LONDON MARKET MIDDAY: Relief Rally For Stocks On Greek Bailout Deal

LONDON (Alliance News) - Relief has rippled across stock markets in the UK and Europe and onto futures markets in the US on Monday, after Greece and its creditors said they came to an agreement on the nation's third bailout deal.

After more than 16 hours of deliberations in Brussels, eurozone leaders reached a "compromise" on a bailout deal at the eurozone summit. However with the details of the deal still needing to be worked out and approved by several governments, it was not immediately clear how quickly aid would flow to Athens.

"EuroSummit has unanimously reached agreement," EU President Donald Tusk wrote on Twitter. "All ready to go for [European Stability Mechanism] programme for Greece with serious reforms and financial support," he added.

Tusk noted that Greece has to meet strict conditions under the new programme, which has to be approved by several national parliaments, including the Greek parliament. Once such approval is gained, negotiations can formally begin, he added in a press conference following the summit.

Eurogroup President Jeroen Dijsselbloem added that a final deal on Greece's new bailout is still "weeks" away, as the agreement has yet to be approved by several eurozone parliaments.

Dijsselbloem said the finance ministers' Eurogroup panel will later on Monday look at the possibility of short-term "bridge financing" to quickly funnel aid to near-bankrupt Greece. The Mediterranean country needs EUR7 billion that has to be paid to the European Central Bank on July 20.

The new bailout being considered for Greece amounts to approximately EUR80 billion, EU Economy Commissioner Pierre Moscovici had told the French broadcaster RTL shortly before the deal was struck, describing the new aid as "massive".

Greece's deal with its creditors keeps the country in the EU, Prime Minister Alexis Tsipras said after the meeting.

"We faced difficult decisions and hard dilemmas," he said, adding that the deal achieved after marathon talks in Brussels is the best possible. "The measures will inevitably create recessionary trends, but the growth package, the restructuring of debt, and secured funding for the next three years" will mean that "Grexit is past," he said.

Ipek Ozkardeskaya, an analyst at London Capital Group, says that the knee-jerk optimism following the agreement will be short-lived as the deal will not bring much relief on the political front.

"The sovereignty of the EU members is highly questionable after Greece accepted a very costly deal to be able to stay in the eurozone. The risk of a political contagion should intensify as the price to use the euro may become increasingly unsustainable. The anti-austerity echoes will inevitably be the next challenge to euro’s 'irreversibility'," the analyst says.

Despite the deal, the euro is trading lower against other major currencies, having briefly rallied. It currently trades the dollar at USD1.1065, while the pound trades the euro at EUR1.4056.

The FTSE 100 trades up 0.8% at 6,726.56, the FTSE 250 is up 1.0% at 17,659.09 and the AIM All-Share is up 0.3% at 751.81.

In Europe, the French CAC 40 trades up 1.9% and the German DAX 30 is up 1.3%.

US futures also point higher, with the Dow Jones Industrial Average and S&P 500 both indicated up 0.7% and the Nasdaq 100 is up 0.8%.

On individual stock news, Barclays is up 2.5% after the bank's new chairman, John McFarlane, told executives working on the group's effort to separate its retail bank from its investment bank to either acquire an entity with a banking licence or apply for a new one, according to a Financial Times report on Sunday.

International Consolidated Airlines Group is up 1.9% after UBS upgraded the owner of British Airways and Iberia to Buy from Hold.

Alent shares are 44% higher after US-based Platform Specialty Products Corp said it has agreed a GBP1.35 billion takeover of the FTSE 250-listed chemicals company.

Platform Specialty, a chemicals industry consolidation vehicle, said it will pay 503 pence in cash for Alent shares, a premium of around 49% to Alent's closing price of 337.7 pence on Friday. Platform will make the acquisition via its MacDermid Performance Acquisitions Ltd subsidiary. Alent trades at 485.10 pence.

International Personal Finance leads mid-cap decliners, off 15% after the lender warned there could be financial consequences for it as a result of potential legal changes in Poland that could result in a cap that covers a broader definition of non-interest costs than previously suggested.

The company said it is reviewing draft legislation as it works out whether the structure of its products will be affected by a cap that could affect all non-interest costs in connection with a consumer loan agreement, a change from previous proposals that involved a cap on all mandatory, non-interest costs.

Anglo Asian Mining trades up 17% making it one of the biggest gainers in the AIM All-Share index. The company said its gold production in the first half hit a record level following a strong second quarter. It said its gold production in the first half was 35,968 ounces, with gold production in the second quarter rising to 18,745 ounces from 17,193 ounces in the first quarter and from 15,736 a year earlier. The company maintained its full-year gold production target at 70,000-75,000 ounces.

Africa-focused miner Red Rock Resources said it has issued a further tranche of shares, in addition to the two it issued last week, to raise another GBP75,000. Red Rock said it would issue 157.9 million shares at 0.0475 pence per share due to strong investor demand for its shares. It was trading up 10% to 0.0495 pence at midday.

Still ahead in the economic calendar is the US monthly budget statement at 1900 BST.

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

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