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LONDON (Alliance News) - Share prices closed higher in London Thursday driven by company updates from a number of heavily weighted stocks, but the market was knocked back a bit after the Financial Times reported that the International Monetary Fund has been told it cannot join the Greek debt bailout.

The board of the IMF has been told that Greece's high debt levels and poor record of implementing reforms disqualify the country from receiving a third bailout from the international lender, raising new questions about whether it will join the latest financial rescue for Greece being put together by eurozone creditors, the Financial Times reported.

The FT said members of the IMF board were told this during a meeting on Wednesday, and the determination means that, while the IMF will participate in the bailout negotiations currently ongoing in Athens, it will not decide whether to agree to a new programme for months and potentially into next year, the newspaper said.

That delay could have significant repercussions, particularly in Germany, where officials have long claimed it would be impossible to secure approval from the Bundestag for the new EUR86 billion bailout package without the IMF being on board.

The FTSE 100 index closed up 0.6% at 6,668.87, its third successive day of gains after a five-day losing streak. The FTSE 250 closed up 0.1% at 17,521.00, and the AIM All-Share index also ended up 0.1% at 749.92.

European stock indices closed higher, with the CAC 40 in Paris up 0.6% and the DAX 30 in Frankfurt up 0.4%.

Stocks on Wall Street were trading lower at the London close, with the Dow Jones Industrial Average and Nasdaq Composite both down 0.2%, and the S&P 500 down 0.3%.

Economic activity in the US increased by less than expected in the second quarter, the Commerce Department revealed in a report, but it made a notable upward revision to the data for the first quarter.

The Commerce Department said real gross domestic product increased at an annual rate of 2.3% in the second quarter, compared to expectations for an increase of about 2.6%. However, the report also said first quarter GDP rose by an upwardly revised 0.6% compared to the 0.2% contraction previously reported.

The GDP growth in the second quarter partly reflected a notable increase in consumer spending, which climbed by 2.9% in the second quarter after rising by 1.8% in the first quarter. The increase in GDP also reflected positive contributions from exports, state and local government spending, and residential fixed investment.

The data came after the US Federal Reserve said in a statement Wednesday that it has observed signs of an improving US labour market and economy, but refrained from signalling the timing of a rate hike.

The Fed said it "anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the US labour market and is reasonably confident that inflation will move back to its 2% objective over the medium term," repeating its past statements nearly word-for-word.

Analysts highlighted the inclusion of the word "some" in the Fed's assessment that it would be appropriate to raise rates "when it has seen some further improvement in the labour market". The comment is likely to increase the focus on the two monthly jobs reports scheduled to be released before the next Fed meeting in September, with the July jobs report due out Friday next week.

"All we can really say is this represents a softening in the requirements from the month before so maybe something similar between now and September will tick the box," said Craig Erlam, senior market analyst at Oanda.

"The other key change was the view that 'underutilisation of labour markets has diminished', rather than 'somewhat diminished', as per the June statement. Again, this is only a slight improvement but it does suggest the Fed is now satisfied with the level of slack in the economy and with the rate at which it is being diminished," Erlam added.

Meanwhile, in London, there was plenty of individual stock news for investors to get their teeth into. Royal Dutch Shell and BG Group were leading gainers in the FTSE 100. Shell said it will slash further costs and jobs as it reported a USD1.7 billion drop in earnings in the second quarter of 2015.

Shell said around 6,500 jobs will be cut as a result of its cost reductions, but also reaffirmed its commitment to its dividend alongside a share buyback. Shell also has sold a significant stake in its downstream refinery business in Japan.

The company reported current cost of supply earnings of USD3.4 billion in the second quarter of 2015, down from USD5.1 billion a year before, as revenue fell to USD73.95 billion from USD115.27 billion after being hit by lower oil prices.

In addition, Shell's USD47 billion mega-merger with BG Group also remains on track, which will form a new company that will more profitable, said Shell.

Shell 'B' shares closed up 4.7%, Shell 'A' shares up 4.2% and BG Group up 3.8%. BG Group is set to report earnings on Friday.

InterContinental Hotels Group closed up 4.6%. The FTSE 100-listed hotel operator, which owns brands including Holiday Inn, Crowne Plaza and InterContinental Hotels, reported growth in profit in the first half of 2015, as it achieved growth in revenue per available room in all of the regions in which it operates and said it remains confident in the outlook for the rest of the year.

AstraZeneca added 3.1% after the pharmaceutical giant upgraded its revenue guidance for its full year at constant currency, although it reiterated its earnings per share guidance as it continues to funnel investment into developing its pipeline in an effort to counter looming generic competition to its products.

Support services company Babcock International Group ended as the biggest faller in the FTSE 100, down 5.2%. Babcock said it is trading in line with its first-half and full-year expectations so far in its 2015 financial year, but it was taking a hit from the oil and gas industry downturn in its Mission Critical Services business.

Babcock said it still expects a fall in first-half revenue in its defence and security business and said it expects oil and gas-related revenue in its MCS business to drop, though emergency services revenue should offset this.

Centrica was the second worst FTSE 100 performer, closing down 3.1%. It said it has completed its strategic review of the business which will see it shift investment away from upstream production and toward British Gas and its other consumer businesses, as it reported a rise in pretax profit but a slight fall in earnings in the first half of 2015.

Royal Bank of Scotland Group closed as the third worst faller in the FTSE 100, down 3.1%, having traded amongst the best blue-chip performers earlier in the day. The majority state-owned bank said it doesn't expect to return capital to shareholders until at least 2017 and warned of a "noisy" year ahead after posting a surprise net profit in the second quarter.

Chief Executive Ross McEwan told journalists he intends to go "further and faster" with the state-backed bank's strategy, as RBS continues to run down businesses and assets it no longer wants or needs, resolves the legal and regulatory issues over its past conduct, and improves the performance of the businesses it wants to keep.

McEwan warned that it will be a "noisy year" as the bank continues to restructure and deal with the consequences of its past conduct. Nevertheless, the CEO told journalists those uncertainties shouldn't hamper the UK government's desire to begin selling down the 80% stake it took when bailing the bank in the global financial crisis of 2007-09.

In the FTSE 250, HellermannTyton shares surged higher after the company said it has agreed to be taken over by Delphi Automotive, the UK-based automotive parts manufacturer. HellermannTyton, which makes wires and cables, said it has agreed to be acquired by Delphi for 480 pence per share, valuing the company at around GBP1.07 billion.

The price is at a 45% premium to HellermannTyton's closing price on Wednesday and at a 43% premium to its one-month volume weighted average price prior to the offer. The company closed up 42% at 470.50 pence.

In the economic calendar Friday, Japanese unemployment and inflation data are out at 0030 BST before the London open. German retail sales are at 0700 BST, ahead of eurozone consumer prices at 1000 BST. In the afternoon, Chicago purchasing managers index is at 1445 BST and the Reuters/Michigan consumer sentiment index is at 1500 BST.

In the UK corporate calendar, in addition to BG Group, there are half-year results expected from Lloyds Banking Group, International Consolidated Airlines Group, Berendsen, UBM, Colt Group, IMI, Vedanta Resources, Vesuvius, Essentra and Alent.

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

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