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Spread-betters expect the FTSE 100 index to open 50 points lower at 6,533 having closed last night down 135.5 points or 2%, at 6,586.1.

Overnight in Wall Street, stocks plunged on concerns about a slowing US economy and the Federal Reserve may be done with cutting interest rates.

The Dow Jones Industrial Average index fell back 362.14 to 13,567.87, while the Standard Poor’s 500 index was 40.94 lower at 1,508.44 and the Nasdaq Composite index fell 64.29 to 2,794.83.

In US economic news, investors today will be focused on October non-farm payrolls to see if there is any further evidence the economy is slowing. The market is expecting that 85,000 jobs were added to the US economy in October, down from 110,000 in September.

On Asian markets, the Hang Seng index finished the morning session sharply lower, down 836.80 points at 30,656.08 led by banks and property companies as investors locked in recent gains following the sell off on Wall Street.

Meanwhile the Nikkei 225 Stock Average closes down 352.92 points or 2.1% at 16,517.48.

In Asian trading hours, oil prices traded higher but was below record peaks of more than $96 as investors took profit and global stock markets weakened on concerns over the US economy.

New York’s main futures contract, light sweet crude for delivery in December, was trading at $93.96 a barrel, up 47 cents from its close of $93.49 in US trade Thursday.

Brent North Sea crude for December traded at $90.70, up 98 cents.

Turning to the UK markets, earning news may be a focus with expected to report a 25% increase in first half pretax profits on Friday due to strong growth in premium traffic and favourable comparatives.

The airline’s first-half pretax is likely to come in at around 590m compared to the 371m it reported in the same period of 2006, which was plagued by security disruptions and heightened security measures that cost BA around 100m.

Elsewhere, British Broadcasting is reporting first-quarter figures with the spotlight likely to be on subscriber growth and retention. The UK pay-TV giant’s key performance indicators, including the number of additional subscribers to its TV, broadband and telephony products, as well as how much they spend and how many stick with Sky, will be the focus of market attention.

There have also been renewed calls for British Sky Broadcasting shareholders to vote down chairman Rupert Murdoch’s re-election at the AGM later the same day.

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‘There are box-office smashes like The Simpsons Movie and The Bourne Ultimatum, then good family stuff like Harry Potter 5 and Shrek 3 along with some good TV series box sets.’

Forced to report his first-half figures bang in the middle of the group’s most important selling period, Fox was being fairly cagey about current trading.

He said: ‘The big days are still ahead of us. November and December account for 40% of our annual sales, and each week within those months sees a 25% rise on the previous one. We’re well-prepared, and all I can say is that we are exactly where we expected to be in terms of current trading.’

If that’s the case, Fox - brought in from Comet just over a year ago - is starting to counter the ever-growing competition from supermarkets and downloads in its traditional markets. He is also shaking up sister bookshops chain Waterstone’s.

Today’s results, for the half-year to 26 October, show HMV reducing losses, cutting costs and shifting into higher-growth sales areas such as video games and MP3 and MP4 players.

Pre-tax losses fell from 29.2m to 28.1m. sales, excluding the sold-off Japan operation, are up 9.5% at 729m. Group sales, which dropped 6.1% a year ago, rose 5% this time.

The biggest improvement came at the HMV chain itself, where like-for-like sales are up 9.2%. That reflects the shift into technology, which accounted for 6% of sales, and gaming, with 15%. HMV has had to accept lower margins on sales of games consoles such as the Wii and PlayStation 3 in the hope the next three years will produce good sales of higher-margin gaming software. New-format stores have been tested at Merry Hill in the West Midlands and Tunbridge Wells in Kent.

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They are lighter and brighter than HMV’s traditional grey-and-purple look, and include a central hub of iMacs where customers can play games and download music.

Fox said: ‘It’s early days yet, but the first indications are good with better footfall and more spending. We plan to open another five early next year, including two at Heathrow Terminal 5.’

Waterstone’s sales were virtually unchanged if one excludes the launch of the final Harry Potter novel, which added 2% to the chain’s revenues. Fox is halfway through closing 10% of Waterstone’s outlets following its takeover of rival Ottakar’s last year.

