MARKET COMMENT: London Ends Mixed As Investors Await Greek Reforms

LONDON (Alliance News) - London stock indices closed mixed Monday as investors continued to await the submission of a detailed list of economic reform proposals by Greece to its international creditors.

Greece and the Eurogroup of finance ministers reached an agreement late Friday on a four-month extension of funding, subject to a list of economic reforms. The country, which has received EUR240 billion in international bailouts since 2010, must convince its creditors that the new leftist government is serious about implementing far-reaching reforms, or else have its financial taps turned off at the end of the month on Saturday.

"We are discussing with our partners to ensure that the list is accepted," said Greek government spokesman Gabriel Sakellarides. "We hope that there are no complications," he added, without providing further details.

The proposed measures are thought to include privatizations and structural reforms in taxation and in the public sector, according to Greek sources. The list also will outline debt relief to distressed Greeks most affected by the crisis.

"Greece appears to have gained no ground whatsoever and is now widely seen as having rolled over. Are they going to launch a late attack with an unacceptable list of proposed reforms? Or if they have turned as compliant as Friday's agreement suggests, then this Greek government may prove as sustainable as the last one," said Guy Foster, group head of research at Brewin Dolphin.

The FTSE 100 closed marginally lower at 6,912.16, having opened at near its record intraday high of 6,950.60 points, set in December 1999. The FTSE 250, meanwhile, managed to take its run of gains to eight consecutive sessions, closing up 0.3% at another new high of 17,167.98. The AIM All-Share closed up 0.3% at 713.05.

European indices outperformed London, with the French CAC 40 and the German DAX 30 both closing up 0.7%.

At the close of European equity trade Wall Street was trading lower. The DJIA was trading 0.2% lower, while the S&P 500 was down 0.1% and the Nasdaq Composite was marginally lower.

HSBC Holdings closed down 4.6%, the second worst performing FTSE 100 stock after fellow lender Standard Chartered. HSBC reported 2014 earnings Monday, kicking off the bank earnings season, and missed expectations with a 17% drop in pretax profit as numerous fines, settlements and provisions for customer compensation took their toll on earnings.

HSBC, which is the largest London-listed bank by market capitalisation, said it made an USD18.68 billion pretax profit in 2014, compared with USD22.57 billion in 2013. According to consensus estimates compiled by the company, financial analysts had expected HSBC to report a pretax profit of USD20.95 billion.

Fellow emerging markets-focused bank Standard Chartered ended as the biggest faller in the FTSE 100, down 4.7%. Standard Chartered reports its 2014 results on Wednesday next week.

International Consolidated Airlines Group, up 2.7%, was one of the best blue-chip performers. A trade union representing workers at Aer Lingus Group has changed its stance and said it will now back the takeover bid for the Irish carrier by International Consolidated Airlines Group, Reuters reported on Sunday. Aer Lingus shares closed up 0.5%.

Oil-related stocks weighed on the main London indices after a fall in the price of oil. Brent oil fell to a low of USD58.34 a barrel, while West Texas Intermediate hit a low of USD48.64, falling below the psychological USD50 a barrel mark.

"The US rig count fell less than expected on Friday leaving oil prices lower. Friday’s fall has followed through to Monday after Libya opened up a new pipeline and Oman increased production; both adding to the global supply glut," said Jasper Lawler, market analyst at CMC Markets.

Amongst the biggest FTSE 100 fallers were Tullow Oil, down 3.7%, Weir Group, down 1.7%, and BG Group, down 1.0%. In the FTSE 250, Ophir Energy fell 5.2%, followed by Premier Oil, down 5.0%, and Hunting, down 4.1%.

In addition, Premier Oil said Monday it has plugged and abandoned the Badada-1 exploration well in Kenya, though it added the well had been drilled within budget. The company did not provide any detail on why the well had been plugged and abandoned, but one of its partners, AIM-listed Tower Resources, said the well had failed to find commercial hydrocarbons. Premier Oil has a 55% stake in the well, with Tower holding a 15% stake and the remaining 30% held by Taipan Resources, which is also the operator.

Tower Resources closed down 41%, the worst performer in the AIM All-Share index.

Precious metal miners felt the crunch after a fall in gold price, which dipped to a low of USD1,190.55 an ounce. Fresnillo, down 3.0%, and Randgold Resources, down 1.9%, were amongst the biggest fallers in the FTSE 100. In the FTSE 250, Polymetal International was the worst performer, down 5.8%, followed by Acacia Mining, down 5.3%, and Centamin, down 2.9%.

DS Smith ended as the biggest gainer in the FTSE 250, up 3.8%. The corrugated packaging company said it is trading in line with expectations as it announced a EUR300 million deal to buy European corrugated board packaging company Duropack.

Dechra Pharmaceuticals ended up 2.9%, making it also one of the best mid-cap performers. The veterinary pharmaceutical business raised its interim dividend to 5.12 pence, from 4.75 pence a year before, as it posted a rise in pretax profit. In the half year to end December 2014, the company posted a pretax profit of GBP12.6 million, up from GBP10.3 million a year before, as revenue rose 5.2% to GBP100.9 million from GBP95.9 million. At constant currency, revenue would have been up 11%, Dechra said.

Bookmaker Ladbrokes is set to announce later this week that it will close around 50 betting shops, as the group faces the twin challenges of tax rises and regulation, The Sunday Times reported. The company is expected to outline the plans at its full-year results presentation on Thursday, bringing the total number of closures by Ladbrokes and rivals William Hill and Gala Coral Group in the past year to more than 200, the paper said. Ladbrokes shares also were downgraded by Deutsche Bank to Hold from Buy. Ladbrokes ended down 5.2%.

In the AIM All-Share, Quindell was the third biggest gainer, up 25%, after saying it has extended the exclusivity period for its discussions with Slater & Gordon regarding the disposal of its professional services division to March 31. The insurance services outsourcing provider said that the discussions continue but that the indicative terms being discussed with the law firm for the division "would imply a significant premium to the company's market capitalisation" on Friday.

In the economic calendar Tuesday, German GDP readings for the fourth quarter are due at 0700 GMT, ahead of eurozone consumer price index at 1000 GMT. European Central Bank President Mario Draghi will give a speech in Frankfurt at the official unveiling of the new EUR20 banknote at 1400 GMT. US consumer confidence isdue at 1500 GMT, as is US Federal Reserve Chair Janet Yellen's semi-annual Congressional testimony on monetary policy.

In the corporate calendar, BHP Billiton is due to release its half-year results at 2130 GMT Monday. On Tuesday at 0700 GMT, there are full-year results from a host of FTSE 100 constituents including housebuilder Persimmon, engineering group GKN, defence and aerospace components maker Meggitt, and packaging and paper company Mondi.

In the FTSE 250, subprime lender Provident Financial, electricity generator Drax Group, specialty chemicals companies Croda International, and Elementis all will report full-year results, while emerging markets asset manager Ashmore Group and animal genetics company Genus will issue  half-year results.

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

Copyright 2015 Alliance News Limited. All Rights Reserved.