LONDON (Alliance News) - UK shares are set to open lower Monday, after a weekend of negotiations between eurozone leaders and Greece failed to produce an agreement of its debt, while the US Federal Reserve chair said it is likely to start lifting US interest rates in 2015.
Eurozone leaders were struggling early Monday to clinch a new bailout agreement with near-bankrupt Greece, despite almost 15 hours of talks at a summit marred by a threat to have the country take a "time-out" from the eurozone.
"EuroSummit intermission for final consultations," Maltese Prime Minister Joseph Muscat wrote on Twitter Monday morning. The eurozone is in a race against time to avoid a default in Greece, which has been cut off from bailout aid, has fallen into arrears to the International Monetary Fund and is now at risk of losing access to emergency support from the European Central Bank.
Sunday had been set as the deadline to reach a bankruptcy-averting agreement, one week before Athens owes a decisive EUR3.5 billion debt repayment to the ECB. The country also owes an IMF repayment of almost EUR500 million on Monday. It already missed a payment of EUR1.5 billion to the Washington-based fund on June 30.
German Chancellor Angela Merkel was among several leaders who had warned ahead of their summit in Brussels that there would not be an agreement with Greece "at all costs."
The leaders spent the night in Brussels negotiating in different formats over Greece's request for a new three-year bailout - expected to amount to at least EUR74 billion - and the economic reforms that would be required of Athens in return.
Greek Prime Minister Alexis Tsipras was reported to have met at least three times with Merkel and French President Francois Hollande, considered to be the most powerful leaders in the 19-country eurozone. Tsipras was "negotiating toughly to preserve the dignity of the Greek people," an EU official said on condition of anonymity.
At the crux of the negotiations are eurozone doubts about whether Athens can be trusted to follow through on the reform promises it is making to get the new bailout.
The finance ministers deemed that those reforms need to be "seriously strengthened" and in their four-page document suggested a long list of economic measures that Greece would have to start pursuing before bailout negotiations start, including legislative action on some measures by Wednesday.
IG says futures indicate the FTSE 100 to open 20 points lower at 6,654.30. The index closed up 1.4% at 6,673.38 on Friday and up 1.3% for the whole week.
In Asia on Monday, the Japanese Nikkei 225 trades up 1.7%. Meanwhile, the Hang Seng is up 0.7% and the Shanghai Composite is trading up 3.7%.
Wall Street ended higher Friday. The DJIA and the S&P 500 ended both up 1.2% and the Nasdaq Composite closed up 1.5%.
The US central bank is likely to begin tightening its benchmark interest rate in 2015 after seven years of unprecedented slack monetary policy, Federal Reserve Chair Janet Yellen said Friday.
"Based on my outlook, I expect that it will be appropriate at some point later this year to take the first step to raise the Federal Funds rate and thus begin normalizing monetary policy," Yellen said, according to the text of a speech she gave in Cleveland, Ohio.
"But I want to emphasize that the course of the economy and inflation remains highly uncertain, and unanticipated developments could delay or accelerate this first step."
The Fed "will be watching carefully to see if there is continued improvement in labour market conditions, and we will need to be reasonably confident that inflation will move back to 2% in the next few years," she said. The Fed is scheduled to issue its next statement on the economy and monetary policy on July 29. Wall Street expectations are for no hikes before autumn.
On the UK corporate front, tens of thousands of businesses seeking compensation in relation to BP's 2010 oil spill in the Gulf of Mexico have filed claims that are yet to be fully processed, according to a Financial Times report on Sunday.
Should the past pattern of payments continue, the report said the cost of the claims to BP will be at least USD2 billion more that it has set aside. The report said that BP declined to comment on the FT's calculations.
Earlier in July, BP reached an USD18.7 billion deal to settle all US federal, state and local government claims arising from the spill.
US chemicals company Platform Specialty Products is set to acquire FTSE 250-listed peer Alent in a USD2.3 billion deal, The Wall Street Journal reported on Sunday.
Citing people familiar with the matter, the newspaper said Platform will pay 503 pence per share for Alent in cash and shares. The price would be at a 49% premium to Alent's closing price on Friday.
In the calendar Monday, Genel Energy and Telit Commications issue trading updates, while Sthree releases half-year results. Collagen Solutions and Conviviality Retail publish full-year results.
In the economic calendar, the Bank of England's Credit Conditions Survey is expected at 0930 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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