The FTSE 100 had pared gains by Monday lunchtime, pausing for breath after a strong surge last week on anticipation of a potential rate cut from the European Central Bank (ECB) in a few days' time.Recent disappointing economic figures from the Eurozone have sparked hopes that the ECB will move to ease monetary policy when the central bank meets on Thursday. London's benchmark index rose by 2.2% last week.The consensus is expecting at least a 25 basis-point reduction in the ECB's key lending rate (the 'refi' rate) from the current record-low level of 0.75%. "Failure by the ECB to act on rate cutting will most certainly spark a sell-off, especially as indices are still near multi-year highs," said Market Strategist Ishaq Siddiqi from ETX Capital.Markets across Europe were trading higher this morning after the weekend saw Italy form a new government, removing some of the political uncertainty that has dampened sentiment over the last few months.The formation brings together Prime Minister-designate Enrico Letta's Democratic Party and the People of Freedom party, led by former PM Silvio Berlusconi who will take up the Deputy PM role. The coalition comes after Giorgio Napolitano was re-elected as President last week. This renewed confidence was reflected in the sovereign debt sale this morning as Italy issued its €6.0bn target in five- and 10-year bonds whilst paying the lowest financing costs since October 2010. Market Analyst Craig Erlam from Alpari said that this was "a clear signal that investors feel much more relaxed about the situation in Italy than they have for a long time".He said: "The only problem now is that the coalition must work together to finish what Mario Monti and his government of technocrats started. This seems very unlikely at this stage and I'll be very surprised if the same coalition government is in place at the end of this year."FTSE 100: Aberdeen surges after half-year reportAberdeen Asset Management was a high riser after saying that assets under management increased 13% in the last six months as risk appetite continues to improve.UK lender Lloyds gained after announcing plans to dispose of its loss-making Spanish retail and private banking operations in an effort to continue its strategy of 'rationalising' its overseas presence and ensuring best value for shareholders.Financial services group Legal & General edged higher after signing a deal to reinsure €136m of New Ireland Assurance's existing and future annuity business, its first annuity deal outside the UK.Vedanta Resources was out of favour announcing that its subsidiary Sesa Goa swung into the red in the year to March 31st after its operations in India were hit by a ban on iron-ore mining. Sector peer BHP Billiton was also lower after saying that it is to sell its Pinto Valley operation and the associated San Manuel Arizona Railroad Company to Capstone Mining Corp for $650m.Reed Elsevier was weighing on the market after Citigroup downgraded the stock to 'neutral'.FTSE 250: Balfour Beatty and Greggs drop on gloomy guidanceBalfour Beatty, the infrastructure firm, was a heavy faller after saying that its UK construction business is expected to deliver "significantly lower profits" from operations in 2013 than its previous expectations.High Street bakery chain Greggs was also declining sharply after saying that profits for the full year would be slightly below the lower end of market forecasts.Heading the other way was pest control and hygiene group Rentokil Initial despite reporting mixed conditions during the first quarter. Profits fell but revenues edged higher. FTSE 100 - RisersAberdeen Asset Management (ADN) 454.70p +9.01%Eurasian Natural Resources Corp. (ENRC) 276.50p +2.67%London Stock Exchange Group (LSE) 1,336.00p +1.98%Schroders (SDR) 2,325.00p +1.66%Fresnillo (FRES) 1,170.00p +1.47%Associated British Foods (ABF) 1,947.00p +1.14%CRH (CRH) 1,391.00p +1.09%Hammerson (HMSO) 523.00p +0.97%Smith & Nephew (SN.) 750.50p +0.87%Wolseley (WOS) 3,257.00p +0.84%FTSE 100 - FallersReed Elsevier (REL) 759.00p -2.13%WPP (WPP) 1,046.00p -1.78%RSA Insurance Group (RSA) 111.10p -1.68%Polymetal International (POLY) 744.50p -1.65%Vedanta Resources (VED) 1,206.00p -1.23%Croda International (CRDA) 2,498.00p -1.07%Sainsbury (J) (SBRY) 378.90p -1.02%Melrose Industries (MRO) 245.10p -1.01%Rolls-Royce Holdings (RR.) 1,123.00p -0.80%Kingfisher (KGF) 313.50p -0.76%FTSE 250 - RisersRentokil Initial (RTO) 101.10p +4.60%UBM (UBM) 739.00p +3.50%Bellway (BWY) 1,383.00p +3.44%Ted Baker (TED) 1,365.00p +3.41%Redrow (RDW) 213.20p +3.04%Savills (SVS) 568.50p +2.25%Barr (A.G.) (BAG) 549.50p +2.23%Kentz Corporation Ltd. (KENZ) 386.80p +2.22%Hansteen Holdings (HSTN) 86.25p +2.07%Rightmove (RMV) 1,863.00p +1.97%FTSE 250 - FallersBalfour Beatty (BBY) 214.60p -12.91%Greggs (GRG) 423.20p -8.50%Carillion (CLLN) 276.70p -4.52%African Barrick Gold (ABG) 184.10p -3.11%Supergroup (SGP) 715.00p -2.92%Petropavlovsk (POG) 150.30p -2.59%Brewin Dolphin Holdings (BRW) 206.30p -2.23%Man Group (EMG) 102.40p -2.01%Informa (INF) 480.50p -1.94%Cobham (COB) 246.00p -1.91%BC