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LONDON (Alliance News) - London share prices are set to open lower Monday, after a weekend of negotiations between eurozone leaders and Greece failed to produce an agreement on its debt, while the US Federal Reserve chair said it is likely to start lifting US interest rates in 2015.
On the corporate front, US-based Platform Specialty Products Corp said it has agreed a GBP1.35 billion takeover of FTSE 250-listed chemicals company Alent. Platform Specialty, a chemicals industry consolidation vehicle, said it will pay 503 pence in cash for Alent shares, a premium of around 49% to Alent's closing price of 337.7 pence on Friday.
IG says futures indicate the FTSE 100 to open 34 points lower at 6,639.00. The index closed up 1.4% at 6,673.38 on Friday and up 1.3% for the whole week.
Eurozone leaders were struggling early Monday to clinch a new bailout agreement with near-bankrupt Greece, despite almost 15 hours of talks at a summit marred by a threat to have the country take a "time-out" from the eurozone.
"EuroSummit intermission for final consultations," Maltese Prime Minister Joseph Muscat wrote on Twitter Monday morning. The eurozone is in a race against time to avoid a default in Greece, which has been cut off from bailout aid, has fallen into arrears to the International Monetary Fund and is now at risk of losing access to emergency support from the European Central Bank.
Sunday had been set as the deadline to reach a bankruptcy-averting agreement, one week before Athens owes a decisive EUR3.5 billion debt repayment to the ECB. The country also owes an IMF repayment of almost EUR500 million on Monday. It already missed a payment of EUR1.5 billion to the Washington-based fund on June 30.
German Chancellor Angela Merkel was among several leaders who had warned ahead of their summit in Brussels that there would not be an agreement with Greece "at all costs."
The leaders spent the night in Brussels negotiating in different formats over Greece's request for a new three-year bailout - expected to amount to at least EUR74 billion - and the economic reforms that would be required of Athens in return.
Greek Prime Minister Alexis Tsipras was reported to have met at least three times with Merkel and French President Francois Hollande, considered to be the most powerful leaders in the 19-country eurozone. Tsipras was "negotiating toughly to preserve the dignity of the Greek people," an EU official said on condition of anonymity.
At the crux of the negotiations are eurozone doubts about whether Athens can be trusted to follow through on the reform promises it is making to get the new bailout.
The finance ministers deemed that those reforms need to be "seriously strengthened" and in their four-page document suggested a long list of economic measures that Greece would have to start pursuing before bailout negotiations start, including legislative action on some measures by Wednesday.
In Asia on Monday, the Japanese Nikkei 225 closed up 1.5%. Meanwhile in China, the Hang Seng is up 0.3% and the Shanghai Composite is trading up 3.0%.
China's foreign trade shrank by nearly 7% in the first six months of the year, official figures showed Monday. Between January and June, the value of foreign trade was CNY11.53 trillion, a 6.9% decrease on the same period last year, according to the customs authorities. Exports rose by 0.9% and imports sank by 15.5% over the same six months.
The figures for June were more positive for China compared to the same month last year. They showed a 2.1% rise in exports, more than analysts expected, and a 6.7% decrease in exports, less than analysts had thought.
"Data released in the session saw China?s trade surplus decline but this masks a rise in exports and a smaller decline in imports that demonstrates some economic improvement," writes CMC Markets analyst Jasper Lawler.
Wall Street ended higher Friday. The DJIA and the S&P 500 ended both up 1.2% and the Nasdaq Composite closed up 1.5%.
The US central bank is likely to begin tightening its benchmark interest rate in 2015 after seven years of unprecedented slack monetary policy, Federal Reserve Chair Janet Yellen said Friday.
"Based on my outlook, I expect that it will be appropriate at some point later this year to take the first step to raise the Federal Funds rate and thus begin normalizing monetary policy," Yellen said, according to the text of a speech she gave in Cleveland, Ohio.
"But I want to emphasize that the course of the economy and inflation remains highly uncertain, and unanticipated developments could delay or accelerate this first step."
The Fed "will be watching carefully to see if there is continued improvement in labour market conditions, and we will need to be reasonably confident that inflation will move back to 2% in the next few years," she said. The Fed is scheduled to issue its next statement on the economy and monetary policy on July 29. Wall Street expectations are for no hike before autumn.
In London, BG Group on Monday said it has begun loading its first liquefied natural gas from the second production train at the Queensland Curtis LNG facility in Australia. An LNG train is a liquefied natural gas plant's liquefaction and purification facility.
The two production trains at the project are expected to produce enough LNG to load ten vessels per month combined, exporting around eight million tonnes per year by the time the project reaches plateau production in the middle of 2016, said BG.
Meanwhile, tens of thousands of businesses seeking compensation in relation to BP's 2010 oil spill in the Gulf of Mexico have filed claims that are yet to be fully processed, according to a Financial Times report on Sunday.
Should the past pattern of payments continue, the report said the cost of the claims to BP will be at least USD2 billion more that it has set aside. The report said that BP declined to comment on the FT's calculations. Earlier in July, BP reached an USD18.7 billion deal to settle all US federal, state and local government claims arising from the spill.
UBS has upgraded International Consolidated Airlines Group to Buy from Neutral, lifting its price target to 700 pence from 580p, while Goldman Sachs has raised Burberry Group's price target to 2,323p from 2,319p, keeping it in its "Conviction Buy List".
In a light economic calendar Monday, the Bank of England's Credit Conditions Survey is expected at 0930 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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