His launch of a Waterstone’s loyalty card has gone well with 700,000 customers signed up since September.

Other stories:
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Downloads blow for High St music sales
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Game sales boom amid rush for consoles
Fopp prepares to call in the administrators
HMV’s profits slump by 50m

Concerns about rising prices have also leapt with 60% of fund managers expect core inflation to rise in the next 12 months - compared to 7% in April. This prompts predictions of higher bond yields with a staggering 80% of investors expecting long-term rates to increase in the next 12 months.

David Bowers, independent consultant at Merrill Lynch, said: ‘Evidence is pointing to a possible sell off in bonds as inflation worries mount,’ he says: ‘A sharp rise in bond yields could help convert this financial crisis into an economic crisis.’

Eurozone investors remain enthusiastic on the commodity trade. Oil and gas, seen as inflation proof, extended its position as Europe’s favourite sector with 41% of investors - an increase of 20% from April.

Karen Olney, chief European strategist at Merrill Lynch, said the need for commodities in developing markets, not labour, are scarce resources in a slow down - bringing with it pricing power. She says: ‘Earnings momentum drives-out performance - not value.’

The other three biggest movers in popularity were chemicals, construction and the industrials with losers being anything linked to the credit binge and/or reliant on the overstretched Anglo-Saxon consumer.

In the UK, cash remained king with managers continuing to hold record amounts on the sidelines. Only 7% of managers now see the UK market as undervalued, compared with 53% two months ago. Following the trend, UK managers no longer saw outlook for growth as the main problem with only 60% now believing the economy will weaken in the year ahead - down 12% from last year. Rather, concerns lie with the impact of higher oil prices and weaker sterling on inflation.

Continuing worries about the UK banks sector has prompted a switch to oil stocks. Last month a quarter of UK investors said banks were undervalued - that number now has fallen to zero. Olney said: ‘Banks are being penalised for earnings decay. While still unloved, this month they are no longer seen as cheap.’

Banks in crisis

The Merrill Lynch survey included 191 fund managers around the world who between them managed a total of about 315bn in assets.

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Directories giant could be the next to ask investors for a bail-out as the advertising market goes from bad to worse.

The Himalayan debt mountain built up by the Yellow Pages owner took centre stage after newspaper group shocked investors with a 212m cash call.

An alarming slide in the adverting market since the end of February forced the hand of the owner of the Scotsman and Yorkshire Post owner.

But experts say that if Johnston Press has caught a cold, Yell could soon come down with the flu.

The talk is that Yell’s full-year results next Tuesday could contain more than just another dose of dire trading news.

And if the ad market gets any worse Yell may be forced to raise some fresh cash of its own, according to industry sources.

The parallels between the Yell and Johnston Press are striking.

Both are heavily dependent on small businesses, which are slashing advertising spending as the economy grinds to a halt.

Property and used car ads have plunged by over 10pc since the start of the year, said Johnston Press, which can only spell bad news for the listings in the Yellow Pages.

Both groups are also heavily indebted as a result of acquisitions sprees.

Yell’s debts now stand at 3.7bn after building up a directories empire in the US and Spain in 2005 and 2006. Not long after the firm arrived, the property markets in the US and Spain started to crash, dragging the economies down with them.

Yell shares plunged 14p to 188p, and have now lost 70% of their value since a calamitous profits warning this time last year. Johnston Press crashed 20p to 115p, while fell 13p to 249p and ‘A’ shares lost 19p to 421p.

The FTSE 100 finished up becalmed at 6,216, gaining just 4 points on the day after another feeding frenzy in the mining sector offset steep losses in the media and banking sectors.

Wall Street opened over 100 points higher on the back of some relatively benign inflation figures, suggesting there is scope for then US Federal Reserve to cut interest rates again. But the prospects for further rate cuts this side of the pond were dealt a heavy blow by the Bank of England’s doom-laden inflation report.

In the rampant mining sector, rallied 98p or 4.9% to 2118p on revived talk that Chinese aluminium giant Chinalco is quietly building up a 10% stake. BHP bid target rose 238p to 6881p.

