"Zen International"- Britain Nearing Deal On Government...

Online, May 13, 2010 (Newswire.com) - "Zen International": US and European stocks pared losses, sterling rose against the greenback and gilts gained on increasing speculation British politicians will form a majority government that will be able to muster the will to cut the nation's burgeoning budget deficit.

The S&P 500 Index declined 0.1% to 1,158.4 in early New York trading after falling as much as 1 percent earlier. "Zen International" analysts ventured that rumors suggesting the talks between Gordon Brown's Labour Party and Nick Clegg's Liberal Democrats had collapsed had raised optimism of a deal being done with the more hawkish Conservative Party of David Cameron.
The British pound rose 0.5%to $1.4920, reversing a drop of as much as 0.9% whilst the yield on the 10-year UK government bond fell 4 basis points to 3.88 percent.

Despite the optimism, "Zen International" sounded a note of caution saying that although sterling would receive a boost from a deal between Cameron and Clegg, investors would soon have to contend with the fact that Britain may well suffer a double-dip recession once austerity measures are introduced.

"Zen International" analysts also suggested that the pound might come under renewed selling pressure if the proposed measures fail to reassure investors that the UK can make headway on deficit reduction at an acceptable pace.