LONDON MARKET CLOSE: Shares Flat As ECB Gives Greece Assistance

LONDON (Alliance News) - UK blue-chip stocks closed flat Friday, but down on the week, as the European Central Bank offered some much-needed relief to Greek banks by raising its emergency liquidity assistance to help with accelerated withdrawals.

The Financial Times reported that the ECB granted a smaller rise than the EUR3 billion increase in assistance requested by the Bank of Greece and is intended to cover Greek banks from Friday until close of business on Monday.

The ECB also warned that Greek banks may not open on Monday, Reuters reported, citing officials who took part in the Eurogroup meeting on Thursday.

Deposit flight may force Greece to impose capital controls, becoming only the second country after neighbouring Cyprus to use such a measure in the euro area. In 2013, Cyprus imposed capital controls amid a banking crisis and removed the last of them this past April.

After a nervous weekend, market participants will be looking ahead to the emergency meeting of eurozone finance ministers on Monday in Brussels, as the deadline for Greece's EUR1.6 billion payment to the International Monetary Fund moves closer.

"We continue to believe the most likely outcome is a deal. This is the rational outcome – Grexit would be costly for both sides — and is what Greek citizens want, according to opinion polls," said economists at Deutsche Bank.

"In our view, Greek PM [Alexis] Tsipras needs to show the left wing of Syriza that he drove the bargaining process to the edge of the cliff. A balanced compromise may not be compatible with Syriza's electoral manifesto," they added.

The FTSE 100 closed flat at 6,710.45 points, but ended the week down 1.1%, as Greek concerns weighed on stocks throughout the week. The FTSE 250 ended up 0.1% Friday at 17,688.73, and the AIM All-Share closed up 0.5% at 768.06.

In Europe, the French CAC 40 closed up 0.3%, but the DAX 30 in Frankfurt ended down 0.5%.

US stock indices were reversing some of Thursday's gains at the London close Friday, with the DJIA trading down 0.2% and the S&P 500 and Nasdaq Composite both down 0.1%.

On the corporate front, Hikma Pharmaceuticals ended amongst the top FTSE 100 gainers, up 2.7%, after being upgraded by Citigroup to Buy from Neutral. Meanwhile, Ashtead Group closed up 1.0% after Exane BNP upgraded the industrial equipment rental company to Outperform from Neutral.

London Stock Exchange Group closed up 2.3% after it named Donald Brydon, the current chairman of Royal Mail and formerly of the London Metal Exchange, to take on the same role at the bourse. The group has been looking for a successor to Chris Gibson-Smith since last July, when he said he would be leaving the LSE. Gibson-Smith will step down on July 1, but will be available to advise the board until the end of August.

Colt Group ended as the biggest gainer in the FTSE 250, up 21% at 189.43 pence, after American financial services group Fidelity made a bid to buy up the remainder of UK telecommunications and IT services provider, which Fidelity founded, to take the company private. However the independent directors of Colt replied that the 190 pence per share offer "undervalues" Colt.

The offer from FMR LLC and FIL Ltd, together known as Fidelity, values Colt at around GBP1.72 billion. Fidelity said this offer price will not be increased.

FMR currently has a 62.43% shareholding in Colt. Fidelity said it has received irrevocable undertakings to accept the offer for 70.15 million shares, or around 7.8% of Colt's issued share capital, or 23.4% of Colt's share capital that is held by independent shareholders.

Card Factory closed down 7.7% at 332.00p after the greeting card retailer said some of its directors and members of its senior management team have sold 14.8 million shares in the company at 330p each, representing approximately 4.3% of its issued share capital. At that price, the sale was worth GBP48.8 million.

The selling shareholders, which included Chief Executive Richard Hayes and Chief Financial Officer Darren Bryant, continue to have an interest in 49.1 million shares between them, representing 14.4% of the issued share capital.

In a quiet economic calendar Monday, the Bank of Japan releases its monthly economic survey at 0600 BST, and the Chicago Federal Reserve national activity index is at 1330 BST. At 1500 BST there are US existing home sales and preliminary eurozone consumer confidence data.

In the UK corporate calendar, the only scheduled corporate releases are from Polar Capital Holdings, which provies full-year results, and JZ Capital Partners, with an interim management statement.

The changes announced in the latest FTSE review will be implemented on Monday and will see Aggreko drop to the FTSE 250 from the FTSE 100, replaced by Inmarsat.

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

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