Markets tread water ahead of GDP and bank stress reports

UK shares posted modest gains in opening deals as investors waited for growth data later this morning.

The FTSE 100 edged 6.7 points, or 0.12%, higher at 5,320. 

Across Europe, markets traded mostly higher after solid gains in the US and Asia overnight.

The Dow Jones Industrial Average was up 201.8 points at 10,322 points and the Nikkei was 210 points at 9,431.

All eyes are now on the results of the European stress tests due later today.

One London trader said: 'There still doesn't seem like there's anywhere near enough private capital to fund the European banking systems debt needs over the next two-to-three years. The stress test results are unlikely to change this and some might conclude that a more radical set of results may have helped address some of these funding concerns by bringing the problems fully into the open.'

With so many people worried the European tests were insufficiently rigorous and tell us little about the real fitness of Europe's banks, Switzerland is set to muddy the water and publish its own, much stricter tests showing that even against much more difficult scenarios its banks look fit and well.

In the UK the focus is on today's GDP data due at 9.30am. The first reading for the three months to end June is widely expected to show growth rose to around 0.5-0.6%. Better-than-expected retail sales data yesterday added to the optimism although most commentators still believe the pace of growth will slow later in the year.

Meanwhile the row about whether governments should do more to stimulate the global economy has heated up again as ECB president Claude Trichet said the whole world must cut spending and increase taxes and the US should be no exception.

Reports of the comments in the Financial Times are likely to increase tensions between the head of the European Central Bank and his US counterpart Ben Bernanke who said he would do more to stimulate the US economy if unemployment rates stay high.