LONDON (Alliance News) - London share prices ended mostly lower Friday, the last trading day of May, as Greece debt negotiations continued to trouble market participants, while on the UK corporate front, there was a flurry of merger and acquisition news from the likes of TeleCity Group, Synergy Health and Carillion.
The FTSE 100 traded above the 7,000 mark for most of the day, but fell sharply at the very end of the session, closing down 0.8% at 6,984.43 points. For the week , the blue-chip index lost 0.7%, while it rose 0.6% in May as a whole.
Meanwhile, the FTSE 250 ended Friday down 0.5% at 18,154.42. The AIM All-Share outperformed, finishing up 0.3% at 772.60.
European indices reacted even worse to the Greek uncertainty, with the CAC 40 in Paris ending down 2.5% and the DAX 30 in Frankfurt down 2.3%.
Split opinions over the Greek situation offered by various officials created uncertainty for investors.
European indices opened lower after International Monetary Fund chief Christine Lagarde said she no longer rules out Greece exiting the eurozone. "Greece's exit is a possibility," Lagarde told Germany's daily Frankfurter Allgemeine Zeitung in an interview published on the newspaper's website on Thursday.
The IMF chief said that such a move would not be easy but would "probably not mean the end of the euro," adding: "It is very unlikely that we will reach a comprehensive solution in the next few days."
Later in the morning, European stock markets were given a boost after European Commission President Jean-Claude Juncker said the Greek stand-off will be resolved in the “coming days and weeks".
But German Finance Minister Wolfgang Schaeuble later ruled out an early breakthrough in the tortuous negotiations, while US Secretary of Treasury Jack Lew called on Athens' creditors to also show more flexibility at the talks.
"I think that there was a broad view that Greece needs to make some tough decisions and to implement policies that will be painful," said Lew, following a meeting of Group of Seven finance ministers and central bankers in the eastern German city of Dresden.
But Lew also said that Greece's creditors - the International Monetary Fund and the EU - also needed to show more flexibility to help reach an agreement with Athens to help unlock the EUR7.2 billion which forms the last tranche of its debt bailout.
"Traders know deep down that a deal will be reached in the nick of time, but those who don't have the stomach for it are getting out of the market while they can," said IG Markets analyst David Madden.
On the corporate front, data centre operator TeleCity Group said it agreed terms on a GBP2.35 billion cash and share takeover offer from US peer Equinix, and terminated its previous deal to acquire Dutch data centre company Interxion Holding.
Under the terms of the deal TeleCity shareholders will receive 572.5 pence in cash and 0.0327 shares in the new company per share, which values each TeleCity share at 1,145.0 pence, based on the volume weighted average price of Equinix shares in New York over the past five days. TeleCity ended down 0.7% at 1,082.53p Friday.
Synergy Health and STERIS said they intend to contest the US Federal Trade Commission's attempt to block STERIS's proposed USD1.9 billion cash and share takeover of Synergy Health. The FTC has informed Synergy that it intends to seek to block the acquisition. STERIS and Synergy said in a statement that they welcome "a full judicial review of the competitive effects of the combination".
Synergy Health's share price has fallen over 16% since last Friday amid speculation of an attempt to block the acquisition by the FTC, and ended down 1.9% at 1,860.00p. The offer from STERIS is worth GBP19.50 per Synergy share.
FTSE 250-listed construction and support services company Carillion said it has acquired Canadian remote-site accommodation and services business Outland Group for up to GBP63 million in cash in order to boost its operations in Canada. Carillion closed down 0.3%.
Associated British Foods ended as the best FTSE 100 performer, up 2.6%, after it was upgraded to Buy from Sell by Goldman Sachs.
In the FTSE 250, Ophir Energy ended up 3.3% after it was upgraded to Overweight from Equal-Weight by Barclays.
In the US, economic activity contracted for the first time in a year in the first quarter of 2015, according to revised data released by the Commerce Department on Friday.
The report said US gross domestic product fell by 0.7% in the first quarter compared to the previously reported 0.2% uptick. The drop came after a 2.2% increase in the fourth quarter. However, the revised decrease in GDP was slightly smaller than the 0.8% drop expected by economists.
"Bad weather and dollar-damaged exports...were the main culprits for this dismal first quarter figure," said Spreadex analyst Connor Campbell. "However, since cold weather won’t be an issue for the second quarter, and increased consumer spending should kick in as oil prices remain low, the dollar shrugged off the Q1 contraction."
When the European markets closed, the greenback was trading at USD1.5264 against the pound, while Wall Street was lower, with the DJIA down 0.8%, the S&P 500 down 0.7% and the Nasdaq Composite down 0.6%.
In the corporate calendar Monday, SVG Capital issues an interim management statement, while Scottish Investment Trust releases half-year results. Camco Clean Energy, NextEnergy Solar Fund, Circle Oil, Capital Gearing Trust and Dolphin Capital Investors publish full-year results. Meanwhile, Xcite Energy releases first-quarter results
In the economic calendar Monday, China's non-manufacturing purchasing managers index is due at 0200 BST, while manufacturing PMIs from Italy, France and Germany are due at 0845 BST, 0850 BST and 0855 BST, respectively. Meanwhile, manufacturing PMI readings from the eurozone and the UK are due at 0900 BST and 0930 BST, respectively. Germany's consumer price index is due at 1300 BST. In the US, manufacturing PMI is due at 1445 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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22 Nov 2016 16:09