Drugs giant gained 39p to 2130p after the American authorities sanctioned the use of its schizophrenia pill Seroquel for treating bi-polar disorder.

It was a sea of red in financials following a U-turn of staggering proportions from (down 14p to 144p) over a 300m cash call. in the growing queue for a bailout could be , which dropped 13p to 445p. Citigroup slapped a ’sell’ rating on A&L, arguing that a ‘marked deterioration’ in its loan book will tear apart its already fragile balance sheet.

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dropped 14p to 470p amid concerns it might struggle to drum up interest in its own given the growing list of companies asking for a handout. IT services firm fired up dealing screens following a robust first-quarter trading update. New boss Andy Green reckons the tech firm has remained resilient in the face of an economic slowdown despite ‘a few examples’ of slower spending.

Price comparison website .com climbed 3p to 118p after blue-blooded broker Cazenove gave it a prominent position on its ‘ outperform’ rankings.

Vaccine developer held out some hope for hay fever sufferers. Its shares blew 6p higher to 34p after trumpeting stellar trial results for a vaccine it claims will wipe out the summer snuffles.

Mining minnow gushed up 1p to 14p after confirming that a number of oil majors want in on a test field in Colombia.

Biofuel producer rose 8p to 553p after doubling first-quarter profits on the back of soaring energy costs.

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Tuesday

The Times

should soon become the first British bus and train operator in the FTSE 100 since was ejected eight years ago. There are reasons to suggest that the company’s $3.4bn (1.7bn) purchase of school bus and Greyhound-owner Laidlaw should fare well. With First’s UK and European businesses continuing to prosper and earnings forecast to grow 20% a year, the shares, at 13.8 times 2009 earnings are still good value. Buy

From AutoParts Azerbaijan to MiningWorld Mongolia, has gone where other trade show organisers fear to tread. Yet ITE has proved a safe way to play surging economic growth in the former Soviet Union and in Central Asia. Yesterday’s update showed trading to be ahead of expectations, with revenues in the second half up 14% twice the rate in mature European markets. At 169p, ITE sits at 17.4 times 2008 earnings, but with 30m of cash giving it scope to continue buying back shares, pursue bolt-on deals and enter new markets, it is worth holding on. Hold

, a fund 75% owned by , notched up an unenviable first yesterday: its external valuers cut the price of its portfolio, a first for a London-listed vehicle since the real estate downturn began. UKCPT shares fell 3p to 80p, a hefty discount to a per share, which it said will also fall by 3.5% to about 98.5p. That may seem steep, but most agents are still expecting property prices to fall about 10% in coming months. That is reason to avoid, and to reevaluate holdings in more retail-focused property plays. Avoid

The Independent

Amid all the gloom up popped yesterday with a bit of good news. The 175m it planned to raise from shareholders to help finance its 1.8bn purchase of Laidlaw the company that owns America’s Greyhound buses will not be needed. Trading across the group looks chipper, with the bus business showing healthy growth and improving margins, and the rail operations chugging along happily. FirstGroup is not the most exciting business in the world, but it does what it does well. Buy

A trading statement from was solid ahead of half-year figures with phase two of its flagship Private Finance Initiative project the East London Waste Authority now complete following delays due to supplier insolvency. The substantial businesses in the Netherlands and Belgium are also doing well. With rising landfill taxes starting to bite, its recycling expertise will increasingly be called upon. The credit crunch may have taken the possibility of a bid from a rival. But once things calm down, and given the company’s attractive portfolio, that could change. Fundamentally, this company is a solid long-term play. Hold

yesterday announced the 47.2m acquisition of NST, a provider of group travel to schools and colleges throughout the UK. Using an operation like NST takes a considerable portion of the grief away from harassed education professionals. It’s an area that Tories focused on this week. And, from a business standpoint, combining NST with its existing PGL which focuses more on activity centres than tours and whose visitors have a younger age profile makes all sorts of sense. The shares are not cheap, and there is a downside risk from a consumer slowdown. But the deal offers scope for the shares to be re-rated. Buy

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