- StanChart in the spotlight over Iranian transactions
UK stocks started the week strongly on the back of improvements in Greece and hopes of imminent action from the European Central Bank (ECB) to stem the crisis.
After a meeting between the Troika (European Commission, European Central Bank and International Monetary Fund) and Greek Finance Minister Yannis Stournaras in Athens at the weekend, the institutions issued a joint statement, saying: "The discussions on the implementation of the programme were productive and there was an overall agreement on the need to strengthen policy efforts to achieve its objectives."
Analyst Craig Erlam from Alpari said this afternoon: "Stocks are continuing to trade higher today following an improved non-farm payrolls figure in the US and fresh hopes that the Eurozone is making strides in fighting the debt crisis. There is still a lot of caution around but many are expecting Spain, and potentially Italy, to request assistance soon in bringing their bond yields lower."
For his part, Andrew Garthwaite over at Credit Suisse is of the belief that markets are being unduly pessimistic as regards the Eurozone crisis. In this same regard, he thinks that the probability of a Greek exit by year-end is only 20%. For those reasons -amongst others- he has decided to upgrade Continental equities to benchmark from underweight. Nevertheless, and to be noted, he adds that, "we think the defensive-led market rally will continue for now (overweight telecoms and pharma)."
According to Italy's Prime Minister, Mario Monti, in an interview with German publication Der Spiegel, the Eurozone tensions "bear the traits of a psychological dissolution of Europe." Talking about the growing resentment between southern and northern European nations, he said that "it is very alarming, and we have to fight against it".
In other news, overnight the People's Bank of China (PBoC) has issued a statement saying that "in the second half, we must continue to reinforce fine-tuning and pre-emptive adjustment in monetary policy and improve credit policy to support the development of the real economy."
Periphery short-term debt yields again fell very sharply today. Even so, there is some "market chatter" of increased demand for options to protect against weakness in the single currency.
FTSE 100: RBS jumps late on
Royal Bank of Scotland surged after The Sunday Times reported that Brazil's Banco Itau could be sizing up the lender's US operations. Those assets could fetch a price of £10bn, the paper reported. Sector peer Barclays was also up on widespread reports that it is planning an overhaul of its bonus system that could see payouts withheld until bankers leave the company.
On the negative side of the ledger, it was reported late on that Standard Chartered violated anti-money laundering laws in the US due to $250bn of transactions with Iran over nearly a decade. The news sent its shares immediately into a tail-spin, although it must be kept in mind that trading volumes are quite low.
Glencore performed strongly on the back of several weekend reports that the group is expected to publish a smaller drop in half-year profits tomorrow than its merger partner Xstrata. That may give it additional ammunition with which to resist pressure from Xstrata shareholder Qatar Holdings for a higher offer price.
Coal and iron ore giant Evraz was in demand after UBS removed the stock from its least preferred list.
BAE Systems was still trading lower by the close despite reports just out that the aeronautics giant has won a contract to upgrade South Korea's fleet of over a hundred F-16 fighter jets. The contract is thought to be worth 1bn dollars.
Marks & Spencer gained after the Sunday Telegraph reported that the High Street giant is the subject of takeover talks. The paper said that bankers at a number of London institutions have assessed the possibility of providing debt finance for a speculative bid of £6.0bn. That follows on similar reports out on the company from Bloomberg towards the end of last week.
FTSE 250: TeleCity rises after maiden divi
Data centre operator TeleCity Group was among the risers after saying demand for its services remains strong in all of its markets, as it made good on its promise to declare a maiden dividend.
Insurance firm Catlin Group rose after jumping back into the black in the first half of 2012 as premiums rose and its London hub sprang back into life.
QinetiQ Group saw shares decline after Goldman Sachs cuts its rating on the stock from neutral to sell.
UK economic data comes in mixed
?Output has fallen among the UK's small and medium-sized manufacturers, and sentiment has deteriorated, according to figures from business lobby group the CBI. Of the 359 firms that responded to the latest quarterly SME Trends Survey, 28% said output volumes had fallen, while 23% of manufacturers reported output volumes increasing in the three months to July.
??New UK car registrations rose for the fifth month in a row in July, posting the strongest figures of 2012 so far. New car registrations rose 9.3% in July to 143,884 units, with the total so far this year up 3.5% on the same period in 2011. ??
Halifax added to a number of recent reports that the UK housing market weakened in July. The lender reported that average prices fell 0.6% month-on-month in July, following on from increases of 0.8% in June and 0.4% in May.
Datafeed and UK data supplied by NETbuilder and Interactive Data.
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