Last checked at LONDON (Alliance News) - UK stocks are lower Friday midday, as concerns about Greece continue to weigh on investor sentiment across Europe and the US, with Wall Street called to open mostly flat.
The FTSE 100 is down 0.6% at 6,765.20, and the FTSE 250 is down 0.6% at 17,843.48. The AIM All-Share is down 0.2% at 770.56.
In Europe, the CAC 40 in Paris is down 0.1% and the DAX 30 in Frankfurt is down 0.4%.
US futures point the DJIA to open up 0.1%, while the S&P 500 and the Nasdaq 100 are both called to open flat.
Analysts say the US futures are reflecting investor befuddlement over Greek debt talks and fears that another one-day crash in Chinese stocks could spread further afield.
The Shanghai Composite closed down 7.4% Friday, as the securities regulator tightens margin financing. The Securities Regulatory Commission published draft rules earlier this month that would cap the size of the country's margin trading and short selling for the first time, at four times a brokerage's net capital.
"With the Chinese economy stalling, the 100% rally in Chinese stocks has never been based on fundamentals but was a trade on the government’s economic stimulus," says CMC Markets analyst Jasper Lawler. "But with the government introducing new margin rules, the message that investors have taken is that the government thinks the rally has turned into a bubble and they want it deflated."
In Hong Kong, the Hang Seng index ended down 1.8% Friday.
The US Reuters/Michigan Consumer Sentiment Index is due at 1500 BST. CMC Market's Lawler says it is expected to confirm the preliminary result of 94.6, higher than the 90.7 registered in May. "Another good number following the strong uptick in consumer spending reported on Thursday would firmly put an [US interest] rate hike back on the table for September’s meeting of the Federal Reserve," he says.
Meanwhile, the Greek debt negotiations are expected to continue on Saturday, as there is a new Eurogroup meeting scheduled for that day at 1600 BST.
"The Eurogroup will continue the discussion on the ongoing negotiations between Greek authorities and [creditor] institutions," said the Eurogroup in an announcement.
A decision has to materialize on Saturday, Eurogroup chief and Dutch Finance Minister Jeroen Dijsselbloem said in The Hague, warning that if a good reform package is not on the table by then it will be "too late".
Greece's current bailout expires on Tuesday, when it is also due to pay a loan instalment to the International Monetary Fund.
A Greek minister said that Greece may be forced to call snap elections if creditors do not budge on their demands. "Every time [Greece] goes to find a solution, they come and tell you, 'bring some pensioners so that we execute them'," Labour Minister Panos Skourletis told Greek TV Mega of Athens' long-running negotiations with its creditors.
Greece may end up with a "recourse to elections" if creditor institutions - the European Commission, the European Central Bank and the International Monetary Fund - continue to insist on terms outside the government's mandate from the public, Skourletis said.
In London, Tesco is the best performer in a handful of risers in the FTSE 100, up 3.3%. The UK's largest supermarket by market capitalisation reported a 1.3% drop in group like-for-like sales excluding fuel in the 13 weeks to May 30, as combined UK and Republic of Ireland like-for-like sales declined 1.5% and international like-for-likes fell 1.0%.
However, this was an improvement on the fourth quarter of the last financial year which saw like-for-like sales fall 1.8% on a group basis, 2.0% in the UK and Ireland and 1.6% internationally. The result also was better than first quarter a year earlier, when sales on the same basis fell 3.4% for the group, 4.1% in the UK and Ireland, and 1.7% internationally, and it beat market consensus of a 1.6% to 3.0% decline.
The positive results have lifted fellow supermarkets J Sainsbury, up 1.7%, and Wm Morrison Supermarkets, up 1.3%.
Chip maker ARM Holdings is down 3.2% after Bernstein downgraded it to Underperform from Market-Perform. Also down is Primark-owner Associated British Foods, falling 1.5% after being downgraded by Numis to Reduce from Hold.
In the FTSE 250, Fidelity China Special Situations is the worst performer, down 7.1%, hit by the fall in Chinese stock markets. Just behind is Evraz, which is down 3.7%, after it priced a four-year RUB15 billion bond at a coupon rate of 12.95% per year and said it plans to use proceeds from the bond issue to refinance its existing debt.
In the AIM All-Share, Tissue Regenix Group is up 7.8%. The company said it has gained further coverage approval for its wound-care product DermaPure under the US national social insurance programme Medicare, securing approval from the Noridian Healthcare Solutions and Palmetto GBA Medicare administrators for reimbursement. This means that DermaPure is now available to 20.7 million Medicare beneficiaries across 30 states, Tissue Regenix said.
Trading in the opposite direction is Resource Holding Management, down 26%. The company said a subsidiary of PUC Founder Bhd has started a voluntary winding-up process in China. Resource Holding, which holds a 46% stake in PUC Founder, said the latter's RedHot Media International (Shanghai) Co business has started the process. Following completion of the winding up, the subsidiary will stop operations and be closed down.
Menawhile, Zanaga Iron Ore Co is down 9.1%. The company said its pretax loss widened significantly in 2014 due to a writedown booked on its project in the Republic of Congo. Zanaga said its pretax loss for the year was USD164.8 million, substantially wider than the USD6.7 million loss the company posted in 2014.
Still in the UK economic calendar Friday, Bank of England Governor Mark Carney will be making a speech at the Inclusive Capitalism Annual conference in London at 1545 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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5 Aug 2014 05:24