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LONDON (Alliance News) - UK stock indices are seeing mixed trading mid-morning Wednesday, with the heavy fall in the Hong Kong and Shanghai stock markets affecting Asia-exposed stocks in London and commodity prices.
Meanwhile, Barclays is one of the biggest gainers in the FTSE 100, up 3.4% after its board decided to replace Chief Executive Antony Jenkins and said John McFarlane, its newly appointed chairman, will act in an executive capacity until a successor is found, as the banking group looks to accelerate its restructuring and improve returns to shareholders.
According to the statement, the non-executive directors led by Michael Rake, who is deputy chairman and senior independent director, concluded that new leadership is required to "accelerate the pace of execution going forward".
The FTSE 100 trades up 0.5% at 6,461.14, the FTSE 250 is down 0.1% at 17,204.09 and the AIM All-Share index is down 0.5% at 746.56.
In Europe, the CAC 40 in Paris is trading up 0.7% and the DAX 30 in Frankfurt is up 0.3%.
In Asia, the Japanese Nikkei ended down 3.1%, while the Hang Seng closed down 5.8% and the Shanghai Composite fell 5.9%. Around half of China's roughly 2,800 listed firms announced trading halts as increasing signs of deleveraging drove down stocks across the board. New measures by the Chinese central bank have so far failed to arrest the recent decline in Chinese stock prices.
"Confidence in the local Chinese equity market has been shattered and is unlikely to come back to previous levels any time soon. To stop trading is serious and from investors the most-hated market intervention," says Heinz Rüttimann, strategy research analyst, at Julius Baer.
The sharp falls in Asian equity markets have hit London-listed stocks with exposure to the region. HSBC Holdings, is the biggest decliner in the FTSE 100, down 1.4%, Standard Chartered, which earlier this month announced the launch of its SC China Value Index, is also down 1.4%. Fidelity China Specialist Situations is the biggest decliner in the FTSE 250 by some distance, trading down 8.9%.
Concerns about China had led to panic selling in metals markets on Tuesday, but FTSE 100 miners are bouncing back from their falls. Glencore, which hit an all-time low on Tuesday, trades up 3.7% and Anglo American is up 2.1%.
Greece's debt problems remains a cause for concern as eurozone leaders set Sunday to be the final deadline for the crisis struck country to submit a new plan for financial assistance.
At a press conference on Tuesday, European Council President Donald Tusk said the final deadline for Greece will end this week. "The stark reality is that we have only five days left."
"Until now, I have avoided talking about deadlines. But tonight I have to say loud and clear that the final deadline ends this week," Tusk added. The 28 heads of state or government of the EU will meet on July 12 to reach a final agreement.
Greek Prime Minister Alexis Tsipras said Wednesday Athens is working to flesh out a proposal submitted Tuesday at a eurozone summit. He expresses confidence that "in the next few days, we will be able to meet the obligations of this crucial time in the best interest of Greece and also of the eurozone," pointing to Athens' promise to "bring forward concrete proposals in detail."
Connor Campbell, financial analyst at Spreadex, says that the real issue for Greece at the moment is its banks, which remain closed and subject to capital controls.
"Without a deal the [European Central Bank] will cease its liquidity aid to the institutions, something that is barely patching over the cracks as it is, and for real, physical Greek people (all too often forgotten in this saga) the spectre of further capital controls, or worse, looms large over the country," Campbell says.
"In reaction to all this madness the eurozone indices opened marginally in the green; however given how poorly the region has been able to hold onto any gains in the last few days, it is unsurprising that this growth has already begun to disappear," he adds.
Publisher Pearson trades down 1.3% after Berenberg cut it to Sell from Hold. The investment bank said the company continues to face headwinds in its US education business, which generates a sizeable chunk of the its profits.
FTSE 250-listed property business Daejan Holdings is the biggest mid-cap gainer, up 4.3% after it said that pretax profit increased by two-thirds in its last financial year, as income from investment property rose and it recorded net valuation gains on investment property. The company said pretax profit increased to GBP271.9 million in the year ended March 31, compared with GBP164.5 million in the prior year.
The UK Budget will be outlined by Chancellor George Osborne at 1230 BST. Osborne is set to include a pledge to re-examine the banking levy, a crackdown on non-domiciles, and a relaxation of Sunday trading hours, along with controversial plans to slash around GBP12 billion from the UK's welfare budget and a populist move to raise the inheritance tax threshold.
Osborne is understood to have rebuffed calls from senior Conservatives to cut the top rate of income tax in the UK to 40% from 45%, the Financial Times reported.
Also ahead in the economic calendar, US EIA Crude Oil stocks is at 1530 BST. After the close of European equity markets, the US Federal Reserve will release its minutes from its latest policy meeting at 1900 BST.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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