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LONDON (Alliance News) - UK stocks ended mixed Tuesday after a volatile session, as Greece responded to a last-minute offer from its international creditors with a request for a two-year bailout and debt restructuring.
The FTSE 100 ended down 1.5% at 6,520.98, having reached an intraday high of 6,605.61 points. The index lost 6.2% during the month of June. Despite its post-election rally, the index lost 3.7% in the second quarter and is down 0.3% in first six months of 2015.
The FTSE 250 ended Tuesday flat at 17,531.50, while the AIM All-Share ended up 0.1% at 755.68.
In Europe, major indices also closed in the red after trading higher earlier in the session. The CAC 40 ended down 1.2%, and the DAX 30 closed down 0.9%.
"Volatility will remain high in Europe with both the Greek government and the institutions puzzling investors with their interpretation of the events," said Markus Allenspach, head of fixed income research at Julius Baer.
The Greek government has submitted a request for a two-year bailout with the European Stability Mechanism to fully cover its financing needs, along with debt restructuring, the state-backed ANA-MPA agency reported citing a statement from the office of the Prime Minister Alexis Tsipras.
"From the first we made clear that the decision to call a referendum was not the end but the continuation of a negotiation seeking better terms for the Greek people," the report said. This would imply the country is seeking a third rescue as its second bailout programme ends on Tuesday.
"Greece remains on the negotiating table," the prime minister's office said in a statement, adding that it was working towards a "sustainable agreement within the euro".
Greece's Finance Minister Yanis Varoufakis said the country will not make the EUR1.6 billion payment to the International Monetary Fund due on Tuesday. Varoufakis answered "no" when he was asked in Athens whether the debt repayment would be made, according to Skai TV.
Failing to pay the IMF will not lead to a default, as the lender would describe that Greece is in arrears. Rating agency Standard & Poor's downgraded Greece's rating to CCC- from CCC and said there was a 50% chance the country would leave the euro. Fitch downgraded Greek banks to 'Restricted Default'.
Eurogroup President Jeroen Dijsselbloem wrote on Twitter that an extraordinary eurogroup teleconference has been scheduled for 1800 BST "to discuss [the] official request of Greek government received this afternoon."
Spreadex analyst Connor Campbell believes that whilst in many ways this is an improvement on where the markets were at the start of the day, "the lack of clarity...and the general uncertainty surrounding the entire situation has meant the European markets have struggled to run with any positivity in the way they have done in the past."
The euro suffered against its major counterparts. When the European equity markets closed, the pound was higher against the euro at EUR1.4109, while the euro was lower against the dollar at USD1.1135.
In the US, Wall Street was higher when European equity markets closed, with the Dow Jones Industrial Average up 0.2%, the S&P 500 up 0.3% and the Nasdaq Composite up 0.5%.
US stocks opened significantly higher Tuesday after the Conference Board released a report showing that its consumer confidence index increased by much more than expected in June. The report said the consumer confidence index jumped to 101.4 in June from a downwardly revised 94.6 in May. Economists had expected the index to rise to 97.4 from the 95.4 originally reported for the previous month.
In London, J Sainsbury and Tesco closed down 2.4% and 2.8%, respectively, after the latest grocery market share data was released by Kantar Worldpanel. Tesco and Sainsbury's came in joint second place out of the big four UK supermarkets, behind Wm Morrison Supermarkets, in the Kantar data, both experiencing an annual sales decline of 1.3% in the 12 weeks to June 21.
Sainsbury's sales were GBP4.18 billion, down from GBP4.23 billion a year before, as its market share declined to 16.5% from 16.7%, while Tesco sales fell to GBP7.24 billion from GBP7.34 billion, as its market share dropped to 28.6% from 28.9%.
Morrisons sales rose 0.6% to GBP2.79 billion in the period from GBP2.77 billion in the same period a year earlier, as its market share increased to 11.0% from 10.9%. Despite the relatively good news, Morrisons shares ended down 0.7%
Hikma Pharmaceuticals was the best blue-chip performer, up 2.5%. The pharmaceutical company is among bidders for Boehringer Ingelheim GmbH's Roxane Labs business in the US, Bloomberg reported citing people familiar with the matter.
The report said that other potential buyers for the generic pharmaceutical unit, which may fetch as much as EUR2 billion or USD2.2 billion, include Mallinckrodt and Perrigo Co. A decision on the winner could be made within weeks, though the German drugmaker may still choose to keep the asset.
In the FTSE 250, Home Retail Group closed up 4.1% after receiving an upgrade to Overweight from Equal-Weight by Morgan Stanley.
Northgate ended down 7.0%. The commercial light vehicle rental company said pretax profit surged in its 2015 financial year as revenue rose across both hire and sale business, prompting the company to hike its dividend payout by nearly half.
However, N+1 Singer said it retains its Hold recommendation due to currency headwinds and depreciation, while Numis downgraded the stock to Hold from Add, raising its price target to 640p from 612p. Though saying Northgate results were "impressive", Numis also said forex headwinds and depreciation as reasons to be cautious.
In the corporate calendar Wednesday, Serco Group, Tullow Oil and Anite issue trading statements while Greene King and Better Capital PCC release full-year results. Topps Tiles provides a third-quarter interim management statement.
In the economic calendar, Markit manufacturing Purchasing Managers' indices for Italy, France, Germany and the eurozone are due at 0845 BST, 0850 BST, 0855 BST and 0900 BST, respectively. UK Markit manufacturing PMI is set for 0930 BST, while the UK financial stability report is due at 1030 BST. In the US, ADP employment change is due at 1315 BST, while ISM manufacturing PMI is at 1500 BST and EIA crude oil stocks at 1530 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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