This blog is now closing for the day - but you can keep up with all the action - including further coverage of Goldman Sachs' results and Mervyn King's speech tonight - in our new blog here.

Thanks for all the great comments so far.

On the UK corporate front, Bellway, the smallest of Britain's four national housebuilders (the others are Persimmon, Barratt and Taylor Wimpey), hiked its dividend by nearly a third today after posting a 51% increase in annual profits to £67.2m. It built fewer homes than a year ago (4,922 versus 4,595) but managed to hike prices to an average £175,613 from £163,175.

Bellway's finance director Alistair Leitch said:

At the moment we are surprised at how resilient things have been given what's going on in the background. We have seen decent numbers for the autumn and expect a slight [seasonal] tail-off until Christmas. As long as the market doesn't fall off a cliff, we'll start worrying about the 2012 spring season.

But he was worried that the daily flow of bad news could impact on people's confidence more.

If we suddenly find the market turns and declines we'll stop land-buying.

Bellway prides itself on the fact that it is the only UK housebuilder that has paid a dividend every year since 1979.

Wall Street has just opened. The Dow has lost 20 points at 11376, a 0.2% fall, while in London, the FTSE is now down 32 points at 5404, a 0.6% drop.

Louise Cooper, markets analyst at BGC Partners, has looked at Moody's warning on France overnight and its impact on bonds today.

Moody's has put into words what many have feared for months - that France's AAA rating could be under pressure. 10 year borrowing costs for France have gone up today and have been on an upward trend since the beginning of October - 10 year yields reached a low of about 2.5% on October 4th and have since risen to be around 3.1% currently. Our European Government Bond desk here at BGC is seeing only sellers of French bonds today. German bunds have also sold off in the last month although less so than French which is leaving the yield spread between the two countries at record levels, around 100bp. So France has to pay a full one percent more in interest costs than Germany to borrow 10 year money.

Here are some market thoughts from Manoj Ladwa, senior trader at ETX Capital.

Gold Since its sharp fall in late September, the recovery in the price of gold has been laboured at best. Despite the negative sentiment surrounding the Eurozone, global economic growth almost non-existent and rising inflation, the shine seems to have gone from the precious metal. Given the lack of buying, one may assume that investors are on the look out for safe-haven assets that offer a better reward versus their risk. Technically, momentum indicators are rolling over to the downside, further confirming lack of investor appetite. Equities When stocks move higher on low volume, the rally can go on to do one of two things: trade a touch higher or come screaming back off. Given the market's initial reaction to comments coming from the G-20 meeting at the weekend, equities looked like they could still leg higher. But the German Chancellor dished out a reality check to the market, investors got spooked and equities sold off sharply. The problems regarding the Eurozone have been a long time in the making and to expect them to be resolved in a week is wishful thinking. Until the issues are addressed and firm attempts made to resolve them, equities are likely to carry on trading within a wide range and strategies need to be adjusted accordingly. Dollar Index. 'Buy dollars, wear diamonds' as I have been told by my FX desk, and they are proving themselves to be right. On a long-term basis, the greenback has underperformed most other asset classes as investors have switched into commodities, but that trend has begun to turn. As a trader, I watch very closely how the market responds to any news announcements, especially the unexpected. Despite a credit rating down, weak economic numbers and increasing volatility, the dollar managed to remain resilient, indicating that the worst seemed to have been priced in. If a long- term upward trend is in place, then the recent pullback in the dollar index could offer a relatively low-risk point of entry.

A closer look at the US bank numbers out today reveals that fixed income, currency and commodities sales and trading revenues were hit by the global market turmoil. At Bank of America, the largest US bank by assets, they crashed by $3.2bn from a year ago to just $314m in the third quarter, "due to lower client activity and adverse market conditions".

At Goldman Sachs, the largest American investment bank, fixed income, currency and commodities revenues tumbled 36% to $1.73bn. "During the quarter, global economic uncertainty intensified, resulting in volatile markets and significantly wider credit spreads," the Wall Street bank said.

Equity index futures now point to a flat opening on Wall Street in just over 20 minutes. Despite a bigger-than-expected loss reported by Goldman Sachs at lunchtime, the bank's shares were up 0.8% to $97.70 in pre-market trading.

Gold extended losses, falling as much as 2% after Goldman Sachs reported the second quarterly loss in its history, which further dented already-fragile investor confidence and gave the dollar a lift, to the detriment of bullion.

Here's more detail on the Goldman Sachs numbers. Investment banking revenues tumbled by a third from a year ago to $781m. Revenues in equity and debt underwriting were "significantly lower than the third quarter of 2010, reflecting a significant decline in industry-wide activity." Nonetheless, the bank stressed it still ranked first in M&A, equity underwriting and stock market flotations for the year so far.

Staff levels are down 4% compared with the end of the second quarter. Goldman said its "compensation" bill in the third quarter, at $1.58bn, was 59% lower than a year ago - but pay still amounted to 44% of revenues in the first nine months of this year. So its bankers take nearly half the money the bank makes in revenues!

