LONDON MARKET CLOSE: Stock Prices Rise As Greece Is Handed Lifelines

LONDON (Alliance News) - London stocks closed higher Thursday buoyed by several positive developments in the Greek debt saga, with the Greek Parliament approving reforms, the European Central Bank raising the ceiling on its emergency liquidity assistance, and the Eurogroup announcing a bridging loan.

The FTSE 100 closed up 0.6% at 6,796.45. The FTSE 250 also closed up 0.7% at 17,765.37, and the AIM-All Share ended up 0.1% at 756.76.

European stocks outperformed London, with the CAC 40 in Paris and the DAX 30 in Frankfurt both closing up 1.5%.

At the London close, Wall Street also was pushing higher as US earnings season continued. The Dow Jones Industrial Average was up 0.2%, the S&P 500 was up 0.6%, and the Nasdaq Composite was up 1.0%.

Stocks in London and Europe began trade on a strong footing after Greek Parliament late Wednesday approved the tough austerity measures required by its EU creditors to move a step closer to the EUR86 billion worth of bailout loans that Athens badly needs. The approval of the economic measures passed with 229 votes in favour in the 300-seat chamber, but 38 Syriza lawmakers abstained or voted against the government.

Later Thursday, ECB President Mario Draghi said in his press conference that the Frankfurt-based bank "continues to act on the assumption that Greece is and remains a member of the euro area" and has raised its ELA for Greek banks by EUR900 million over one week. Draghi said the conditions have been restored to raise ELA for Greece after having left it unchanged for weeks.

Following Draghi's announcement, a senior banker told Reuters that Greek banks will reopen on Monday. Banks have been closed since June 29 when Athens imposed capital controls as the Greece debt crisis intensified.

Draghi also noted that it was "uncontroversial" that debt relief was "necessary" for Greece but said it is a question of how best implement debt relief in the framework of European rules and institutions.

While Draghi was speaking in Frankfurt, eurozone finance ministers agreed in principle during a conference call to grant Athens the previously negotiated three-year rescue plan.

Eurogroup also approved a EUR7 billion bridge-loan for Greece during the conference call, the details of which will be revealed later Thursday or on Friday. The funds will be used to help Greece meet a EUR3.5 billion bond redemption to the ECB on Monday. In his press conference Draghi expressed confidence that the country will make the payment.

Holger Schmieding, chief economist at Berenberg, said that if Greece continues to implement the bailout agreement from Monday morning, it could see the country's economy beginning to improve once more.

"If Prime Minister [Alexis] Tsipras now convinces his own citizens that he will implement the accord, some money may soon flow back into the banks. That could slowly start a virtuous circle," Schmieding said.

"Some rebuilding of the deposit base and a less troubled outlook for the claims of Greek banks on the Greek sovereign could ease the squeeze further. If so, only small increases in ELAs may suffice to allow a gradual return to more normal conditions in the Greek banking system and its economy after the current turmoil. But again, it all depends on Greece. Athens has to implement the deal," he added.

On the corporate front, multi-commodity miner Anglo American went from being one of the worst performers in the FTSE 100 to closing as one of the best, up 1.5%. Anglo said before the market opened that it had a "solid" production performance in the second quarter of 2015 that was in line with its expectations but said it will take a substantial impairment charge in the first half totalling between USD3.0 billion to USD4.0 billion.

The miner said iron ore production in the second quarter from its Kumba operations in South Africa fell 9% year-on-year to 10.4 million tonnes from 11.5 million tonnes due to mining feedstock constraints.

However, Anglo American said it achieved "record" export sales of 11.7 million tonnes in the period, up 14% as it continues to reduce its inventory, which fell to around 4.0 million tonnes from 6.5 million tonnes at the end of 2014.

Gold miners Fresnillo, down 1.2% as the worst performer in the FTSE 100, and Randgold Resources, down 0.4%, ended amongst the few FTSE 100 fallers following another decline in the spot price of gold. The metal hit its lowest level since November on Thursday at USD1,142.40 an ounce.

BT Group shares recovered from their earlier losses after UK telecoms regulator Ofcom said it has completed the first phase of its Strategic Review of Digital Communications and said it will seek views on a number of potential changes, including an option to separate off BT's infrastructure division, Openreach.

Whilst the formation of Openreach has "delivered real choice, quality and value" for customers, Ofcom said Thursday, the regulator added: "The incentive for BT to discriminate against competing providers can be limited by regulation, but not removed entirely."

The regulator highlighted changes to BT's network over the year, and suggested that it has been concerned that Openreach's performance on behalf of providers has "too often been poor".

BT shares closed up 0.6%. Shares in the company's competitors also closed higher, with Sky up 0.9% and TalkTalk Telecom Group up 1.6%. Meanwhile, Telecom Plus, which provides telephony as well as other utilities, rose 5.2%, the best performer in the FTSE 250.

Big Yellow Group closed up 3.1% after the self-storage company said its revenue increased in the first quarter of its financial year, boosted by the acquisition of its regional portfolio joint venture, though like-for-like revenue also increased.

It said its total revenue in the first quarter to the end of June was GBP24.1 million, up from GBP18.9 million a year earlier, thanks to the company acquiring the 67% of the Big Yellow Partnership Ltd, its regional joint venture, that it did not already own in December.

Still ahead in the economic calendar there will be a speech by Bank of England Governor Mark Carney in Lincoln Cathedral at 1900 BST, and US Federal Reserve Chair Janet Yellen will start a second day of testimony before Congress at 1930 BST.

On Friday, there is US inflation data at 1330 BST, alongside housing starts and building permits. At 1500 BST, there is the Reuters/Michigan consumer sentiment index.

In the UK corporate calendar, there are second-quarter results from miner Evraz and a first-quarter trading update from currency manager Record.

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

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