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LONDON (Alliance News) - A new twist to the Greek debt drama has depressed European stock prices at the London open Friday, but the euro is showing surprising strength after a positive reading on German factory orders.
In Frankfurt, the DAX 30 stock index is down 0.9%, as is the CAC 40 in Paris.
Vodafone is the top FTSE 100 gainer in early deals, up 1.1%, after the mobile phone company confirmed it is in early talks with cable company Liberty Global about a possible asset exchange, but said it is not discussing any potential merger with the company.
Shares in the oil companies involved in the Horse Hill project near Gatwick Airport are higher after saying an independent assessment has increased the oil in place estimate. The shares of the six companies had been suspended Thursday pending the announcement.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.5% at 6,825.69
FTSE 250: down 0.5% at 17,995.66
AIM ALL-SHARE: down 0.2% at 775.52
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Hang Seng: down 0.8% at 27,325.91
Nikkei 225: closed down 0.1% at 20,460.90
DJIA: closed down 0.9% at 17,905.58
S&P 500: closed down 0.9% at 2,095.84
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GBP: down at USD1.5326
EUR: up at USD1.1248
GOLD: down at USD1,175.11 per ounce
OIL (Brent): down at USD61.48 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
(all times in BST)
OPEC meeting
09:30 UK Consumer Inflation Expectations
10:00 EU Gross Domestic Product
13:30 US Nonfarm Payrolls, Unemployment Rate, Average Earnings
13:30 Canada Unemployment Rate, Participation, Labor Productivity
17:30 US Fed's William Dudley speech
20:00 US Consumer Credit Change
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The Greek government hardened its stance toward international creditors' reform proposals after high-level talks failed to produce a deal for the country to gain access to much-needed money to avoid default. A proposal presented by the International Monetary Fund and European institutions "contains extreme positions that cannot be accepted by the Greek government," the statement from Athens said late Thursday, a day after a Brussels meeting a day earlier with the international creditors. Greece said the creditors "have not taken a step back, independently of the fact that over the past four months the two sides had converged on reforms, which the Greek government included in its own proposal." The statement came after Greece delayed a key debt repayment of about EUR300 million due Friday to the IMF. The Washington-based crisis lender said Thursday that Greek authorities had declared their plans to bundle four payments due this month into a single EUR1.6 billion lump sum now due on June 30.
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The British Chambers of Commerce downgraded its UK growth projection for this year citing weaker than expected expansion in the first quarter. The business lobby expects the economy to expand 2.3% this year instead of 2.7%. Nonetheless, the slowdown is expected to be temporary. The prospects for the medium term remains steady with growth projected to be 2.6% next year and 2017.
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Permanent job placements in the UK increased further in May, although the rate of growth eased to a four-month low, the Report on Jobs produced by Markit Economics on behalf of the Recruitment and Employment Confederation and KPMG showed. The number of people placed in permanent jobs continued to increase in May but the pace of expansion slowed, reflecting a weaker growth in demand for staff, with the latest rate of increase the slowest in 2015 so far.
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Germany's factory order growth exceeded expectations in April helped by foreign demand, data from Destatis revealed. Factory orders increased 1.4% month-on-month, faster than a 0.5% rise forecast by economists. It was also the fastest growth since December, when it was 3.3%.
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The EU said the heavy fighting around Mariyinka, near Donetsk, in Eastern Ukraine is the most serious violation of the ceasefire under the Minsk agreements since February. The escalation followed the movement of a large amount of heavy weapons towards the contact line by the Russia-backed separatists, as reported by the Organisation for Security and Co-operation in Europe Special Monitoring Mission. Renewed intense fighting risks unleashing a new spiral of violence and human suffering, said Maja Kocijancic, chief spokesperson for Federica Mogherini - the EU's chief of security and defense policy.
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The European Commission adopted an implementing act that will extend the transitional period for capital requirements for EU banking groups' exposures to central counterparties (CCPs) under the Capital Requirements Regulation (CRR). CCPs are commercial entities interposed between the two counterparties to a transaction, becoming the buyer to every seller and the seller to every buyer. The main purpose of a CCP is to manage the risk that could arise if one counterparty is not able to make the required payments when they are due - i.e. defaults on the deal. The CRR introduced a capital requirement for the exposure of EU banks and their subsidiaries to a CCP. The current transitional period expires on June 15. The European Commission's implementing act will now extend the transitional phase to December 15.
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Salvage workers were attempting to right a capsized Chinese cruise ship early Friday, state television reported, with over 300 people still missing after it sank four days ago. The starboard side of the Eastern Star, which capsized late Monday in bad weather, was visible above the water, the report said. The confirmed death toll stood at 82 early Friday, the official Xinhua news agency reported. Fourteen people have been rescued. Cranes capable of lifting the ship are being used to right the vessel.
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BROKER RATING CHANGES
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HSBC RAISES LLOYDS TO 'BUY' ('HOLD') - TARGET 103 (87) PENCE
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HSBC STARTS AB FOODS WITH 'BUY' - PRICE TARGET 3680 PENCE
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TRADERS: NUMIS CUTS BETFAIR TO 'SELL' ('REDUCE')
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COMPANIES - FTSE 100
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Lloyds Banking Group took action on bonuses for its executives after being fined GBP117 million by UK regulators over the way it handled complaints relating to the payment protection insurance mis-selling scandal. According to the UK's Financial Conduct Authority, the fine was the largest retail fine that it has ever issued. In a statement, Lloyds said awarded but unvested bonuses amounting to about GBP2.65 million in total will be forfeited by executives, while its Remuneration Committee has decided to cut the bonus pool for 2015 by about GBP30 million.
