LONDON (Alliance News) - London share prices are set to open lower Tuesday, while Greece and its international creditors have reached an agreement for a new debt bailout for the cash-strapped country, a report said.
The Mediterranean country and its lenders agreed on a new debt bailout on Tuesday, Reuters reported, citing a finance ministry official.
"An agreement has been reached. Some minor details are being discussed right now," said a Finance Ministry official according to the news agency after marathon overnight talks between Greece and its lenders in Athens.
The process is being hastened so that any deal can go to national parliaments in the euro area for approval. The Greek parliament is expected to pass any possible deal by the middle of the week, the reports said citing sources. Once approved by national parliaments, euro area finance ministers are expected to meet towards the end of the week to finalize the process. Afterwards, funds will be released to Greece to allow it to honour a payment to the European Central Bank due August 20.
IG says futures indicate the FTSE 100 to open 29 points lower at 6,706.70. The index closed down 0.3% at 6,736.22 on Monday.
Outside Greece, Germany and eurozone ZEW surveys of economic sentiment are due at 1000 BST.
"The August German ZEW survey is set to dominate the news flow this morning," says Lloyds Bank. "After a sharp pick-up between the fourth quarter of 2014 and the first quarter of 2015, the forward-looking expectations measure, which tends to lead euro-area GDP by around three quarters, has subsequently retraced a little on the back of accumulating Grexit worries."
"However, with such concerns fading somewhat over the last month, we anticipate a small rebound from 29.7 in July to 32.0," says Lloyds.
In Asia on Tuesday, the Japanese Nikkei 225 closed down 0.4%. In China, the Hang Seng in Hong Kong is up 0.7% and the Shanghai Composite is up 0.8%.
In an unexpected move seen as a step to counter the domestic economic slowdown, the People's Bank of China lowered the value of the yuan. In a statement released on Tuesday, the bank set the value of yuan at 6.2298 a dollar, 1.9% lower than Monday's official fixing rate. The bank termed it as an one-time adjustment as it strives to keep the yuan stable at a reasonable level.
This in contrast to the PBoC's practice of setting a mid-point for the yuan's exchange rate each morning, which could be 2% higher or lower from the previous session's closing value. The Chinese currency seldom fluctuates over the range. The devaluation is seen as step towards making the exchange rate of the yuan more market determined. A weaker currency makes the exports of a nation competitive and boosts export earnings.
Wall Street ended higher Monday. The DJIA closed up 1.4%, the S&P 500 ended up 1.3% and the Nasdaq Composite finished up 1.2%.
Federal Reserve Bank of Atlanta President Dennis Lockhart said on Monday the US central bank is close to raising short-term interest rates, potentially sooner than September, as he said the economy is "approaching an acceptable normal", The Wall Street Journal reported.
Lockhart, during a speech at the Atlanta Press Club, said the "point of liftoff is close". He added that "September remains a live possibility" for a first rate rise in the US for nine years.
"I remain predisposed to September being a possible date for liftoff," Lockhart said. "At the same time, in the greater scheme of things, I don't think [waiting] a meeting or two is going to be decisive for the US economy."
The pound strengthened against the dollar when the European stock markets closed Monday. However, the greenback recovered some ground overnight and sterling is standing at USD1.5580 early Tuesday, compared to USD1.5523 at the London close Monday.
On the UK corporate front, Ladbrokes Tuesday said it made a loss in the first half of 2015, having made a profit in the first half of 2014, as its revenue slipped and it slashed its interim dividend.
The FTSE 250-listed bookmaker reported a pretax loss of GBP51.4 million in the six months ended June 30, after it made a profit of GBP27.7 million in the same period of the prior year. Revenue declined slightly to GBP588.8 million from GBP589.3 million. The bookmaker will pay an interim dividend of 1.0p, a quarter of the 4.3p it paid the year before.
Just Retirement Group and Partnership Assurance Group said they have agreed to merge in an all-share deal, and intend to raise GBP150 million together. The deal values Partnership Assurance at about GBP668.5 million, equivalent to 166 pence per share. The stock closed at 154.25p on Monday.
Investors will receive 0.834 new Just Retirement shares for each Partnership Assurance share they already own. Just Retirement shareholders will own about 60% of the combined group, without taking into consideration the planned equity raising, with Partnership Assurance shareholders holding the remainder.
Also in the economic calendar Tuesday, in the US, unit labor costs and nonfarm productivity are expected at 1330 BST. The Redbook index is expected at 1355 BST, while wholesale inventories are at 1500 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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