LONDON (Alliance News) - UK stocks are flat to higher Tuesday mid-morning after investor sentiment was boosted Monday by a positive outcome from the Eurogroup meeting held in Brussels, though with still no deal on Greece's debt problems and with a new summit scheduled for Thursday.
On the London Stock Exchange, Ladbrokes is leading the FTSE 250 after confirming it is in merger talks with unlisted rival Gala Coral Group, while Johnson Matthey, Diageo and Vodafone Group are amongst the biggest gainers in the FTSE 100 following broker upgrades.
The FTSE 100 is up 0.1% at 6,832,17, the FTSE 250 is up 0.3% at 17,951.09, while the AIM All-Share is flat at 769.87.
In Europe, major indices also are higher, with the CAC 40 in Paris up 0.8% and the DAX 30 in Frankfurt up 1.0%. Stocks around the world are enjoying some relief after previous losses. Wall Street ended broadly higher Monday, with the Nasdaq Composite reaching a new closing high, while the Japanese Nikkei 225 closed up 1.9% Tuesday at a 15-year high of 20,809.42 points. In China, the Hang Seng closed also up 0.9% in Hong Kong, and the Shanghai Composite finished up 2.2%.
Eurozone leaders sought Monday to jump-start stalled bailout negotiations with Greece, but warned that still more efforts are needed to bridge differences with Athens and pull it back from the brink of bankruptcy.
"I'm convinced that we will come to a final agreement in the course of this week, for the simple reason that we have to find an agreement this week," said European Commission President Jean-Claude Juncker, following an emergency summit in Brussels.
A new reform proposal, submitted by Athens just hours before Monday's talks, managed to "inject new dynamism into the negotiations", said European Council President Donald Tusk.
Greece has been negotiating since February with the commission, the European Central Bank and the International Monetary Fund on reforms needed to unlock EUR7.2 billion in bailout aid. The talks have entered crunch time, with just days left for Greece to access funds before the European share of its rescue package expires on June 30.
"There is much that needs to be done, according to [German Chancellor Angela] Merkel at least, but there has been a serious proposal submitted by the Greeks, and it is possible that a deal could be done this week that would avert the threat of an imminent default," says Hantec Markets Richard Perry.
Meanwhile, Spreadex analyst Connor Campbell believes, even should Greece and its creditors find a deal, the problem it not over, at least for the Greek government.
"Yet as predicted, the shift towards creditors' demands has left [Greek Prime Minister Alexis] Tsipras an unpopular man at home," he says. "Concessions on VAT and pensions...may have helped endear Tsipras to Merkel, [IMF Managing Director Christine] Lagarde and co, but it leaves him with the unenviable prospect of selling this proposal, which has already sparked fears in Greece that it will sap any remnants of growth out of an already stagnant country, to the Syriza-filled Parliament."
Outside Greece, Germany's private sector growth improved in June as output growth accelerated further, survey results from Markit Economics showed Tuesday. The flash composite output index rose to 54 in June from a 5-month low of 52.6 in May. A reading above 50 suggests expansion in the private sector. Meanwhile, eurozone private sector economic growth hit a four-year high in June. The Markit composite output index came in at 54.1 in June, a 49-month high and above expectations of 53.5. The index was at 53.6 in May.
On the corporate front, Ladbrokes is leading the mid-cap index, up 12%, after confirming late Monday that it is holding talks with unlisted rival Gala Coral Group on a possible merger of Ladbrokes and Coral Retail, Eurobet Retail, and Gala Coral's Online businesses. Ladbrokes said the talks are focusing on plans to create an enlarged business which would be traded on the main market of the London Stock Exchange, where the betting firm currently is traded as a member of the FTSE 250 index.
Ladbrokes said there is no certainty a deal will be done between the two or on the timing of any agreement. It also said that, should the deal proceed, it may undertake an equity placing in order to strengthen the balance sheet of the combined business. The company said that the results of its Business Review, due to be published on June 30, may be rescheduled dependent on how talks with Gala Coral progress.
Shore Capital analyst Greg Johnson says the announcement surprised the market, saying that the rationale for the merger is compelling. However, the analyst sees "significant potential hurdles" to the deal, warning about competition regulation, as the combined entity would equate to broadly half the UK retail betting market.
Petrofac is also amongst FTSE 250 gainers, up 8.0%, after being upgraded by JP Morgan to Overweight from Neutral.
In the FTSE 100, Johnson Matthey is up 2.4% after being upgraded by Citigroup to Buy from Neutral, while Diageo and Vodafone are up 1.9% and 1.1%, respectively, after Nomura upgraded both stocks to Buy from Neutral.
Bunzl is the worst blue-chip performer, down 1.5%, even though the distribution and outsourcing company said overall trading in the first half of 2015 has been in line with its expectations, with revenue in the first half set to grow by around 6%, including a one-percentage-point benefit from positive exchange rate movements. In a separate statement, Bunzl also announced the acquisition of four businesses in the US, Colombia, Canada and France.
Still in the corporate calendar, cruise operator Carnival releases its second-quarter results at 1400 BST.
In the economic calendar, in the US, durable goods are due at 1330 BST, the Redbook index is due at 1355 BST, and US Markit manufacturing PMI is due at 1445 BST. US new homes sales are at 1500 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
Copyright 2015 Alliance News Limited. All Rights Reserved.
Petrofac (PFC)
Johnson Matthey (JMAT)
Diageo (DGE)
Vodafone (VOD)