FTSE down as storm clouds surround Osborne

The FTSE opened down as stuttering UK growth cast a shadow over chancellor George Osborne's Autumn statement on the economy to be delivered later today.

Grim forecasts on growth from the OECD yesterday painted a bleak picture as the UK struggles to get its economic recovery into gear.

The government has already indicated that billions will be pumped into infrastructure projects in a bid to stimulate the economy but investor sentiment has failed to be lifted.

Despite gains in Asia and Wall Street on hopes that European leaders will today agree to beef up the Eurozone bailout fund to save beleaguered economies, the overriding mood was gloomy in London.

That sentiment was mirrored in a ten-year Italian bond auction which saw yields of a record 7.56 per cent. A three year bond issue saw yields of 7.89 per cent.

Meanwhile credit rating agency Standard & Poor's could change its outlook on France's triple-A credit rating to negative within the next 10 days, French newspaper La Tribune reported.

Moody's ratings agency warned it could downgrade the subordinated debt of 87 banks across 15 countries on concerns that governments would be too cash-strapped to bail them out.

Banks and miners — bulwarks of the FTSE 100 — both suffered in early trading. RBS was the biggest faller, down 2.9 per cent with Lloyds slipping by 2.3 per cent.

Barclays edged down by 1.4 per cent while also in the financial sector insurance buyout vehicle Resolution dropped 2.5 per cent.

Miner Vedanta was more than two per cent off as was Rio Tinto which yesterday warned that flagging markets were hitting demand for commodities.

Among other miners Anglo American was down 1.4 per cent. Antofagasta was another loser, dropping by 2.1 per cent.

On the up side engineer GKN was the highest climber, up 1.6 per cent. The rise was fuelled by speculation that Warburg Pincus-backed Quest Global Engineering was a leading contender to bid for the company.

Hedge fund giant Man Group was the best performer among financial stocks, lifting by just over one per cent.

Gold miner Randgold Resources bounced back by more than one per cent after being hit by a trading statement yesterday in which it downgraded its output forecasts.

Caterer Compass and security company G4S were both up 0.8 per cent.

In Asia the Nikkei closed up 2.3 per cent and the Hang Seng 1.2 per cent.

Meanwhile the Nationwide reported that UK house prices had risen for the third consecutive month.

The Bank of England also said approvals for home loans - a gauge of house prices in six months' time - numbered 52,743 in October, up from 51,193 in September.