LONDON MARKET COMMENT: Stock Futures Turn Lower On Greek Standstill

LONDON (Alliance News) - UK shares are set to open lower after no agreement was reached on Thursday's talks between Greece and its international creditors held in the Eurogroup meeting.

IG says futures indicate the FTSE 100 to open 5 points lower at 6,702.30. The index closed up 0.4% at 6,707.88, boosted by a higher open on Wall Street after a mixed set of US inflation and jobless claims data.

"As expected yesterday?s Eurogroup finance ministers meeting yielded the outcome that most people thought it would and broke up with no new progress and quite a downbeat mood, amongst EU officials," says Michael Hewson, chief markets analyst at CMC Markets UK. "Greece?s finance minister [Yanis Varoufakis] did submit some new proposals, but they don?t appear to have been enough to satisfy EU creditors, while German Chancellor Angela Merkel reiterated the line of no reforms, no money."

Varoufakis said Thursday he has warned his eurozone counterparts that "we are dangerously close to a state of mind that accepts an accident" involving his country.

"I urged my colleagues not to fall prey to this state of mind," he said. "We can forge a good agreement. Our government is standing by with ideas and with a determination to cultivate the two forms of trust necessary to end this Greek drama - the trust of our partners...and the trust of our people."

As a result, eurozone leaders will hold an emergency summit on Monday to discuss the situation in Greece.

"It is time to urgently discuss the situation of Greece at the highest political level," EU President Donald Tusk said in a statement issued on Thursday evening.

Greece is seeking to access EUR7.2 billion remaining in its international bailout, but has been struggling for months to agree with its creditors on prerequisite economic reforms. Time is running short as the European part of the country's bailout is due to expire at the end of this month.

An extension now has to be discussed, since it is "simply impossible" to complete the procedures needed for the disbursement of the bailout funds by June 30, said Eurogroup President Jeroen Dijsselbloem, after the eurozone finance ministers' Eurogroup.

Outside Greece, Germany's producer prices declined by more than expected in May, data released by Destatis revealed Friday. Producer prices declined 1.3% in May from last year, but this was slower than the 1.5% drop seen in April and 1.7% fall in March. The annual pace of decline was bigger than a 1.1% fall forecast by economists though. German producer prices have been falling since August 2013.

In the UK, public sector net borrowing data for May is due at 0930 BST, providing the final official assessment of the public accounts before Chancellor of the Exchequer George Osborne gives his Budget to UK Parliament on July 8.

"The April figures indicated that borrowing on the PSNB-ex Banks measure fell to GBP6.8 billion from GBP9.3 billion in April 2014," says Lloyds Bank. "This 27% decline was well ahead of the Office of Budget Responsibility forecast...for the shortfall for the year to be trimmed by 14% to GBP75.3 billion."

"We have pencilled in a GBP10.9 billion print for May which would still leave the cumulative shortfall, at GBP17.7 billion, 18% lower than in May 2014," comments Lloyds.

In Asia on Friday, the Japanese Nikkei 225 closed up 0.9%. Meanwhile, the Hang Seng is up 1.0% and the Shanghai Composite is trading down 3.1%.

Wall Street ended higher Thursday. The DJIA and the S&P 500 closed up 1.0% and the Nasdaq Composite finished up 1.3%.

On the UK corporate front, N Brown Group reported growth in revenue in the first quarter of its financial year and said its guidance for the full year remains unchanged. The online, catalogue and stores retailer said group revenue was up 2.5% in the 13 weeks to May 29, as like-for-like sales rose 1.5% and product revenue grew 4.3% but financial services revenue fell 1.9%.

N Brown, which trades under multiple brands including House of Bath, SimblyBe, Jacomo, and figleaves.com, said that its Power Brands continued to outperform the wider group performance, with the active customer file increasing 9%.

Morgan Stanley downgraded Kingfisher to Underweight from Equal-Weight, while upgrading Poundland Group to Equal-Wight from Underweight. Meanwhile, Citigroup upgraded Hikma Pharmaceuticals to Buy from Neutral.

Also in a light economic calendar scheduled for Friday, eurozone current account is due at 0900 BST.

By Daniel Ruiz; danielruiz@alliancenews.com

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