Further turmoil in the markets this morning as the political situation across Europe continues to dominate the picture.

The next month will be a battle between political will and economics. The political will is being tested to its limit and whilst European leaders continue to insist that they want Greece to remain in the eurozone, they are continually being reminded of the economic reality that a break up of the single currency is almost certain by the likes of our Governor of the Bank of England and Prime Minister.

Italian ten year yields have crossed back above 6% and for Spain back above 6.5% meanwhile risk adverse investors piled into German bunds driving their cost of borrowing even lower.

The main theme across all asset markets on Thursday was ongoing risk-aversion, as Spanish bank concerns, disappointing US data and ongoing political uncertainty in Greece kept investors seeking risk-free safe-havens, and shunning risk asset and risk currencies.

The euro traded at $1.2714 this morning, up 0.03% as the Spanish bond auction saw near-total uptake. According to the Bank of Spain, the country managed to sell €2.49 billion in bonds, just below its maximum target of €2.5billion.

Media reports that the ECB would halt monetary policy operations with some Greek banks put the euro on the back foot, highlighting the continued scope for unsettling news. EUR/USD printed a low of 1.26814 early in the European session and was fairly choppy in US trade.

Crude for June delivery was trading at $92.86 a barrel on the New York Mercantile exchange at 12.15pm (London time), paring its earlier gains on negative Greek sentiment.

Copper was down more than 1.3% on the back of the re-emergence of the Greek crisis, with politicians playing musical chairs to decide who gets to form the next government.

Light crude oil for June delivery on the New York Mercantile Exchange (NYMEX) was down 0.61% at $105.50 a barrel this afternoon due to rising inventories and weaker ADP figures.

Retail sales in the US climbed 1.1% in September from August according to data from the US Commerce Department. This is the biggest jump in retail sales seen for seven months and it’s helped the Dow Jones to add 100 points today already.  

The UK’s FTSE 100 plummeted below the 5000 mark on Friday morning as fears of a double-dip recession in the US and across the EU continued to dominate investor sentiment.

UK markets might have been overshadowed by the Compreshensive Spending Review (CSR) this week but they were certainly not bowed by it.