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Vodafone Group said it is in early talks with cable company Liberty Global about a possible asset exchange, but said it is not discussing any potential merger with the company. Media reports on Thursday said that Vodafone and Liberty Global were holding merger talks. Vodafone confirmed Friday the pair are in early talks about the possible exchange of selected assets, but said it is not in talks with the company about a merger. Vodafone added there is no certainty a deal will be made.
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COMPANIES - FTSE 250
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Halfords Group reported growth in profit in its recently-ended financial year as sales performed strongly in both its Retail and Autocentres divisions. The car parts and bicycle retailer reported a pretax profit in the 53 weeks to April 3 of GBP83.8 million and GBP80.8 million in the 52 weeks to March 27, up from the GBP72.6 million reported in the 52-week period the prior year, as revenue rose to GBP1 billion from GBP939.7 million. Like-for-like sales grew 6.8%. Halfords will pay a dividend of 16.5 pence, up 15% from the 14.3p paid the year before.
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Bellway said it expects its housing completions to rise at the close of its financial year, with its operating margin set to improve and its forward sales book strengthening. The housebuilder said it expects housing completion for the year to the end of July to be around 850 units higher than the 6,851 it reported a year earlier. The company said its full-year operating margin should improve by around 300 basis points to over 20% in the year, up from 17.2% a year earlier. Bellway also said its forward sales position going into the new financial year is set to be around 22% higher in value year-on-year at GBP1.27 billion, up from GBP1.04 billion at the end of its 2014 financial year.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Shares in the oil and gas companies involved in the Horse Hill project in the Weald Basin, southern England, resume trading Friday after they received a report from oil services company Schlumberger which upgrades the oil in place estimate for the project. UK Oil & Gas Investments, Evocutis, Stellar Resources, Solo Oil, Doriemus and Alba Mineral Resources said that Schlumberger has estimated a gross overall oil in place for the Jurassic section of the Horse Hill-1 well of approximately 271 million barrels of oil per square mile. The 255 million barrel estimate for the tight limestone and mudstone plays compares to the oil in place estimate the companies received in April from Nutech Ltd, which estimated the total oil in place at 158 million barrels per square mile.
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Aer Lingus Group said its traffic in May increased on the back of a recovery in its short-haul performance and better long-haul figures. The Irish flag carrier, which reports traffic figures measured in revenue passenger kilometres, said traffic rose by 6.8% in the month to 1.7 billion revenue passenger kilometres, from 1.59 billion a year earlier. It marks an improvement on its April numbers. The airline also saw an improvement in its load factor in the month, up by 1.7 percentage points to 80.4% from 78.7% a year earlier.
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Fuller, Smith & Turner reported growth in profit in its recently-ended financial year as revenue grew in all three sectors of the business, and said it has made a good start to the current year as it continues to invest in its estate and develop its brands. The pubs and brewing company reported a pretax profit in the year to March 28 of GBP36.1 million, up from the GBP33.5 million reported the prior year, as revenue grew to GBP321.5 million from GBP288 million. Fuller will pay a total annual dividend of 16.60 pence, up 10%.
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Hochschild Mining said the processing plant at the Inmaculada project in southern Peru is operating at about 80% of its capacity, with the company announcing first dore production at the gold and silver project. In a statement, the company said the processing plant is operating in line with its commissioning schedule. It is expected to "ramp up to design capacity in the next few weeks".
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Rare Earth Minerals and Bacanora Minerals outlined the plans the pair have for the Sonora lithium project in Mexico. The companies said that in the second half of the year, Bacanora will start an expansion and infill drilling programme at Sonora, which is expected to be followed by a further mineral resource update and mining design and scheduling for the site.
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Egdon Resources and Union Jack Oil said they have struck deals with Celtique Energie Petroleum Ltd to increase their stakes in the PEDL241 licence in Lincolnshire. Egdon has acquired a further 40% stake in the licence for a nominal consideration, increasing its total stake to 80%. Union Jack also has doubled its stake in the licence, acquiring a further 10% to bring its total interest to 20%, also for a nominal fee.
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UTV Media said it has agreed a deal to sell its Juice FM business to Global Radio Holdings Ltd, a subsidiary of This is Global Ltd, for GBP10 million. Juice FM is UTV's Liverpool-based radio station.
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COMPANIES - INTERNATIONAL
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Global food giant Nestle said it will withdraw its popular Maggi brand of instant noodles from shop shelves in India. "Unfounded concerns about the product have led to an environment of confusion for the consumer," Nestle India said in a press release. "We have decided to withdraw the product off the shelves, despite the product being safe," the statement said. Shops and markets in India had already begun withdrawing packets of the noodles earlier in the week after tests showed the product contained high levels of lead and monosodium glutamate, a flavour enhancer. The Delhi government banned sale of Maggi brand noodles for 15 days after tests revealed lead over permissible limits in over 75% of the samples collected. Nestle said its own tests showed lead levels within safety limits. A company spokesman said no MSG was added to noodles sold in India, but the product glutamate occurred naturally in other ingredients used.
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Hewlett-Packard was nearing a deal to acquire Computer Sciences last month until the talks broke down, Bloomberg reported people with knowledge of the matter said. Hewlett-Packard, which worked on the potential Computer Sciences purchase for several months, doesn't intend to revisit talks with the company, the report said.
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Yahoo! said that it will shut down a few of its services, including Yahoo Maps, as it focuses on search, communications and digital content. The Yahoo Maps site will close at the end of June.
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Friday's Scheduled AGMs/EGMs
Volga Gas
EU Supply
MP Evans Group
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
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