LONDON MARKET MIDDAY: Stocks Post Gains As US Momentum Set To Continue

LONDON (Alliance News) - UK stock indices are posting broad gains midday Friday, with investors seemingly putting fears of a Greek default behind them for now and as US indices look to continue their positive momentum from Thursday.

The FTSE 100 trades up 0.5% at 6,739.81, the FTSE 250 is up 0.3% at 17,733.46 and the AIM All-Share trades up 0.3% at 766.58.

European stocks are also performing well despite the worrying Greek backdrop, with the French CAC 40 trading up 1.3% and the German DAX 30 up 1.1%.

In New York on Thursday, stocks moved sharply higher with the DJIA and S&P 500 both closing up 1.0%. The tech-heavy Nasdaq Composite ended up 1.3% at 5,132.9488, a new record close for the index, while hitting a record intraday high of 5,143.316.

The rally on Wall Street came as traders continued to react positively to the largely doveish Federal Reserve monetary policy announcement on Wednesday and the weaker-than-expected US inflation numbers on Thursday. Futures currently indicate US stock indices for a modestly higher open Friday, with the DJIA, S&P 500 and Nasdaq 100 all pointed up 0.1%.

Concerns about a Grexit from the eurozone, and even the EU, refuse to go away. The country is edging closer to default as it struggles to secure a deal with its international creditors to unlock access EUR7.2 billion remaining in its international bailout.

The meeting of eurozone finance ministers on Thursday ended with no deal for Greece. As a result, eurozone leaders will hold an emergency summit on Monday to discuss the situation in Greece.

"We are headed into one of the most uncertain weekends for a long time and yet looking at the markets you'd swear everything is hunky dory," says Craig Erlam, senior market analyst at Oanda.

"While the [International Monetary Fund] has claimed that no grace period will be afforded to Greece, I'm sure if a deal is reached before then they would accept a late payment and not deem them to have defaulted. But a lot needs to be done before that can even be considered and progress is simply not being made," Erlam adds.

While the euro has weakened somewhat against the dollar Friday, now trading at USD1.1308, London Capital Group market analyst Ipek Ozkardeskaya believes the euro should now be somewhat insulated to a Greek default.

"Greek tears attract no more sympathy, and the euro complex trades regardless of Greek default risks. The euro's sensitivity to Greece decreases, a potential Grexit shock should have limited impact on euro," Ozkardeskaya says.

On the London Stock Exchange, Colt Group is by far the best performer with its shares surging 21% to 190.026 pence after Fidelity made an 190p per share offer for the remaining shares in the telecommunications and IT firm that it does not already own, valuing Colt at around GBP1.72 billion. FMR and FIL, together known as Fidelity, said this offer price will not be increased. FMR already has a 62.43% shareholding in Colt.

However, the independent directors Colt said the offer "undervalues" the company, and made no recommendation as to whether or not shareholders should accept the offer. The offer price is at a 21% premium to Colt's closing price of 157 pence Thursday.

Card Factory is the worst performer in the mid-cap FTSE 250 index, down 9.1% at 326.80p. The greeting card retailer said some of its directors and members of its senior management team have sold 14.8 million shares in the company at 330p each, representing approximately 4.3% of its issued share capital. At that price, the sale was worth GBP48.8 million. The selling shareholders, which included Chief Executive Richard Hayes and Chief Financial Officer Darren Bryant, continue to have an interest in 49.1 million shares between them, representing 14.4% of the issued share capital.

Styles & Wood Group is the best AIM All-Share performer, with shares rising 40%. The company revealed a refinancing of its outstanding convertible preference shares, with a Henderson Global Investors fund and an investor backed by the big five FTSE 100 banks taking shares in the company after buying its outstanding convertible preference shares from a subsidiary owned by Royal Bank of Scotland.

The refinancing strengthens the company's balance sheet, gives it a better capital structure and increases net assets by GBP3.6 billion, according to Styles & Wood, which said the move will cut cash outflows by GBP5.2 million and enable it to consider acquisitions.

Meanwhile, shares in Auhua Clean Energy have slipped 33% after it said its pretax profit and revenue fell in 2014 compared to 2013, and it has raised GBP1.7 million through its previously announced discounted share placing and subscription. The placing comprised of 9.0 million shares, and the subscription 29.3 million shares, both at the price of 4.5 pence each. The company currently trades at 5.35p.

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

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