MARKET COMMENT: Stocks Close Up As Markets Await Greece Decision

LONDON (Alliance News) - London's main stock indices ended slightly higher Friday, but early trade next week is set to be dominated by an expected decision from Greece's lenders on whether to extend the country's loan agreement for six months.

The FTSE 100 closed up 0.3% at 6,915.2, ending up 0.6% for the week as a whole. The FTSE 250 finished up 0.4% at 17,122.55, setting a new record close, while the AIM All-Share index ended up 0.2 at 711.2.

Greece and its European creditors on Friday afternoon started another round of tough negotiations aimed at finding a compromise over a proposed loan extension for the Mediterranean country.

"The majority of reports coming out of the Eurozone suggest that a deal won’t be made today, and that certain factions don’t really mind if this is the case," said Spreadex analyst Connor Campbell.

Friday morning, Reuters had reported that Greece and the eurozone were close to a deal on a financing-for-reforms package, citing a senior Greek official. That was ahead of the meeting in Brussels of Eurogroup ministers, the third in two weeks, just days before the existing Greek bailout agreement expires, on February 28.

On Thursday, Greek Finance Minister Yanis Varoufakis wrote to Eurogroup chief Jeroen Dijsselbloem to formally request a six-month extension to the agreement governing its bailout. But the terms of the Greek proposal were dismissed out of hand by the German finance ministry, which said the proposal "does not correspond" to criteria agreed by eurozone finance ministers earlier this week.

German Finance Minister Wolfgang Schaeuble describing the request as a "Trojan horse" that would end the current rescue programme, according to Greek sources. Schaeuble's hard stance caused a rift with fellow eurozone ministers and also within the German coalition government, with Economics Minister Sigmar Gabriel, a Social Democrat, criticizing his conservative colleague.

Margaritis Schinas, a spokesman for European Commission President Jean-Claude Juncker, said of the ongoing talks: "We are confident a deal is possible in the foreseeable future if everyone is reasonable. But we are not there yet. We expect further work will be needed".

"Greece is in the eurozone and it should remain in the eurozone. Everything should be done for the stronger cohesion of the eurozone," German Chancellor Angela Merkel said Friday. In a joint press conference in Paris following a meeting with French President Francois Hollande, Merkel added that "a lot of technicalities need to be resolved."

Economists fear that Athens could run out of money within weeks if the international financial taps are turned off, potentially triggering an exit from the euro currency bloc. Should the latest talks in Brussels fail, Greece would request an emergency summit of the Eurogroup, a top ranking SYRIZA official told dpa.

Europe's main stock indices ended flat to higher amid the ongoing talks, with the French CAC 40 flat and the German DAX 30 up 0.4%.

Data from Markit Economics showed that Eurozone business activity accelerated for the third straight month to hit a seven-month high in February on stronger demand, raising hopes that an economic recovery is gaining strength. New order growth also prompted firms to raise their staffing levels at the fastest pace since 2011.

The Purchasing Managers' Index for eurozone services came in at 53.9 in February, up from 52.7 in January. It was expected to rise slightly to 53. Meanwhile, eurozone manufacturing PMI rose less-than-expected, to 51.1 from 51 in January. Economists had forecast the index to rise to 51.5.

"Undeterred by the ongoing Greek debt crisis, economic growth is gathering momentum and looks set to gain further traction in coming months," Chris Williamson, chief economist at Markit said.

The German services PMI rose more-than-expected to 55.5, a 5-month high, from 54.0 in January. The score was expected to rise marginally to 54.4 in February. At the same time, expansion in the manufacturing sector remained stable in February. The index remained at 50.9 versus an expected score of 51.5.

Meanwhile, UK retail sales declined slightly more than expected in January, the Office for National Statistics showed. Retail sales dropped 0.3% in January from the prior month, which was the first decline in four months. Economists had forecast sales to fall 0.2% after rising 0.2% in December. The monthly fall was driven by food, textile, clothing and footwear and other store sales.

In London, Weir Group was among the FTSE 100 best performers, up 2.6% after it was upgraded to Buy from Neutral from Goldman Sachs.

Standard Life was also among the biggest gainers, up 2.1%, after its continued shift from being an insurer to an asset manager helped push operating profit before tax from continuing operations up 19% in 2014. Assets under administration increased on the back of net inflows, positive market movements, and the acquisition of Ignis Asset Management.

Kingfisher was amongst the worst performing stocks in the blue-chip index, down 1.9%, after Barclays downgraded the DIY retailer to Underweight from Equal Weight, saying it sees a number of weaknesses in the company's operations in France, the UK and Poland.

In the FTSE 250, Essentra was the best performer, up 8.8%, after the supplier of plastic and fibre products said it has increased its full year dividend for 2014 after reporting a significant rise in pretax profit, driven by strong revenue growth across most of its divisions.

Wall Street was trading mixed when the European equity markets closed, with both the DJIA and the Nasdaq Composite flat and the S&P 500 down 0.1%.

In the corporate calendar Monday, HSBC Holdings, Bovis Homes, Bunzl, Unite Group, Audioboom, XP Power, Greencoat UK Wind and Tritax Big Box will issue full year results. Dechra Pharmaceuticals will release half year results, while Associated British Foods will provide a trading update.

In the economic calendar Monday, German IFO surveys for February will be released at 0900 GMT, while UK CBI Distributive Trades Survey is due at 1100 GMT. In the US, Chicago Fed National Activity Index is at 1330 GMT and Existing Home Sales will be at 1500 GMT, while the Dallas Fed Manufacturing Business Index will be released at 1530 GMT.

By Daniel Ruiz; danielruiz@alliancenews.com

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