LONDON (Alliance News) - London stock indices have closed mixed Thursday, after Germany said it will not accept the terms of Greece's request for a six-month extension to its debt bailout.
Earlier Thursday, Greek Finance Minister Yanis Varoufakis wrote to Eurogroup chief Jeroen Dijsselbloem to formally request a six-month extension to the agreement governing its bailout. It is unclear, however, to what extent Athens is prepared to stick to the associated austerity measures imposed by its international creditors.
"The letter from Athens is not a substantial proposal for a solution," Martin Jaeger, a German Finance Ministry spokesman told dpa, since it "does not correspond" to criteria agreed by eurozone finance ministers earlier this week.
The announcement comes ahead of the Eurogroup meeting Friday to consider the Greek request.
"Greece is running out of time and money. Having already come part of the way, Greece may well move further and accept the current programme as the basis for all further discussions at the Eurogroup meeting Friday. Changing just parts of the request Greece has now submitted may suffice for that. But completing Greece’s inevitable U-turn that fast will be tough for its double-populist coalition, to put it mildly," said Holger Schmieding chief economist at Berenberg.
Berenberg retains its prediction of a 35% chance of a Greek exit from the euro, the same view it has had in place since the election of Greek Prime Minister Alexis Tsipras last month.
The latest Greek development caused a sharp drop in the European stock indices and the euro, which fell to a low of USD1.1353 against the dollar but recovered to USD1.1385 at the close of London stock markets.
The FTSE 100 closed down 0.1% at 6,888.90. The FTSE 250, however, ended up 0.3% at 17,049.79, another record high. The mid-cap index now has closed up in six consecutive sessions. The AIM All-Share closed 0.1% higher at 708.93.
European stock indices managed to recover from the initial shock of the German rejection to closed higher. The CAC 40 in Paris ended up 0.6% and the DAX 30 in Frankfurt closed at a record high, up 0.3% to 10,997.72. On Wall Street at the London close, the DJIA was down 0.1%, the S&P 500 was flat, and the NASDAQ Composite was up 0.4%.
Oil-related stocks closed amongst the worst performers in the FTSE 100 and the FTSE 250 after Brent oil slipped to below USD58 a barrel.
Amongst the biggest fallers in the FTSE 100 were Tullow Oil, down 2.7%, BG Group, down 2.6%, Royal Dutch Shell 'B', down 2.1%, Weir Group, down 1.7%, and BP, down 1.2%.
In the FTSE 250 was Premier Oil, down 4.9%, the biggest faller in the index. Hunting was down 4.6%, SOCO International down 4.2%, Cairn Energy and Ophir Energy down 2.9%, and AMEC Foster Wheeler down 2.7%.
British Gas owner Centrica was the biggest faller in the FTSE 100, closing down 8.5%. The company reduced its dividend for the full year after swinging to a loss in 2014 on a significant impairment charge, and said it will reduce its costs and capital expenditure budget over the next two years in response to the low oil price.
Centrica also said that further reductions in wholesale oil and gas prices in December will mean that the company "needs to plan on the basis that lower wholesale prices will persist for all of 2015 and potentially through 2016 and into 2017," which means cashflow from its energy business will be impacted.
Babcock International ended as the second worst blue-chip performer, down 5.7%. Leidos Holdings Inc, a US engineering company, was chosen as the UK Ministry of Defence's preferred bidder for the logistics commodities and services programme. According to Reuters, Babcock International Group also was in the running for the contract.
Petra Diamonds closed as the best performer in the FTSE 250, up 7.9%. The company said it will pay a maiden dividend of 2.0 pence per share at the end of its financial year after reporting a rise in earnings and profit during the first half, and said revenue and production will increase during the second half.
Rexam was the second biggest mid-cap gainer, up 6.2% at 563.607 pence. The British drinks can maker said it has reach a deal on the terms of a takeover offer from US rival Ball Corp, a cash and share deal valuing Rexam at around GBP4.3 billion. Under the terms of the takeover offer, for each Rexam share, Rexam shareholders will receive 407p in cash and 0.04568 new Ball shares. Ball said that based on its closing share price of USD74.39 on Tuesday, and the currency exchange rates at the time of the formal offer, the takeover offer represents an indicative value of 628p per Rexam share, well above its current share price.
In the economic calendar Friday, there are Markit Services, Manufacturing and Composite Purchasing Managers Index readings from France at 0800 GMT, Germany at 0830 GMT and the eurozone at 0900 GMT. UK public sector new borrowing for January is at 0930 GMT as is UK retail sales. US Markit Manufacturing PMI is expected at 1445 GMT.
In the corporate calendar, full-year results are expected from FTSE 100 savings and investment company Standard Life and from FTSE 250-listed packaging components company Essentra.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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31 Mar 2016 15:15
