LONDON MARKET COMMENT: Stocks Trade Lower; HSBC Leads Gainers

LONDON (Alliance News) - London stock indices quickly reversed a higher open to trade lower mid-morning Monday, in a quiet start to the week, with HSBC Holdings leading FTSE 100 gainers for the second consecutive session after reports over the weekend suggesting it will spin off its UK retail bank.

The FTSE 100 is down 0.4% at 7,043.00, the FTSE 250 is down 0.2% at 17,687.39, and the AIM All-Share index is down 0.1% at 752.91.

European stocks also are trading lower. The CAC 40 in Paris is down 1.0% and the DAX 30 in Frankfurt down 0.3%.

HSBC Holdings shares lead the few FTSE 100 gainers, up 2.6%. The company closed up 2.9% on Friday, when it announced a review of the possibility of moving its headquarters outside the UK. Over the weekend, the Sunday Times reported that HSBC also is mulling the spin-off of its UK retail bank into a separate business for about GBP20 billion.

"HSBC investors are warming to reports that the UK domiciled and London listed bank is mulling a spin off of its UK retail banking operations to ensure it remains flexible to any changes to the UK's membership in the EU," says Will Hedden, a dealer at London Capital Group.

Shares in fellow highly international UK-based bank Standard Chartered are just behind Monday, up 2.2%.

Housebuilders are amongst the worst performers in the FTSE 100, with Taylor Wimpey down 1.6%, Barratt Developments down 1.5%, and Persimmon down 1.1%.

Centrica trades up 0.2% as it said energy consumption in the first quarter of 2015 was higher as weather was colder than expected, despite the number of residential accounts remaining broadly flat and business accounts falling, but the company reiterated its full-year guidance.

The FTSE 100 company said residential gas consumption was 10% higher in the first three months of 2015 year-on-year with electricity consumption increasing by 2%, which Centrica said was due to colder temperatures than normal during the period.

Sports Direct International is up 1.5% after RBC Capital Markets upgraded the sports retailer to Sector Perform from Underperform. RBC says online sales are improving again and it feels the valuation for the sports retailer is now more reasonable.

RBC also upgraded SuperGroup to Outperform from Sector Perform, saying the fashion retailer's valuation is undemanding, and it should drive double-digit top and bottom line growth. SuperGroup is the best performer in the FTSE 250, up 5.5%.

Tullow Oil confirmed an international tribunal has ordered all exploration for oil and gas in a disputed offshore area between Ghana and the Ivory Coast to be suspended, including in the company's flagship TEN project.

Although exploration and new exploitation in the disputed area is suspended, existing developments such as the TEN project can continue to be developed, Tullow said. All new exploration and exploitation will remain suspended until the Special Chamber of the International Tribunal of the Law of the Sea in Hamburg, Germany, makes a final decision on the maritime boundary dispute between the two countries in late 2017.

Tullow trades up 1.3%.

Investors also are focusing on Greece's upcoming deadlines to its international creditors as the struggling nation tries to gather enough funds to meet demands. Greece is scheduled to pay the International Monetary Fund around EUR200 million on Friday, before another payment of EUR745 million due on May 12.

"The markets have started the week on nervous footing as Greece's looming deadline and the reality that it is not in a position to meet its commitments dawns on the investment community," says IG market analyst Alastair McCaig.

Still ahead in the economic calendar, the Confederation of British Industry industrial trends survey results are set for 1100 BST. US Markit services and composite Purchasing Managers' Index readings are due at 1445 BST, and the Dallas Fed manufacturing business index is at 1530 BST.

Futures indicate Wall Street for a mixed open, with the DJIA pointed down 0.1%, the S&P 500 indicated flat, and the Nasdaq 100 expected to open up 0.1%. After the close of US equity markets, Apple will report second-quarter results.

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

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