London midday: Footsie nears four-month low

- Footsie near levels not seen since end of July- 'Fiscal cliff' and Greek uncertainty clouds the markets- Melrose drops 13 per centAfter a fairly subdued start, UK stocks had sunk firmly into negative territory for the third straight day, owing to some heavy falls from Melrose, the banks and resources stocks.The FTSE 100, down 0.55% at 5,647 by Friday lunchtime was nearing a four-month low: the last time the index closed below this level was on July 31st when it finished the day at 5,635.US President Barack Obama is meeting with Democratic and Republican congressional leaders today to initiate discussions over a deal that would negotiate a reduction to the deficit in a bid to avoid the so-called US 'fiscal cliff'. Lawmakers must come to an agreement in order to avoid $607bn in spending cuts and tax increases that, if not changed, will take effect on January 1st. Market analyst Craig Erlam from Alpari said this morning: "Expectations are understandably low regarding a positive outcome from the first meeting. These talks are likely to go on for weeks before they come to any kind of agreement. Both parties are standing firm on key issues ahead of the first talks which is going to make an agreement unlikely and therefore the stock markets unstable."The longer these talks go on, the bigger the losses we're likely to see is risk assets as investors move their cash into safe haven assets. The markets hate uncertainty and there's nothing more uncertain at this moment than what will happen if the US is tipped over the fiscal cliff."Acting as a backdrop, Italy's Finance Minister has told Bloomberg he is optimistic that Europe can reach an agreement on Greece next week. The International Monetary Fund's Managing Director, Christine Lagarde, on the other hand, has been cited in a slightly more sceptical vein. Greece last week finally managed to pass the required €13.5bn in austerity measures and the Eurogroup decided to grant an additional two years to reach deficit targets set out in its bailout programme. FTSE 100: Melrose tanks after gloomy guidanceIndustrial turnaround specialist Melrose plummeted this morning after saying some of its businesses have seen a slow-down in business in recent weeks. The overall weekly rate of order intake in the second half of the year has been 8% lower than the first half , but Melrose said it is too early to tell how this will affect 2013, and in any case the order intake rate is varying on a business by business basis.Banking peers RBS and Lloyds were registering losses. A Public Accounts Committee report said today that while the government would look to make a profit for taxpayers on the sale of its stake in the two banks, this may not happen "for many years". It also said that there is a risk that the £66bn invested in RBS and Lloyds "may never be recovered". Oil titan BP was lower as investors digested yesterday's late announcement that it has resolved all criminal claims with US authorities regarding the Gulf of Mexico oil spill and will pay the DoJ and SEC a combined $4.5bn. Nomura reiterated its 'neutral' rating on the stock today, saying that in order to become more positive on BP, it would need to see a greater evidence of an "operational and financial turnaround".On the whole, resources groups were also firmly out of favour, including EVRAZ, Fresnillo, ENRC and Shell. However, mining giant Anglo American was bucking the trend after announcing that its heavy building materials producing unit Tarmac and French cement group Lafarge are to sell a portfolio of UK construction material operations to steel tycoon ?Lakshmi Mittal for £272m. Serco rose strongly after it delivered the anticipated pick-up in performance in the second half and said it is on track to meet full-year expectations.Engineering giant IMI gained after saying that second-half trading has been in line with expectations so far in spite of some expected weakness in the Fluid Power division. Consumer goods giant Reckitt Benckiser fell after it launched a $1.4bn (£882m) counterbid for US nutrition specialist Schiff Nutrition International, with the tender offer beginning today. FTSE 250: Bodycote jumps after solid revenue growthBodycote, the world's largest thermal processing services provider, has reported revenue growth of 2.9% in the four months to the end of October compared to the same period the previous year. At constant currency rates, revenue rose to 7.6%. Defence contractor Ultra Electronics fell after saying that uncertainty and cutbacks in the defence sector will hit it profits for the year. In addition, the Finance Director has decided to move on.Hedge fund manager Man Group edged higher after saying that it has got shot of the last of its exposure to the estates of collapsed US bank Lehman Brothers.FTSE 100 - RisersSerco Group (SRP) 562.50p +3.31%IMI (IMI) 958.50p +1.75%International Consolidated Airlines Group SA (CDI) (IAG) 163.20p +1.30%Babcock International Group (BAB) 968.50p +1.20%Next (NXT) 3,592.00p +1.18%Capita (CPI) 724.50p +1.05%Experian (EXPN) 1,036.00p +0.88%Compass Group (CPG) 693.50p +0.87%Polymetal International (POLY) 1,113.00p +0.82%ARM Holdings (ARM) 720.50p +0.70%FTSE 100 - FallersMelrose (MRO) 206.50p -12.50%Pennon Group (PNN) 608.50p -3.18%Lloyds Banking Group (LLOY) 44.77p -2.02%Evraz (EVR) 221.00p -2.00%Eurasian Natural Resources Corp. (ENRC) 269.00p -1.97%Fresnillo (FRES) 1,911.00p -1.90%BT Group (BT.A) 221.00p -1.86%Rio Tinto (RIO) 2,952.50p -1.58%Royal Dutch Shell 'A' (RDSA) 2,044.00p -1.52%Vedanta Resources (VED) 1,044.00p -1.51%FTSE 250 - RisersBodycote (BOY) 377.40p +4.05%Genus (GNS) 1,312.00p +2.18%Centamin (DI) (CEY) 69.10p +1.99%Talvivaara Mining Company (TALV) 107.00p +1.90%Savills (SVS) 413.40p +1.52%Pace (PIC) 185.90p +1.31%Homeserve (HSV) 229.80p +1.28%Balfour Beatty (BBY) 252.90p +1.20%Telecom Plus (TEP) 854.50p +1.18%Telecity Group (TCY) 870.50p +1.16%FTSE 250 - FallersLonmin (LMI) 470.00p -4.16%COLT Group SA (COLT) 101.00p -3.81%Supergroup (SGP) 668.00p -3.19%Drax Group (DRX) 522.50p -2.97%Essar Energy (ESSR) 123.80p -2.90%Bwin.party Digital Entertainment (BPTY) 110.90p -2.89%Ophir Energy (OPHR) 500.00p -2.82%Mitchells & Butlers (MAB) 327.00p -2.79%SDL (SDL) 494.30p -2.60%Filtrona PLC (FLTR) 565.50p -2.25%BC