Last checked at LONDON (Alliance News) - Stock markets across the UK, Europe and the US jumped Monday after a new debt bailout plan was agreed between Greece and its creditors just prior to the London, open following marathon talks over the weekend in Brussels.
Eurozone finance ministers continued to meet Monday to discuss short-term bridge financing for the economically weaken country.
Eurozone leaders reached a deal with Greece on Monday to pull the country back from the brink of being bounced from the common currency bloc, but major hurdles still need to be cleared before Athens can receive the new financial rescue package. The new three-year bailout, estimated at between EUR80 billion and EUR86 billion, is subject to approval by several national parliaments, including those of Greece and of Germany, the biggest creditor nation in the eurozone.
Greek Prime Minister Alexis Tsipras said Monday's agreement, which specifies the terms under which negotiations can move forward, had involved "difficult decisions and hard dilemmas".
"The measures will inevitably create recessionary trends, but the growth package, the restructuring of debt and secured funding for the next three years will mean that Grexit is past," Tsipras said.
As part of the deal, leaders agreed for Greece to park assets worth EUR50 billion in a privatisation fund. Profits from the fund will be used to reduce debt, create investments, and help recapitalize Greece's struggling banks - an effort expected to require approximately EUR25 billion.
Furthermore, the details of the deal still needs to be worked out and approved by several governments, meaning it is not immediately clear how quickly aid would flow to Athens. Eurogroup President Jeroen Dijsselbloem said that a final deal on Greece's new bailout is still "weeks" away, as the agreement has yet to be approved by the respective eurozone parliaments.
Guy Foster, head of research at Brewin Dolphin, said Tsipras may have a difficult time getting the deal approved by Greek parliament, noting 15 deputies have stated, in the time since Tsipras asked the chamber of deputies to authorise him to negotiate on Friday, that they would find it hard to approve a deal.
"These may well be hollow threats but, if they are not, then Tsipras may need to call early elections (again) which could take place this autumn. Alternatively if he retains a majority he will need to clean out the dissenters from his own party effectively repositioning the rump to the right," Foster wrote.
Dijsselbloem said the finance ministers' Eurogroup panel will look at the possibility of short-term "bridge financing" to quickly funnel aid to near-bankrupt Greece. The Mediterranean country needs EUR7 billion that has to be paid to the European Central Bank on July 20. An EU diplomat said that eurozone finance ministers are considering ways of granting Athens a EUR12 billion bridging loan to meet its immediate financing needs and to allow banks to reopen, if conditions are met to negotiate a new Greek bailout.
The FTSE 100 closed up 1.0% at 6,737.95 points marking its fourth successive session of gains. The FTSE 250 added 1.3% at 17,708.88 and the AIM All-Share gained 0.3% to 752.30.
European stocks were buoyed by the Greek deal, the CAC 40 in Paris ended up 1.9% and the DAX 30 in Frankfurt ended up 1.5%.
On Wall Street at the European close, the DJIA was trading up 1.1%, the S&P 500 was up 0.9% and the Nasdaq Composite was up 1.2%.
On the London Stock Exchange, International Consolidated Airlines Group closed as the best performer in the FTSE 100, up 4.8%. UBS upgraded the owner of British Airways and Iberia to Buy from Neutral.
In the FTSE 250, Alent was by far the biggest gainer, closing up 44% after US-based Platform Specialty Products Corp said it has agreed a GBP1.35 billion takeover of the specialty chemicals company.
Platform Specialty, a specialty chemicals industry consolidation vehicle, said it will pay 503 pence in cash for Alent shares, a premium of around 49% to Alent's closing price of 337.7 pence on Friday. Platform will make the acquisition via its MacDermid Performance Acquisitions Ltd subsidiary. Shares in the company ended Monday at 487.00p.
On the other side of the index, International Personal Finance closed as the worst performer, down 25%. The lender warned there could be financial consequences for it as a result of potential legal changes in Poland that could result in a cap that covers a broader definition of non-interest costs than previously suggested.
The company said it is reviewing draft legislation as it works out whether the structure of its products will be affected by a cap that could affect all non-interest costs in connection with a consumer loan agreement, a change from previous proposals that involved a cap just on all mandatory, non-interest costs.
Derwent London ended up 3.2% after the FTSE 250-listed property developer said it struck a GBP132 million deal to acquire the Aldgate Union building in Whitechapel in east London and said it has secured its first lettings at the White Collar Factory in Old Street, also in east London.
Derwent will acquire the Aldgate Union building, located on Whitechapel High Street, from Royal Bank of Scotland Group. It will be bought with vacant possession in December. RBS is currently the occupier of the property.
Still ahead in the economic calendar is the US monthly budget statement at 1900 BST. In the calendar Tuesday, German inflation data are at 0700 BST and UK inflation numbers are at 0930 BST. ZEW economic surveys for the eurozone and Germany are at 1000 BST, alongside eurozone industrial production data. US retail sales are at 1330 BST.
In the UK corporate calendar, there are interim management statements from FTSE 250-listed companies Dairy Crest Group, Michael Page International and Carillion. FTSE SmallCap-listed ITE Group also issues an interim management statement. Transport operator FirstGroup and electronics diagnostics and repair services provider Regenersis issue trading statements. Professional services consultancy Begbies Traynor Group reports full-year results.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
Copyright 2015 Alliance News Limited. All Rights Reserved.
19 Oct 2022 14:50
IN BRIEF: Begbies Traynor says UK companies in distress grows by 25%
Begbies Traynor Group PLC - Manchester-based corporate rescue and recovery practice - The latest 'Red Flag Alert' report, which is compiled by Begbies Traynor, finds a 25% increase in the number of UK companies in 'critical financial distress' from a year before. The 2,090 of companies in this category in the third quarter of 2022 is up 6.8% from 1,957 in the second quarter. The increase is led by the industry groups Bar & Restaurants, General Retailers, Leisure & Cultural Activities, and Media. Begbies Traynor also finds 610,000 companies in the less-severe 'significant financial distress' category, up 8% on a year before and 4% from the second quarter.
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