MARKET COMMENT: London Seen Starting Lower On ECB's Greece Stance

Thu, 05th Feb 2015 07:40

LONDON (Alliance News) - UK shares are set to open lower Thursday, after the European Central Bank turned up the pressure on Greece over its vow to renegotiate the terms of its bailout.

Meanwhile, in pre-market company news, BT Group said it has agreed to acquire mobile network EE for GBP12.5 billion, in a cash and share deal that will give EE's joint owners Deutsche Telekom AG and Orange SA stakes in BT.

The company will pay the cash amount through a combination of new debt financing and around GBP1 billion from the placing of new BT shares. It said this placing will be launched in due course.

Fellow telecoms firm Vodafone confirmed its full-year guidance Ebitda at GBP11.6 to GBP 11.9 billion and added that its project spring investment programme is well advanced. The group said its third quarter group service revenue was GBP10.88 billion.

AztraZeneca moved to further bolster its respiratory drug pipeline by acquiring the rights to Actavis' branded respiratory business in the US and Canada, as it reported lower earnings for 2014 due to increased investments it is making in accelerating its existing portfolio. The group said is to buy Actavis' US Respiratory portfolio for USD600 million plus royalties.

The news came as medical devices company Smith & Nephew reported higher 2014 earnings, buoyed by a sustained improvement in US reconstruction markets and higher growth in emerging markets, and GlaxoSmithKline sold its entire stake in Gemab AS.

Caterer Compass Group said it has made a strong start to the new full year. The company said its organic revenue grew 5.7% in the first quarter. Compass Group said its North America trading started well, while its European and Japanese business returned to growth.

IG futures indicate the FTSE 100 to open 47 points lower at 6,813.1. The index closed up 0.2% at 6,860.02 on Wednesday, after a slide in the price of oil offset a positive UK economic reading and the decision by China's central bank to cut its reserve ratio for banks.

In Europe, German factory orders were up 4.2% in December from the month before, above the consensus forecast of 1.5%.

The ECB said it would refuse to accept Greek government bonds as security for loans. The central bank had previously given the Greek government a waiver on the use of its bonds as security, but said in a statement that it would lift that exemption as of February 11.

"European markets look set for a lower open today after the European Central Bank decided to send a rather sharp message to the Greek government that they were in no mood to accept any renegotiations of their obligations with respect to the current Greek bailout program," says Michael Hewson, chief market analyst at CMC Markets.

Greek finance minister Yanis Varoufakis push to renegotiate the country's bailout faces a tough opponent on Thursday as he holds talks with German Finance Minister Wolfgang Schaeuble.

Wall Street ended flat to lower Wednesday. The DJIA closed flat, the S&P 500 ended down 0.4% and the Nasdaq Composite fell 0.2%.

In Asia on Thursday, the Japanese Nikkei 225 closed down 1%, and the Hang Seng trades flat. The Shanghai Composite is trading down 1.2%.

Brent crude is quoted at USD53.42 a barrel Thursday and US benchmark West Texas Intermediate is quoted at USD47.65 a barrel. Gold is sliding at just under the psychologically important USD1,300 level, quoted early Thursday at USD1,270.92 an ounce.

In the economic calendar, Bank Of England interest rate decision at 1200 GMT. In the afternoon, US Initial jobless claims are at 1330 GMT.

By Daniel Ruiz; danielruiz@alliancenews.com