LONDON (Alliance News) - London stock prices ended mostly lower Friday, as investor sentiment across Europe was damaged further by a report that European Union officials have formally put on the table for the first time the possibility of a Greek default.
Royal Mail was the leader of a short list of gainers in the FTSE 100 index, while Royal Dutch Shell ended amongst the biggest blue-chip fallers after saying it will pull out of a shale gas exploration project in the east of Ukraine.
The FTSE 100 ended down 0.9% at 6,784.92 points, but only down 0.3% for the week as a whole. The FTSE 250 closed down 0.8% Friday at 17,949.09. The AIM All-Share outperformed, ending up 0.2% at 774.89.
In Europe, the CAC 40 in Paris ended down 1.5% and the DAX 30 in Frankfurt finished down 1.3%.
When the European stock markets closed, Wall Street also was lower, with the DJIA down 0.6% and the S&P 500 and Nasdaq Composite both down 0.5%.
"News that EU officials were now seriously considering ‘Plan B’, as a Greek default, sent ripples of negativity through an already sinking market as investors were once against spooked by the chances of a Grexit," said Spreadex analyst Connor Campbell.
Several officials told Reuters that the possibility of a Greek default has been formally discussed for the first time among senior EU officials.
Emergency scenarios for Greece discussed by eurozone countries could include capital controls, said dpa sources after a meeting of the currency bloc's state secretaries for finance in Bratislava, Slovakia. Such controls, which are typically used to prevent mass money transfers out of a country, could only be ordered by Greece itself, the sources said on condition of anonymity.
However, at the European stock market close, a Greek government official said the parties are "closer than ever to a deal". Greece is ready to submit counterproposals "to bridge the remaining differences," with its creditors over its bailout, the official said.
Speaking on condition of anonymity, the official added that the Greek delegation will meet with the representatives of the creditors Saturday morning in Brussels. "We are more than ever closer to an agreement," the official said, adding that "what is needed is political will" for a mutual understanding.
Berenberg analyst Holger Schmieding believes that only a change in Greece's position "very soon" will allow time for some technical preparations before finance ministers could approve the deal on Thursday. The analyst thinks Greece's creditors have no intention to "blink".
"So far, Greek Prime Minister Alexis Tsipras has avoided the hard decision: get rid of his left wing or lead Greece into the default/Grexit abyss, said Schmieding. "The longer he drags his feet, the more difficult it will be to get a good deal."
In London, a Bank of England policymaker said the UK economy has started to return to normal conditions and so the time to end the loose monetary policy is nearing.
"The economy is starting to return to more normal conditions, after arguably the biggest shock in over a hundred years, and we expect this healing process to continue over the forecast," BoE Monetary Policy Committee member Ian McCafferty said in a speech, text of which was published by the central bank on Friday. "As a result, the time of the extraordinary policy stance of recent years is gradually drawing to a close."
On the London Stock Exchange, Royal Mail rose 2.8% after falling 4.5% Thursday on the sale of a further 15% stake in the postal firm by the UK government. Shares in the company also were boosted on Friday by being upgraded to Overweight from Neutral by JPMorgan.
Meanwhile, Royal Dutch Shell has notified Ukraine that it will pull out of a shale gas exploration project in the east of the country, the Financial Times reported, as a result of the ongoing conflict in the region. Insiders cited heightened geopolitical risk and sharp drop in global oil prices, which has made shale gas exploration projects less attractive, the report said. Shell 'A' and 'B' shares both closed down 2.1%.
In the FTSE 250, clothing designer and retailer Ted Baker ended up 1.2% after saying Friday it is on track to meet expectations for its full year following a strong start, with revenue up 24% in the eighteen weeks from the beginning of February to June 6.
Bwin.Party Digital Entertainment and Petra Diamonds were amongst the biggest mid-cap losers, down 10% and 7.0%, respectively. Two shareholders in Bwin.Party are looking to sell 50 million shares in the online gambling company, and Petra Diamonds said it expects to report lower revenue when it next reports annual results, as average prices for selling its diamonds have come under pressure.
In the economic calendar Monday, Italy's consumer price index is due at 0900 BST, while the eurozone trade balance is at 1000 BST. European Central Bank President Mario Draghi is expected to speak in the European Parliament in Brussels at 1430 BST. In the US, industrial production is due at 1415 BST, while NAHB housing market index is expected at 1500 BST.
In the UK corporate calendar, Majestic Wine, Redcentric, Latchways and Worldwide Healthcare Trust release full-year results.
By Daniel Ruiz; danielruiz@alliancenews.com
Copyright 2015 Alliance News Limited. All Rights Reserved.
Redcentric (RCN)
Worldwide Healthcare Trust (WWH)
Petra Diamonds (PDL)