LONDON MARKET EARLY CALL: Stocks Seen Flat; RBS Could Face US Penalty

LONDON (Alliance News) - UK shares are set to open flat Friday, as investors start to focus on the potential outcomes of the Greek referendum on Sunday, while US markets are closed for the Independence Day holiday.

Greece's Prime Minister Alexis Tsipras on Thursday urged Greeks to preserve "national unity" in the face of "temporary" difficulties, while the International Monetary Fund said Athens would be dependent upon bailout aid for years to come. Tsipras has urged Greeks to opt for "no" on Sunday when they vote in a referendum he called on whether the country should accept reforms demanded by its creditors.

"The next day we will all be one in our efforts for our country to overcome, as soon as possible, this economic crisis," he said in a Defence Ministry speech.

But the IMF warned in a 23-page debt assessment that Greece's problems are far from over, arguing that Athens will need a further EUR50 billion in funding to get through the end of 2018.

"Very significant changes in policies and in the outlook since early this year have resulted in a substantial increase in financing needs," the IMF said in the document, dated June 26, which has not yet been formally approved.

A "weak reform effort" had rendered the country's debt unsustainable, the Washington-based fund added.

Jeroen Dijsselbloem, the head of the eurogroup, warned that it would be "extremely difficult" to keep Greece in the eurozone if the country votes "no".

"The Greek government gives the impression that the future of their country after a 'no' vote will be simpler. That is not being honest with the Greek voters," Dijsselbloem told parliament in the Netherlands, where he is the finance minister.

Opinion polls published this week suggest the Greek public is split. A GPO poll conducted for French bank BNP Paribas and reported in Greek media showed 47.1% of people planned to vote "yes" or were likely to, while 43.2% said they would vote against it or were leaning toward "no".

IG says futures indicate the FTSE 100 to open 1 point higher at 6,631.50. The index closed up 0.3% at 6,630.47.

In Asia on Friday, the Japanese Nikkei 225 trades up 0.2%. Meanwhile in China, the Hang Seng trades down 0.1% and the Shanghai Composite is down 1.7%.

China's securities market regulator said late Thursday it has opened an investigation into suspected market manipulation as stocks opened lower again, having lost a quarter of their value in the past month. The China Securities Regulatory Commission said it has set up a team to look for "clues of illegal manipulation across markets" and irregularities between securities and futures trading.

The services sector in China continued to expand in June, but at a slower pace, the latest Purchasing Manager's Index from HSBC Bank showed on Friday, with a PMI score of 51.8. That's down from 53.5 in May, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. The composite index came in at 50.6, down from 51.2 in the previous month and touching a 13-month low.

Wall Street ended flat to lower Thursday, with the DJIA down 0.2%, the Nasdaq Composite down 0.1% and the S&P 500 flat. US stocks are closed Friday for the Independence Day holiday.

The Royal Bank of Scotland Group could face a penalty of as much as USD13 billion depending on the outcome of a US mortgage securities lawsuit, Bloomberg News reported on Thursday.

According to the report the US Federal Housing Finance Agency, which is suing on behalf of Fannie Mae and Freddie Mac, estimated that amount in a court filing in a related case.

In the corporate calendar Friday, International Consolidated Airlines Group releases its June traffic statistics, likely in the afternoon, while Ferrexpo publishes its second-quarter production results. SVM UK Emerging Fund, Polar Capital Technology Trust and Eco Animal Health release full-year results. Marshalls issues a trading statement.

In the economic calendar, France's and Germany's Markit services PMI are due at 0850 BST and 0855 BST, respectively, while the same for the Eurozone and the UK are due at 0900 BST and 0930, respectively. Eurozone's retail sales are expected at 1000 BST.

By Daniel Ruiz; danielruiz@alliancenews.com

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