LONDON (Alliance News) - UK shares are seen opening a touch higher Monday, despite ongoing concerns about the state of Greece's finance, after a letter written by Greek Prime Minister Alexis Tsipras emerged over the weekend warning the International Monetary Fund that the country could not pay its debt obligation without EU aid.
Tsipras wrote to International Monetary Fund chief Christine Lagarde warning that last week's EUR750 million IMF repayment would be missed unless the European Central Bank immediately raised its curbs on Greece's ability to issue short-term debt, the Financial Times reported Monday.
The letter, first reported by the Greek daily Kathimerini but which the FT said it had independently confirmed, raises questions about how close Athens is to bankruptcy with the next EUR300 million IMF payment due on June 5, according to the British newspaper.
Athens ultimately made the payment without financial assistance from the bloc but only by tapping a rarely used emergency account Greece holds at the fund.
"The worrying thing is that despite this, Tsipras has stressed that they will not 'back down on pension and labour issues', an area where its creditors appear to hold a similar stance," says Craig Erlam, senior market analyst at Oanda.
"If neither side changes its stance then it would appear Greece is only a couple of weeks from defaulting on its debt, and yet the markets seem rather unfazed. Maybe investors have become immune to all this tough talk and still think Tsipras will cave or resign, enabling a late deal to be done. If we remain in this position as we near the 5 June, I doubt investors will be so confident," Erlam adds.
IG says futures indicates the FTSE 100 to open 6.5 points higher Monday at 6,967.0. The index closed down 0.2% at 6,960.49 on Friday after a series of weak economic data releases in the US.
On Wall Street on Friday, the DJIA and the S&P 500 both ended up 0.1% and the Nasdaq Composite closed down 0.1%.
In Asia on Monday, the Japanese Nikkei closed up 0.8%, the Hang Seng trades down 1.2% and the Shanghai Composite down 0.2%.
Babcock International Group reported strong growth in pretax profit for its last financial year as revenue was buoyed by major new contract wins and acquisitions.
The engineering support services company focused on infrastructure and big projects reported a pretax profit of GBP313.1 million for the year to end-March, up from GBP218.8 million a year earlier as its own revenue rose to GBP4.00 billion from GBP3.32 billion. Revenue including its share of joint venture and associates' revenue rose to GBP4.50 billion, from GBP3.55 billion.
Its closely-watched pretax profit, which also includes profit from joint ventures and associates but excludes exceptional items and amortisation of acquired intangibles rose to GBP417.7 million from GBP316.1 million.
Elsewhere in the UK corporate calendar, there were full-year results from FTSE 250 outsourcer Mitie Group, imaging technology company e2v Technologies and food company Cranswick
In the economic calendar there is German Bundesbank monthly report at 1200 BST, and the US National Association of Home Builders housing market index at 1500 BST.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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