You can read the Goldman Sachs results here.

Goldman Sachs has just reported a loss of $393m, or $0.84 per share, for the third quarter - worse than expected. This compares with earnings of $2.98 a share a year ago. The bank made revenues of $3.59bn, including $781m in investment banking.

It's only the second quarterly loss since the 1999 flotation, says the Guardian's banking correspondent Jill Treanor.

Time for a lunchtime round-up. The FTSE is down over 70 points at 5365.98, a 1.3% fall. The broad-based sell-off is on the back of revived concerns over the eurozone debt crisis and slower Chinese growth figures.

UK inflation was a shocker - it hit 5.2%, a three-year high, on the back of higher utility bills. Chinese economic growth has slowed - it grew by a hefty 9.1% in the third quarter, but that was down from 9.5% in the previous quarter. Wall Street futures indicate the Dow Jones will open some 30 points lower.

The Wall Street reporting season continues, with Bank of America results just out. It swung to a profit of $6.2bn in the third quarter, from a net loss of $7.3bn a year ago. The investment bank says it plans to hire more than 1,000 small business bankers by early 2012. Small firms have found it particularly hard to get loans during the downturn, but Obama's $30bn small-business loan program has flopped. Here is the press release. Goldman Sachs numbers are due shortly.

OK, I am now handing over the blog to my colleague Julia Kollewe - thanks for all your comments this morning.

In all the fuss over inflation and other dire statistics, I've neglected the Occupy London protests, carrying on into a fourth day today by St Paul's.

Without anything major to report so far today, here is what the papers made of the protests, as well as some coverage of the debt crisis too.

- From local action to a global howl of protest: Esther Addley on the Occupy movement

- Occupy London protest - in pictures

- Polly Toynbee: In the City and Wall Street, protest has occupied the mainstream

- Occupy London protest camp prepares to become permanent fixture: Peter Walker's report from the site of the protests.

- The Times' leading article (£) says: This protest is wrong-headed and there is little purpose in being polite about it.

- Richard Littlejohn at the Daily Mail says the protesters have a point - and then goes on to call them "layabouts"

My colleague Polly Curtis has been looking at what the implications of high inflation are for the government's spending plans.

The news from Brussels is that the European Financial Stability Facility is likely to be increased through means of a guarantee system.

Eurozone officials are briefing that the EFSF will promise investors who buy Spanish, Italian or other debt that it will cover a portion of losses, potentially allowing it to guarantee a lot more debt than the fund is worth - €440bn.

The guarantee idea is not new, but suggestions that it is the most likely solution is interesting.

"This idea is the main contender," an unspecified eurozone official told Reuters.

Some more poor statistics, this time from Germany. The ZEW Institute's monthly survey of German analyst and investor sentiment shows confidence falling to its lowest level in nearly three years.

ZEW economist Michael Schroeder said he thought the country may already be in recession.

My colleague Katie Allen's report on UK inflation is now up here.

A couple of people are pointing out that the Misery index - calculated by adding the inflation rate to the unemployment rate - has risen to its highest level since 1992.

It is now at 13.3%.

The Bond Vigilantes, otherwise known as M&G's retail bond team, suggest that inflation has not yet reached its height.

@bondvigilantes

UK inflation awful - RPI 5.6% yoy (vs 5.4% expected), highest since June '91. CPI 5.2% yoy (vs 4.9% exp). Next month likely the peak though.

The underlying cause behind surging inflation is soaring gas and electricity bills.

Here's some comment from Chris Williamson, an economist at Markit:



The September figure should represent a peak in the rate of inflation, with petrol price rises and January's VAT hike falling out of the year-on-year comparisons in the fourth quarter and the new year respectively. Commodity prices, which tend to lead consumer prices, have fallen just over 10% from the peak seen in February, which also suggests we should see some further downward pressure on inflation. Furthermore, with consumer spending remaining very subdued, it seems likely that retailers will need to focus on discounting to win sales in coming months. On the other hand, the renewed weakness of sterling will continue to drive up import prices, and oil prices have also begun to creep up again. There is therefore a risk that the rate of inflation could remain higher than the Bank of England is currently projecting and remain above the 2% target for some time. However, we do not expect this to deter the Bank from maintaining an ultra-loose policy stance. The Bank is clearly more concerned about the current fragility of the recovery than current above-target inflation, meaning further stimulus could well be on the cards as policymakers seek to prevent the country from sliding back into recession if business and consumer confidence fails to pick up soon, which seems unlikely.

David Smith, the Sunday Times' economics editor, says meanwhile that RPI (which stood at 5.6% in September) has not been higher since June 1991:



All I can say is that the Bank of England must have been desperately worried about growth, and very confident inflation will fall sharply to have launched another £75 billion of quantititive easing in this context.

UK consumer price inflation has come in at 5.2%, ahead of expectations of 4.9%. It's the highest inflation rate since September 2008.

