MARKET COMMENT: London Shares End Mixed Ahead Of Greek Debt Meeting

LONDON (Alliance News) - London stock prices ended mixed Tuesday, as investors awaited a Eurozone finance ministers meeting on Wednesday where Greece's financial needs will be deliberated, amid a report that the European Commission is considering an extension of the country's debt agreement.

The FTSE 100 closed down 0.1% at 6,829.12. The FTSE 250 ended up 0.5% at 16,658.74, and the AIM All-Share finished up 0.1% at 699.95.

European stocks ended higher, with the CAC 40 in Paris up 1.0% and the DAX 30 in Frankfurt up 0.9%, on speculation about the bail-out extension.

A few minutes after midday, London stocks jumped after Bloomberg reported the Commission will propose a six-month extension for Greece, which will kick down the road a possible exit from the eurozone.

"The deal is designed to avoid any sudden panic in February, and doesn’t solve the problem in its entirety, but it buys time, and if the eurozone is good at one thing, it is buying time," said IG market analyst Chris Beauchamp.

CMC Markets analyst Jasper Lawler added: "The offer of an extension shows some sense of concession on the part of the EU and could pave the way to a bridge program more favourable to the demands of the new Greek government."

The news came ahead of the emergency meeting of Eurozone finance ministers on Wednesday and an EU summit on Thursday where Greece's financing needs will be discussed.

Senior Greek finance ministry sources said the government plans to attend the Eurogroup summit with a proposal for a bridge programme to cover the government's funding needs until it can negotiate a replacement for its bailout programme with creditors, which would come into force in September.

The government's proposal is in four parts, according to a finance ministry source. The first foresees keeping in place 70% of the bailout conditions, while 30% of the programme would be scrapped and replaced with 10 new reforms which Greek officials would agree with the Organization for Economic Cooperation and Development.

Earlier Tuesday, data showed that Chinese inflation slowed to a five-year low in January on easing food inflation, with analysts saying this gives space for the central bank to adjust monetary policy to support weakening economic growth. Inflation eased by more than expected to 0.8% in January from 1.5% in December, the National Bureau of Statistics said Tuesday. This was the lowest rate of consumer inflation since November 2009.

Chinese producer prices slid 4.3% year-on-year following a 3.3% drop a month ago. The rate of decline exceeded the 3.8% drop expected by economists and marked the biggest fall since late 2009. On a monthly basis, producer prices were down 1.1% in January.

In the US at the London close, Wall Street was trading broadly higher, with the DJIA up 0.3%, the Nasdaq Composite up 0.7%, and the S&P 500 up 0.5%.

In the UK, FTSE 100-listed Barclays and HSBC Holdings closed down 0.2% and 2.1%, respectively, as banks stocks struggled amid worries about the financial implications of a Grexit. Barclays managed to recover part of its losses after midday, but HSBC, which is facing other headaches, finished among the worst performers.

UK Business Secretary Vince Cable has raised doubts over HSBC's claims to have cleaned up its act after allegations over activities in Switzerland in 2005 to 2007 that helped wealthy customers dodge taxes and hide assets, according to a Financial Times report on Tuesday.

Meanwhile, Reuters reported that HSBC faces investigation by US authorities and an inquiry by British lawmakers over the Swiss accounts.

On a more positive note for the global lender, Hang Seng Bank, HSBC's 62% indirectly held subsidiary, is to sell a stake of up to 5% in China's Industrial Bank Co, in a move to raise up to CNY12.73 billion, about GBP1.34 billion, before expenses for the subsidiary that will leave it with a stake of about 5.87% if all shares are sold.

Food and clothing retailer Marks and Spencer, up 4.9%, and supermarkets Morrisons, up 4.7%, and Tesco, up 1.9%, ended among the best performers in the FTSE 100 index.

Both Morrisons and Tesco have managed to stem market share loss and falling sales, delivering their best performance in over a year, the latest industry data from Kantar Worldpanel suggested. Tesco's sales in the 12 week period actually rose by 0.3% year-on-year, having returned to growth for the first time since January last year, while Morrisons had its best performance since December 2013 after its sales fell by only 0.4%.

Prices continued to fall across the grocery sector, dropping 1.2% in the latest 12 weeks, marking a 17th consecutive drop, but sales volumes in the overall grocery market rose 1.1%, the fastest rate since June last year.

In the AIM All-Share, Nyota Minerals more than tripled, after the company said it has entered into a cash and shares deal to buy a 70% stake in KEC Exploration Pty, the owner of an exploration permit for a nickel project in Italy. Nyota said it will acquire the stake in KEC for AUD100,000 in cash plus 75 million new Nyota shares.

After the close Tuesday, the English Premier released the results of its auction of broadcast rights for the next three years. BT increased its number of games to 42 for GBP320 million per season, while Sky won 126 games for GBP1.39 billion per year.

In the corporate calendar for Wednesday, FTSE 100 constituents ARM Holdings, Reckitt Benckiser and Tullow Oil will issue full-year reports, while Glencore will release its fourth-quarter production results. In the FTSE 250, Reckitt spin-off Indivior also is due to provide full-year results, as is Telecity, while management statements are due from Thomas Cook, Homeserve, QinetiQ, Electrocomponents, Redrow and Dunelm.

In the economic calendar, the US monthly budget statement for January is at 1900 GMT.

By Daniel Ruiz; danielruiz@alliancenews.com

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