LONDON (Alliance News) - London stock indices have come off their intraday lows mid-morning Tuesday amid reports of a last-ditch attempt by Brussels to make a deal with Greece to solve its debt crisis.
Greece and its creditors have failed to reach an agreement thus far on a deal to release bailout funds in time for Greece to meet a EUR1.6 billion debt payment to the International Monetary Fund due later Tuesday. Greek Prime Minister Alexis Tsipras reportedly said on Monday that his country will not make the payment to the IMF by the deadline.
However, Tsipras received a last minute offer from European leaders, which seeks to solve Greece's bailout crisis, EU sources said. Tsipras would have to accept in writing the last compromise proposal made by Greece's creditors and commit to campaigning for a "yes" vote in a controversial referendum that Athens will hold on the proposal this Sunday, the source said on condition of anonymity.
The offer was made to the Greek prime minister by European Commission President Jean-Claude Juncker on Monday. Tsipras would have to make the commitments in a letter addressed to Juncker, Eurogroup chief Jeroen Dijssebloem, German Chancellor Angela Merkel and French President Francois Hollande. This could then pave the way for a meeting of eurozone finance ministers, the source said.
Even so, the FTSE 100 still trades down 0.7% at 6,575.81. The FTSE 250 is down 0.4% at 17,471.33, and the AIM All-Share index is down 0.2% at 753.89.
In Europe, the CAC 40 in Paris is down 0.5%, and the DAX 30 in Frankfurt is down 0.6%.
The pound spiked against its major trading partners after UK first-quarter GDP came in better-than-expected. Gross domestic product gained 0.4% sequentially, revised up from the 0.3% growth estimated on May 28, and in-line with estimates. Year-on-year, first-quarter GDP growth was revised up to 2.9% from 2.4%, beating the 2.5% growth economists predicted.
The pound hit a high of USD1.5745 versus the dollar after the report, but fell back to USD1.5728. Against the euro, the pound trades at EUR1.4088.
The euro was supported by preliminary inflation readings for the eurozone, which showed continued marginal growth, but slower than in May. Inflation softened to 0.2% year-on-year in June, in line with forecast, from 0.3% in the prior month. Core inflation, which excludes energy, food, alcohol and tobacco, slowed marginally to 0.8% in June from 0.9% in May. Core inflation figures also matched economists' expectations.
Tesco, down 2.4% is the worst performer in the FTSE 100 after the latest grocery market share data from the Kantar Worldpanel. Tesco and Sainsbury's came in joint second place out of the big four, behind Wm Morrison Supermarkets, in the Kantar data, both experiencing an annual sales decline of 1.3% in the period.
Sainsbury's sales were at 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% in the 12 weeks to June 21 to GBP2.79 billion from GBP2.77 billion in the same period a year earlier, as its market share increased to 11.0% from 10.9%.
Sainsbury's trades down 1.7%, while Morrisons is down 0.4%.
Home Retail Group is the best performer in the FTSE 250, up 3.5% after receiving an upgrade to Overweight from Equal-Weight by Morgan Stanley.
St Modwen Properties is up 2.1% after it said it expects to see positive momentum continue into the second half of its financial year after reporting a jump in pretax profit for the first. The FTSE 250-listed regeneration property company said it made a GBP177.6 million pretax profit in the six months ended May 31, compared with GBP48.6 million in the corresponding period of the prior year. Revenue increased by 37% to GBP150.1 million, driven up as profit of joint ventures and associates rose to GBP100.6 million from GBP9.6 million.
Northgate shares are amongst the worst performers in the mid-cap index, down 6.6%. The commercial light vehicle rental company Northgate 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, analysts at N+1 Singer and Numis are cautious on the stock due to currency headwinds and depreciation.
Still ahead in the economic calendar is US Chicago Purchasing Managers Index at 1445 BST and consumer confidence at 1500 BST.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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