Wynnstay Props. Share News (WSP)

LONDON (Alliance News) - London stock prices closed mostly flat Tuesday, propped up in late trade by a higher US open after suffering for most of the session from heightened concerns about a Greek debt default.

The FTSE 100 index closed flat at 6,710.10 points, having hit its lowest level since the end of January at 6,656.90 in earlier trade. The FTSE 250 also ended flat at 17,736.19, while the AIM All Share closed down 0.4% at 767.86.

European indices closed higher, with the CAC 40 in Paris ending up 0.5% and the DAX 30 in Frankfurt also up 0.5%. At the London close, the DJIA was trading up 0.5% in New York. The S&P 500 and the Nasdaq Composite indices were both up 0.3%.

Greece and its international creditors continue to lock horns as the debt-ridden nation struggles to gain access to a EUR7.2 billion bailout funds in exchange for economic reforms. Tensions remain high as Greek Prime Minister Alexis Tsipras accused his country's creditors of "pillaging" Greece and suggested their motives are political, in a statement to the Efimerida Ton Syntakton newspaper.

"The Greek government is negotiating with a plan and has presented nuanced counterproposals," Tsipras said. "We will patiently wait for the institutions to adhere to realism."

Greece's creditors have called for the country to take on more radical reforms than it currently proposes but Greek Finance Minister Yanis Varoufakis said in German newspaper Bild that he won't unveil any new proposals at the eurogroup meeting of finance ministers, even as time is running out to reach a deal.

The Greek government has until June 30 to pay the International Monetary Fund a total of EUR1.5 billion.

"The abstract concept of a Greek deal remains perfectly achievable yet painfully difficult at the same time. It appears all that is required is a shift of millimetres, not miles, to unlock a fresh batch of Greek funds. Yet those millimetres are increasingly feeling insurmountable," said Connor Campbell, financial analyst at Spreadex.

On the domestic front, the UK pulled out of a brief brush with deflation, as consumer prices rose 0.1% in May from last year, as expected by economists and offsetting April's 0.1% year-on-year fall. This was the first rise in four months. Month-on-month, the consumer price index gained 0.2%, the same as in April, and matched expectations. Core inflation, which excludes energy, food, alcoholic beverages and tobacco, rose to 0.9% on an annual basis, versus 0.8% in April.

The prompt exit from deflation should kill off any lingering thoughts that the Bank of England will cut UK interest rates below their current record low 0.5%, IHS Global Insight economist Howard Archer said. It is most likely that consumer price inflation will hover just above zero through the summer and then start heading decisively up from the autumn onward, he added.

The pound declined following the release of the UK inflation figure but recovered its losses during the rest of the day's trade. At the London equity close, the pound traded the dollar at USD1.5618.

In the FTSE 100, British American Tobacco closed up 2.9% and Imperial Tobacco Group ended up 2.2%. The tobacco companies were the two best blue-chip performers after Credit Suisse re-initiated both businesses with Outperform ratings.

Ashtead Group closed as the second worst performer in the FTSE 100, down 2.7%, despite reporting strong growth in profit and revenue for its recently-ended financial year, thanks to organic growth in both the US and UK and an acquisition in Italy. The company also raised its dividend and gave a positive outlook.

Analysts at Investec, Panmure Gordon and Berenberg all reiterated their Buy ratings on Ashtead Group after company's full-year results came in ahead of their expectations. The stock had hit an all-time high at the end of May, but has declined largely in-line with the wider index since.

Royal Mail had been one of worst performing blue-chip stocks for most of the session but closed up 0.3%. The UK's communications and postal regulator Ofcom widened its review of the regulation of Royal Mail in light of the decision by competitor Whistl to pull its plans to launch its own direct delivery services in the UK.

Ofcom said it wanted to look at what changes to the overall postal framework might be appropriate to secure the so-called universal postal service - Royal Mail's obligation to deliver to every address in the UK at the same price.

Ladbrokes ended as the best FTSE 250 gainer, up 4.4% after Morgan Stanley raised the bookmaker to Overweight from Equal Weight and raised its price target to 150.00 pence from 135.00p. The company ended trade at 122.10p.

National Express Group, up 1.7%, said it won two new rail contracts with local transport authorities in the North Rhine-Westphalia region in Germany. The two contracts are expected to generate around EUR1 billion over their lifetimes.

Crest Nicholson ended up 1.3% having traded amongst the worst mid-cap performers in the morning. The housebuilder struck a bullish tone about its prospects, as it reported that first-half pretax profit rose by about 52%.

Crest Nicholson Chief Executive Stephen Stone said the business has the longer-term opportunity to achieve a "natural scale" approaching 4,000 units and GBP1.4 billion of revenue per annum. The company said it is on track with a three-year plan to grow revenue towards GBP1 billion by October 2016.

In the economic calendar Wednesday, there are Japanese trade data at 0050 BST. The Bank of England's minutes from its latest policy meeting will be released at 0930 BST, alongside UK unemployment and earnings data. Eurozone construction data are at 1000 BST, and US EIA crude oil stocks are at 1530 BST.

After the London close, focus will be firmly on the US Federal Reserve as it announces its interest rate decision and economic projections at 1900 BST, followed by a press conference with Fed Chair Janet Yellen at 1930 BST.

In a quiet UK corporate calendar, there are full-year results from housebuilder Berkeley Group Holdings, online bookmaker Betfair Group, structural steel company Severfield, and agricultural supplies and specialist retail business Wynnstay Properties.

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

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