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LONDON (Alliance News) - The FTSE 100 has given up most of its early gains Wednesday, having risen strongly at the open on reports that the Greek government will ask for an extension of its loan agreement with the eurozone, while the pound surged higher on a strong UK jobs report.
Greece is set to submit a request to eurozone finance ministers on Wednesday for a six-month extension to its loan agreement with its creditors, the government said, following days of standoff between Athens and the Eurogroup over the country's bailout.
"Let's wait today for the request for an extension of the loan contract to be submitted by the finance minister," government spokesman Gabriel Sakellarides told private Greek broadcaster ANT1. "We are coming to the table to find a solution. We want to believe that we are on a good path and all the deliberations will find a common ground."
The focus now is on the European Central Bank's decision Wednesday on Greek emergency liquidity assistance.
At mid-morning, the FTSE 100 is up 0.1% at 6,901.39, having touched a new 15-year intraday high of 6,921.32 at the open Wednesday, after also achieving its highest close in 15 years on Tuesday. The blue-chip index remains short of its record high of 6,950.60 points, set in December 1999.
Meanwhile, the FTSE 250 continues at new record highs, trading up 0.7% at 16,999.65. The AIM All-Share is up 0.1% at 707.51.
European indices also are performing well, with the CAC 40 trading up 0.7% and the DAX 30 up 0.3%.
The UK unemployment rate fell unexpectedly in the October to December period, data from the Office for National Statistics showed. The jobless rate fell to 5.7% during the October to December period from 5.8% in the September to November period. Economists had forecast the rate to remain at 5.8%. Average earnings rose 2.1% annually after the 1.8% increase in November, more than the 1.7% consensus estimate. However average earnings excluding bonuses grew 1.7% in the same period, down on the forecast and November's figure of a 1.8% growth.
"Overall this is a solid report that will give the Bank of England faith that it is pursuing the correct path by not being too worried about the prospect of deflation. This report is pound positive even if there are a couple of points that are worth noting," says Kathleen Brooks, research director at Forex.com, citing the number of people who are economically inactive and the influence of January bonuses on the wage figures.
The pound rose against other major currencies in response to the report and traded at USD1.5433 and EUR1.3549 at mid-morning.
Meanwhile, policy-makers for the Bank of England unanimously decided to hold the key interest rate at a record low 0.50% and the asset purchase programme unchanged at GBP375 billion. All nine committee members agreed that it was appropriate to leave the stance of monetary policy unchanged at this meeting, the minutes of the monetary policy committee meeting held on February 4 and 5 showed.
"As expected, the Bank of England voted unanimously to keep interest rates unchanged, although there does appear to be differences over when it will be necessary to raise them," says Dennis de Jong, managing director at UFX.com. "While record low inflation reads like great news for consumers, it's a real threat to businesses and the wider health of the economy. But unlike in the Eurozone, where there are falling prices and flagging economic performance, any UK deflation should be short-lived and therefore an interest rate rise looks an increasingly likely measure, perhaps as early as later this year."
Coca-Cola HBG is the biggest faller in the FTSE 100, down 3.5%, after it cited a "challenging", volatile year ahead, having reported a drop in 2014 profit due to adverse currency movements and volume weakness in key emerging markets Russia and Ukraine.
The world's second largest bottler of Coca-Cola products reported an 11.4% drop in fourth quarter comparable net profit to EUR30.4 million, from EUR34.3 million last year. Total group sales volume increased 0.8% in the quarter to 485.1 million unit cases, following a 4.8% decline in the third quarter, and 3.9% in the first nine months of the year, after it saw a somewhat better performance in Russia, Nigeria, Poland, Austria and Greece.
Galliford Try is one of the biggest gainers in the FTSE 250, up 3.1%. The construction and housebuilding company said its pretax profit for the six months to the end of December was GBP42.5 million, up 12% from the GBP38.1 million posted a year earlier. The group also hiked its interim dividend on the back of the rise in profit, raising it to 22 pence per share from 15 pence per share last year.
Balfour Beatty, up 2.4%, is another top mid-cap performer. The construction and support services company said it has reached financial close and completed the acquisition of the GBP352 million Gwynt y Môr offshore transmission project. Balfour said it will jointly own the project with infrastructure investor Equitix. Balfour will invest GBP28 million of equity in the project, representing 60% of the equity required.
WH Smith, down 1.5%, is one of the worst performers in the FTSE 250, after being downgraded to Equal-Weight from Overweight by Barclays. TSB Banking Group, down 1.6%, is another big faller after it was downgraded to Hold from Buy by Jefferies.
Still ahead in the economic calendar is US producer prices at 1330 GMT and industrial production at 1415 GMT as well. After the close of London equity markets, the US Federal Reserve will release its minutes from its previous policy meeting at 1900 GMT.
US futures point to a flat opening. The DJIA and the Nasdaq Composite are indicated slightly higher, while the S&P 500 is pointed fractionally lower.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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