LONDON (Alliance News) - Stocks in London are called higher Friday as Greece submitted a new set of reform proposals to Brussels late Thursday, moving one step closer to the potential resumption of bailout talks with its creditors.
The proposals must now be assessed ahead of emergency meetings of eurozone and EU leaders on Sunday afternoon. These talks have been presented as the last chance for a deal.
The new list of reforms makes concessions to creditors' demands in key areas including VAT and pension reform, according to a copy of the document seen by dpa. It includes a standard VAT rate of 23%, with a reduced rate of 13% for basic food, energy, hotels and water, and a super-reduced rate of 6% for pharmaceuticals, books, and theatre - in line with the creditors' last set of proposals.
The new proposal also mirrors the creditors' last demands on pension reform, eliminating a solidarity grant for hard-up pensioners more rapidly than previously proposed, while introducing measures to keep people in work until the age of 67.
But Greece's reform efforts must now be greater than creditors had previously demanded, diplomats in Brussels said earlier Thursday on condition of anonymity, noting that the situation in the country had badly deteriorated since negotiations broke off in June.
Chris Scicluna, head of economic research at Daiwa Capital Markets, says this new reform package could be seen by many as Greek Prime Minister Alexis Tsipras caving in to pressure from creditors.
"With Tsipras seemingly having caved in to most of the creditors' demands, while still looking for so-far-unrequited stronger commitments for a restructuring of Greek debt (presumably via longer maturities and more concessionary interest rate), the biggest obstacle to a deal will be his own Syriza party and the Greek parliament," Scicluna says. "After the trauma inflicted by the referendum, in many Greek eyes Tsipras will be viewed as a coward and a traitor."
IG says futures indicate the FTSE 100 to open higher at 6,630.4. The blue-chip index ended up 1.4% at 6,581.63 on Thursday, boosted by a rebound in Chinese and Hong Kong stock markets after a period of sharp declines.
On Friday, stock markets in Asia continue to trade largely higher, with the Japanese Nikkei down 0.3%, but the Hang Seng trading up 2.2% and the Shanghai Composite up 5.2%.
On Wall Street Thursday, the DJIA and the S&P 500 both ended up 0.2% and the Nasdaq Composite closed up 0.3%.
In a quiet UK corporate calendar, there are full-year results from solid state battery technology company Ilika and Artemis Alpha Trust.
In the economic calendar, there are trade balance data from the UK at 0930 BST and US wholesale inventories at 1500 BST. US Federal Reserve Chair Janet Yellen will be speaking in Cleveland, Ohio at 1700 BST.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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