Europe open: Shares flat as investors eye Hunt emergency statement

European shares swung either side of the flatline at the opening on Monday with all eyes firmly on an emergency fiscal statement by new British Finance Minister Jeremy Hunt in a bid to quell turmoil in UK bonds and reassure markets that the government was economically competent.

Hunt, Britain’s fourth finance minister in four months, decided to bring forward elements of his statement after weekend talks with Prime Minister Lizz Truss and Bank of England Governor Andrew Bailey.

He has sparked fears of a return to the grind of austerity first enthusiastically championed by former finance minister George Osborne after the banking industry caused the 2008 financial crash. Hunt on the weekend warned of spending cuts and tax rises, a complete reversal of Truss’s disastrous plan to produce £45bn in unfunded tax cuts which led to the sacking of his predecessor Kwasi Kwarteng.

“Out of the gates, UK gilt yields are trading mostly lower as bond prices push higher, suggesting that the sacking of Kwasi Kwarteng and the appointment of Jeremy Hunt have helped to stabilise the market to some extent, reinstating some confidence in the UK government borrowing market,” said Victoria Scholar at Interactive Investor.

“The Bank of England this morning also helped to reassure markets with a soothing statement on the end of its gilt market operations, suggesting that some support remains with the availability of its Temporary Expanded Collateral Repo Facility (TECRF) which is available until 10th November.”

In equity news, shares in UK broadcaster ITV gained after a report that management is trying to cast its production business in a more prominent light amid frustrations with the group’s stock market valuation. The company is reportedly reviewing the future of ITV Studios, its production arm, including the option of selling a stake, in an attempt to boost its lagging share price.

Hargreaves Lansdown was in the red after it reported a drop in first-quarter assets under administration and announced the departure of chief executive Chris Hill, amid reports the company has been hit by a lawsuit over the failure of Neil Woodford's equity income fund.

Reporting by Frank Prenesti for Sharecast.com