Fletcher King Share News (FLK)

LONDON (Alliance News) - Shares prices are lower in London Tuesday midday after Bank of England Governor Mark Carney said the moment at which UK interest rates may begin to rise is moving closer.

The blue-chip FTSE 100 index is down 0.3% at 6,719.30 points, while the mid-cap FTSE 250 is down 0.8% at 17,567.58. The AIM All-Share is down 0.1% at 751.94.

In Europe, the CAC 40 is Paris is down 0.2%, while the DAX 30 in Frankfurt is up 0.5%.

Speaking in front of the Treasury Committee in the House of Commons on Tuesday morning, BoE Governor Mark Carney gave the pound a lift, while pushing down equities, after suggesting that the central bank soon could start to normalise UK monetary policy.

"The point at which interest rates may begin to rise is moving closer, given the performance of the economy," Carney said.

The pound jumped to USD1.5594 following Carney's remarks from USD1.5475 prior.

Earlier this month, the BoE kept its key interest rate at its record low level and the size of its quantitative easing unchanged, as policymakers examined risks emanating from the Greek crisis. The Monetary Policy Committee decided to hold the key bank rate at 0.5% and the size of asset purchases at GBP375 billion. The rate has been at its historic low since March 2009. The previous change in quantitative easing was an increase of GBP50 billion in July 2012.

Meanwhile, UK inflation returned to zero in June, data published by the Office for National Statistics showed. Consumer prices remained flat on a yearly basis in June as expected by economists after rising 0.1% in May. The consumer price index remained flat on a monthly basis as well, in contrast to a 0.2% increase in May and a 0.1% rise forecast by economists.

"Continuing falls in food and clothing have kept a lid on CPI growth in the UK, and with oil markets looking ripe for fresh falls, the prospect of more months of negative inflation are also in sight, which will complicate matters for the Bank of England. The rationale for a rate rise is still looking flimsy, especially given the Fed's unwillingness to move on the subject," says Chris Beauchamp, senior market analyst at IG.

Governor Carney also spoke about the deal reached Monday between Greece and its creditors.

"Carney...captured the tone of Europe this morning, stating that there are 'big execution risks' involved in [the] Greek deal and that ‘Herculean efforts’ were required", writes Spreadex analyst Connor Campbell.

US stocks are called to open mostly lower, as investors fear that the debt deal reached on Monday may not be approved by the Greek parliament. The DJIA is pointed down 0.1%, the S&P down 0.1%, and the Nasdaq 100 up 0.1%.

"Optimism over the agreement over Greece’s next bailout that ran through US markets on Monday looks like it will taper off at Tuesday’s open with only the Nasdaq to open higher," writes CMC Markets analyst Jasper Lawler. "The concern that the deal may not pass Greek parliament and that its harsh terms will just bring Greece to the brink again at a later date is weighing on market sentiment."

Greece's Prime Minister Alexis Tsipras faces a showdown with members of his Syriza party and coalition partners, who are angered by his capitulation to European demands for the most sweeping austerity package in the history of the common currency. Tsipras' coalition is in disarray over a preliminary deal brokered in Brussels that keeps the beleaguered Greek economy in the eurozone but bypasses many of the campaign pledges on which Syriza swept to power.

Before formal negotiations can begin on up to EUR86 billion in bailout funds, the Greek parliament must agree to legislate on a raft of measures that are even tougher than those rejected by more than 61% of Greeks in a July 5 referendum.

Crude oil prices are taking a hit after Iran and foreign ministers from six major world powers reached a comprehensive agreement to alleviate concerns over Tehran's controversial nuclear programme. Curbs in Iran's nuclear capacity, together with intrusive international inspections, are aimed at preventing Iran from misusing plutonium waste or uranium reactor fuel for making warheads.

In return, US and EU embargoes against Iran's oil exports and its international banking ties will be lifted. The prospects of an even greater supply of oil onto the market has sent crude oil prices lower, with Brent oil now trading at USD56.75 a barrel and US benchmark West Texas Intermediate at USD51.13 a barrel.

On the London Stock Exchange, Sky is the biggest gainer in the FTSE 100, up 3.3%, after Deutsche Bank upgraded it to Buy from Hold. The bank says it believes the broadcaster is best positioned in Europe to capitalise from the acceleration in online video growth. However, ITV is down 1.2% after Deutsche cut it to Sell from Hold.

International Personal Finance is the best performer in the FTSE 250, up 3.1%. The lender's shares dived 25% on Monday after it warned there could be financial consequences for it as a result of potential legal changes in Poland that could result in a cap that covers a broader definition of non-interest costs than previously suggested.

In the AIM All-Share index, Iofina is up 11%. The iodine and iodine speciality chemical derivatives producer said crystalline iodine production hit record levels in the first half of 2015 which topped off an overall "strong performance", but warned iodine prices will remain subdued for the remainder of 2015.

Commercial property manager Fletcher King is down 17% as it posted lower pretax profit and revenue for the year to the end of April, saying that while its results came in line with its expectations, there were "a little disappointing". The weaker results prompted the company to cut its final dividend payout to 0.75 pence per share, from 2.25p a year earlier.

Still ahead in the economic calendar Tuesday is US retail sales at 1330 BST.

By Daniel Ruiz; danielruiz@alliancenews.com

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