International Airlines Share News (IAG)

LONDON (Alliance News) - UK and European equity markets closed higher Wednesday, spurred by hopes of a new deal between Greece and its creditors, but comments from Greek Prime Minister Alexis Tsipras reaffirming his support for a 'No' vote in the upcoming referendum knocked stocks in the final hour of trade.

Speaking in an address to the nation, Tsipras vowed to press ahead with the referendum on bailout terms on Sunday and once again urged the Greek people to vote 'no' and to secure a viable and fairer deal. Tsipras also said that anyone who says a 'no' vote in Sunday's referendum would mean a Greek exit from the eurozone is "telling lies".

He added that Greece remains at the negotiating table and better proposals have been tabled since the announcement of the referendum. Deposits, salaries and pensions will not be lost, Tsipras said.

The Prime Minister's speech came after officials from Greece and the EU confirmed that the Greek government sent a new proposal on its bailout accompanied by a letter from Tsipras to the country's creditors, which said Greece is prepared to accept the majority of its creditors' bailout demands.

The Greek official emphasized that the government has "not fully accepted the proposal of the institutions" overseeing the country's bailout - the European Commission, the European Central Bank and the International Monetary Fund.

However, German Finance Minister Wolfgang Schaeuble rejected new proposals from Athens, saying any new rescue programme would be based on a fresh set of conditions. Schaeuble said Athens' second bailout and the offer from its creditors had expired on Tuesday and that conditions for any new programme would be "rather different".

The Greek saga will continue Wednesday afternoon, with eurozone finance ministers scheduled to meet at 1630 BST.

The FTSE 100 closed up 1.3% at 6,608.59, the FTSE 250 ended up 1.1% at 17,717.05 and the AIM All-Share closed up 0.8% at 761.92.

In Europe, both the French CAC 40 and the German DAX 30 closed up 1.9%.

On Wall Street at the London close all three US indices, the DJIA, the Nasdaq Composite and the S&P 500, closed up 0.7%.

US indices were also supported by strong economic data. The US manufacturing sector grew at a faster than expected pace according to a report from the Institute for Supply Management. The ISM said its purchasing managers index rose to 53.5 in June from 52.8 in May, with a reading above 50 indicating an increase in manufacturing activity. Economists had expected the index to edge up to 53.2.

Payroll processor ADP released a report which showed private sector employment in the US increased by more than expected in June. ADP said employment in the private sector jumped by 237,000 jobs in June following an upwardly revised increase of 203,000 jobs in May. Economists had expected an increase of about 220,000 jobs. The better than expected private sector job growth in June was the strongest since an increase of 275,000 jobs last December.

The pound failed to recover from its early fall against other major indices as the UK manufacturing sector expanded at the slowest pace in more than two years in June, as production and new orders logged slower growth, survey results from Markit Economics showed.

The seasonally adjusted Markit/Chartered Institute of Procurement & Supply Purchasing Manager's Index dropped unexpectedly to 51.4 in June from revised 51.9 in May. Economists had expected the index to rise to 52.5 from May's initially estimated value of 52.

At the close of equity trade in Europe, the pound traded the dollar at USD1.5632, and the euro at EUR1.4096.

The independent Airports Commission gave its backing to the expansion of Heathrow airport after concluding that the move would deliver the most economic benefits to the UK, a move supported by trade bodies who called on the British government to act quickly to implement the recommendations.

The move was welcomed by trade bodies and by budget carrier easyJet, though Irish budget carrier Ryanair Holdings said the proposal does not go far enough and will not solve the capacity squeeze in the south east, while Gatwick Airport's chief dug in his heels and said his airport remains in the race.

EasyJet closed up 2.4% and Ryanair ended up 4.0%. TUI Group closed up 3.0%, while International Consolidated Airlines Group closed up 1.5%.

In the FTSE 250, Serco Group closed as the best performer, up 6.5% after the outsourcer said trading in the first half of 2015 has been slightly better than anticipated, though it maintained its expectations for the full year and still forecasts a fall in revenue and flat trading profit in the half-year period. Shore Capital and Liberum both retain a Hold stance on the company, agreeing that Serco Group is trading "a little better".

Betfair Group closed up 4.1% after Morgan Stanley lifted the bookmaker's price target to 3,000 pence from 2,030p, keeping an Overweight stance. The company ended at 2,504.48p.

Sirius Minerals closed up 61% after the North York Moors National Park Authority late Tuesday gave the green light for Sirius Minerals to build the world's largest potash mine in the Yorkshire park near Whitby. Sirius Minerals shares resumed trading Wednesday after the Park Authority held a special committee meeting Tuesday to deliberate on Sirius's application to build a potash mine under the North York Moors National Park, which has now been approved.

In the economic calendar Thursday, there is UK Halifax house prices at 0800 BST ahead of UK construction purchasing managers' index at 0930 BST and eurozone producer price index at 1000 BST. At 1230 BST is the release of the European Central Bank's policy meeting accounts. The focus will be on the US for the rest of the afternoon, with the release of nonfarm payrolls, unemployment and earnings data all at 1330 BST and factory orders at 1500 BST.

In the corporate calendar, there are trading statements from housebuilder Persimmon and recruitment and outsourcing company Harvey Nash Group. There is also half-year results from performance materials company Low & Bonar.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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