I wrote earlier about how slower Chinese growth might cause commodities to dip.

Well, Copper was down 2.6% early on, and Zinc is down by a similar amount.

The commodity price most of us are most interested in - oil - is down too. Brent Crude futures are off 0.4% now to $109.75.

Gold meanwhile has come off a fraction - trading at $1,661 an ounce.

Dexia, the Franco-Belgian bank which was forced to seek government help earlier this month, saw its shares plunge another 13% this morning on fears that a major shareholder may have to launch a firesale of its stake.

Holding Communal, a Belgian shareholder which holds a 14.1% stake in the bank, has debts of €1.6bn and may be forced to declare itself bankrupt.

The problem seems to be circular - Holding's assets, in particular its Dexia shares, have fallen in value so it cannot meet its debts. And the prospect of it not meeting its debts and being forced into bankruptcy is itself forcing down Dexia shares, and thus the value of its assets.



Dexia shares already fell almost 20% yesterday on the same fears.

Some corporate news for you from this morning's announcements.

Firstly, in London, the owner of Premier Inn and Costa Cofee has hiked its half-year dividend by 50% after posting a 15% rise in profits. Both chains are massively expanding at present, and for now Whitbread seems to be defying the consumer downturn.

And another company doing the same is the world's biggest luxury goods group.

LVMH, the maker of Louis Vuitton handbags, Mumm champagne and Hennessy cognac, said like-for-like sales rose 15 percent to €6.01bn (£5.2bn).

How have the bond markets reacted to Moody's warning on France?

Well, the yields on French ten-year bonds actually came down a bit initially and are now unchanged.

But perhaps a better measure is the spread - the difference between the French yields and the benchmark German yields - which give us an idea of how much more expensive it is for France to borrow than other sovereigns.

Those have gone up - German ten-year yields are down about 0.07 on the day - so the spread is now just over 1%, having started the day at 0.96%. Not a huge move but worth keeping an eye on.

OK, time for a quick agenda for the day

• UK inflation figures are out at 9:30 - and could show that the UK consumer prices index hit 5% in September.

• Goldman Sachs reports third quarter numbers later today - and is expected to post a loss.

• The build-up to Greece's 48-hour strike scheduled for Wednesday and Thursday intensified yesterday as a deputy in the ruling Greek socialist party quit parliament in protest at austerity measures. All today's developments as they happen.

• More updates as they come in on Moody's warning that France could be put on a negative outlook.

• The Occupy London protesters set out their stall yesterday, looking to stay put in their tents by St Paul's. We will have all the news as the protests develop.

The bad news is that the FTSE 100 has opened further down than we expected.

The blue-chips are down 80 points, or by 1.5%, at 5,356.

France's CAC is down 1.2%, while the German DAX is down 1.1%.

The French finance minister Francois Baroin has commented on the Moody's debt warning on France 2 television.

His comments will disappoint those chanting "Fight! Fight! Fight!" in the hope of another politician/ratings agency bust-up, as he seems to have taken the news relatively calmly.



It (France's AAA credit rating) is not in danger because... we will even be ahead of schedule on passing deficit reduction measures.

He added that France would have to cut its GDP estimates - currently it has a target of 1.75% growth in 2012.



It is probably too high compared to the development of the economic situation, we will not adapt it today. We will adapt it, that much is clear.

So while Nicholas Sarkozy decides whether or not to take aim at the ratings agencies, Berlusconi-style, the other major news as you are waking up is that Chinese growth has slowed.

Chinese GDP still grew at a hefty 9.1% in the third quarter, but that was down from 9.5% in the previous quarter. Experts were also expecting a 9.2% growth rate.

Chinese growth is pretty critical to investors' expectations at the moment. A surging China means huge demand for raw materials in particular, one of the main factors behind the recent boom in commodities prices.

That in turn is a big driver of the FTSE 100 - which is heavily reliant on resources stocks like the oil majors and the mining groups.

So, on the back of that, and just to run you through the usual early morning indicators of where the markets are heading:

- oil was fairly steady despite the news - Brent Crude is trading at $110 a barrel. Reuters reports a CMC Markets analyst saying: "The headline [Chinese] GDP number may be down but I wouldn't call it a downside surprise, the numbers still indicate a soft landing."

- The Japanese Nikkei index closed down 1.6%.

- The latest estimate I can find for the FTSE 100 suggests it will open 0.9% down, or by about 50 points.

Morning everyone and welcome back to our live coverage of the Eurozone debt crisis.

In yesterday's live blog my colleague Graeme Wearden mentioned the possibility of a downgrade to French debt.

Lo and behold, a statement from Moody's came through at around 10:30pm last night. The headline is that Moody's could put France on a negative outlook.You can read more here.

It may not sound like much to review the outlook downwards (it would not constitute a downgrade), but it is unlikely to be good for market sentiment today.

Ahead of the open markets are expected to be down - with Chinese growth figures (on which, more soon) disappointing.