Wall Street has joined other global markets in retreat as hopes of a deal between Greece and its private bondholders proved premature.
But the US market has come off its worst levels after a better than expected business confidence survey. The Richmond Federal Reserve index rose to 12 points in January from 3 the month before, the strongest reading since March last year. Annalisa Piazza at Newedge Strategy said:
The outcome is stronger than anticipated and it confirms the relatively positive momentum for US manufacturing activity. So far, Fed regional surveys are consistent with some upswing in business activity at the start of the year and the improvement looks broad-based.
That said, the US economy is still far from [its] potential and - in our view - the Fed is unlikely to make any considerable change in its assessment for growth in tomorrow's FOMC statement. If anything, the wording will be a touch less sluggish, with a note of modest improvement for some sectors that - over the summer and autumn months of 2011 - suffered from a soft patch.
So after falling around 90 points, the Dow Jones Industrial Average is now down around 59 points. The FTSE 100 has fallen 46.53 points to 5736.03 while French and German markets are around 1% lower.
Sentiment has not been helped by downbeat comments from the International Monetary Fund, which has cut its global growth forecasts and said it saw the eurozone entering a mild recession in 2012.
