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LONDON (Alliance News) - London share prices are set to open lower Friday, with investors focusing on Markit Purchasing Manager's Index readings from several European countries as they continue to ponder the potential outcomes of the Greek referendum on Sunday.
Activity is likely to be subdued with US markets closed for the Independence Day holiday.
IG says futures indicate the FTSE 100 to open 13 points lower at 6,617.00. The index closed up 0.3% at 6,630.47.
Greece's Prime Minister Alexis Tsipras on Thursday urged Greeks to preserve "national unity" in the face of "temporary" difficulties, while the International Monetary Fund said Athens would be dependent upon bailout aid for years to come. Tsipras has urged Greeks to opt for "no" on Sunday when they vote in a referendum he called on whether the country should accept reforms demanded by its creditors.
"The next day we will all be one in our efforts for our country to overcome, as soon as possible, this economic crisis," he said in a Defence Ministry speech.
But the IMF warned in a 23-page debt assessment that Greece's problems are far from over, arguing that Athens will need a further EUR50 billion in funding to get through the end of 2018.
"Very significant changes in policies and in the outlook since early this year have resulted in a substantial increase in financing needs," the IMF said in the document, dated June 26, which has not yet been formally approved.
A "weak reform effort" had rendered the country's debt unsustainable, the Washington-based fund added.
Jeroen Dijsselbloem, the head of the eurogroup, warned that it would be "extremely difficult" to keep Greece in the eurozone if the country votes "no".
"The Greek government gives the impression that the future of their country after a 'no' vote will be simpler. That is not being honest with the Greek voters," Dijsselbloem told parliament in the Netherlands, where he is the finance minister.
Opinion polls published this week suggest the Greek public is split. A GPO poll conducted for French bank BNP Paribas and reported in Greek media showed 47.1% of people planned to vote "yes" or were likely to, while 43.2% said they would vote against it or were leaning toward "no".
"Post-referendum looks pretty bleak for Greece either way but a 'No' vote carries a lot more short term risk," says CMC Markets UK analyst Jasper Lawler.
"Evidence from the past five months is surely enough to show that muddling out-of-touch bureaucrats in Athens and the Eurozone will not reach a deal before there's a banking crisis. Without the European Central Bank?s emergency funding, estimates are that Greece?s banks are days from insolvency, even with only EUR60 being withdrawn a day under capital controls," Lawler writes.
In Asia on Friday, the Japanese Nikkei 225 closed up 0.1%. Meanwhile in China, the Hang Seng trades down 0.3% and the Shanghai Composite is down 4.5%.
China's securities market regulator said late Thursday it has opened an investigation into suspected market manipulation as stocks opened lower again, having lost a quarter of their value in the past month. The China Securities Regulatory Commission said it has set up a team to look for "clues of illegal manipulation across markets" and irregularities between securities and futures trading.
The services sector in China continued to expand in June, but at a slower pace, the latest PMI from HSBC Bank showed on Friday, with a PMI score of 51.8. That's down from 53.5 in May, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. The composite index came in at 50.6, down from 51.2 in the previous month and touching a 13-month low.
Wall Street ended flat to lower Thursday, with the DJIA down 0.2%, the Nasdaq Composite down 0.1% and the S&P 500 flat. US stocks are closed Friday for the Independence Day holiday.
Investors will also focus on Markit services and composite PMI readings from several European countries. France's and Germany's PMI readings are due at 0850 BST and 0855 BST, respectively, while the same for the Eurozone and the UK are due at 0900 BST and 0930, respectively.
"In the UK the June PMI?s have so far been mixed," says Lloyds Bank. "The manufacturing index, which was released on Wednesday, fell back to a weaker-than-expected 51.4, which was its lowest reading since April 2013. On the other hand, the construction PMI, published yesterday, rose for the second month in a row to a stronger-than-expected 58.1."
"While last month?s services [UK] PMI dipped sharply to a four-month low of 56.5 which raises some concerns about Q2 output, several factors suggest that underlying activity remains strong. Specifically, the business expectations balance," Lloyds says. "We look for a rise to 57.3."
The Royal Bank of Scotland Group could face a penalty of as much as USD13 billion depending on the outcome of a US mortgage securities lawsuit, Bloomberg News reported on Thursday.
According to the report the US Federal Housing Finance Agency, which is suing on behalf of Fannie Mae and Freddie Mac, estimated that amount in a court filing in a related case.
JP Morgan upgrades BP to Overweight from Neutral, according to traders, while S&P Capital upgrades the oil giant to Hold from Sell. Barclays lifts the the company's price target to 600 pence from 560p. Meanwhile, Goldman Sachs raises its price target on BP to 376p from 364p.
Changes from the brokers come after BP on Thursday said it has reached an agreement in principle to settle all US federal and state claims arising from the Deepwater Horizon spill in the Gulf of Mexico in 2010. BP was the biggest blue-chip raiser Thursday ending up 4.5%.
Also in the economic calendar Friday, Eurozone's retail sales are expected at 1000 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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