Confusion reigns over double-dip recession, analysts say

European equity markets are mostly flat, showing investors' confusion about the possibility of a double-dip recession. They plunged more than 2% yesterday, across Europe, after a bearish statement from Britain's central bank.

Despite Bank of England governor Mervyn King's comments reassuring the economy is still growing, both the UK and the US central banks have cut their growth forecasts this week.

"The markets gave their verdict on the Fed yesterday — and it was a pretty emphatic one," said Steven Barrow, head of G10 strategy at Standard Bank. "But what's the market so worried about? We think it's the confusion and uncertainty that dogs policymakers—not just in the US."

The FTSE 100 was practically unchanged, down 4 points to 5,241 at 9:35a.m.

The expectations of low growth, and no inflation, pushed up bond prices in the US last night, dragging down the 10-year government yield to 2.70%.

"In reality the GDP downgrades from BoE, and China's slower growth indicators yesterday have contributed to this latest bout of risk aversion," said Jim Read, a credit analyst at Deutsche Bank. "These growth concerns have also been negatively received by the commodities markets and the selling pressure has continued into the overnight session."