MARKET COMMENT: UK Shares Trade Mixed; HSBC Slides On Profit Fall

LONDON (Alliance News) - UK shares trade mixed Monday mid-morning, as investors wait for Greece to submit a final detailed list of economic reform proposals to its European creditors, while HSBC Holdings is the biggest faller in the FTSE 100 after reporting a 17% fall in annual profit.

The FTSE 100 is down 0.3% at 6.897.97, while the FTSE 250 is down 0.1% at 17.100,39. Meanwhile, the All AIM-Share is outperforming, up 0.2 at 712.49.

After Greece and its European creditors reached an agreement to extend the country's debt programme by four months at Friday's Eurogroup meeting of finance ministers, the Mediterranean country is expected to submit a final detailed list of economic reform proposals on Monday.

A draft list was submitted by the government headed by Alexis Tsipras on Sunday, ahead of a formal evaluation by bailout lenders that will determine whether to extend the country's bailout until June.

"The agreement of a temporary four-month extension or 'bridge' obtained by Greece now needs to be backed up today by a list of reforms, to replace the other 30% of measures that it didn?t agree with as part of its current program", says Michael Hewson, chief analyst at CMC Markets UK.

The reforms include privatizations and structural reforms in tax and public administration - with the goal of combating tax evasion, corruption and streamlining its civil service, according to sources cited by dpa.

"This will look to raise EUR7.3 billion; however, it remains to be seen whether this plan will be far reaching enough to assuage the troika," says Spreadex analyst Connor Campbell.

"Logic would dictate there will have to be a lot more than these tax changes if Greece wants to secure the loan it cannot really go without later today", adds Campbell.

European indexes are trading higher Monday mid-morning, with the CAC 40 in Paris up 0.4% and the DAX 30 up 0.5%.

The German business confidence index rose by less than expected in February, as the country's IFO business climate index climbed to 106.8 in February. It was expected to rise to 107.6. In January, the score was 106.7.

Meanwhile, the current conditions index of the survey unexpectedly fell to 111.3, while it was expected to rise to 112.7. In January, the reading was 111.7. The expectations measure of the survey moved up to 102.5 in February, which was slightly below the 103.0 score predicted by economists. In January, the score was 102.0.

In London, HSBC Holdings is the biggest loser in the FTSE 100, down 6.2%, after the banking giant reported a 17% drop in annual pretax profit, citing lower gains from business disposals, as well as numerous fines, settlements, and the the cost of provisions for customer compensation in the UK.

HSBC Holdings said it made a 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. On an adjusted basis, which excludes the year-on-year effects of foreign currency translation and "significant" items, pretax profit was down to USD22.83 billion from USD22.98 billion.

Still, HSBC increased its dividend per share to USD0.50 from USD0.49.

Antofagasta, down 1.6% at 740 pence, also was among the worst performers, despite lowering its cash cost guidance for 2015 by about 10 cents a pound, bringing it in line with its cash costs in 2014, saying that input costs were now more favourable. The copper and gold miner said it now expects net cash costs for 2015 to be USD1.40 per pound thanks to lower oil prices and the drop in the Chilean peso.

Goldman Sachs has cut its recommendation on Antofagasta shares to Sell from Neutral, and its price target to 625 pence from 660p.

Meanwhile, International Consolidated Airlines Group is among the biggest gainers, up 1.6%, after the Aer Lingus Central Representative Council, a group of staff representatives of the company's trade unions, 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 are up 1.1%.

Bunzl, up 1.4%, is among the best performers in the FTSE 100 after the distribution and outsourcing company raised its dividend for a 22nd consecutive year after reporting higher 2014 earnings on the back of a further 17 acquisitions, saying it expects further earnings growth in 2015 as it announced two further deals.

In the FTSE 250, DS Smith is the biggest gainer, up 3.7%, after the corrugated packaging company said it is trading in line with expectations, adding it has proposed a EUR300 million deal to buy European corrugated board packaging company Duropack.

Also in the mid-cap index, Dechra Pharmaceuticals, up 1.8%, has collected several increases to its price target, as analysts respond positively after the veterinary pharmaceutical business on Monday raised its interim dividend by 7.8% to 5.12 pence and posted higher pretax profit for its first half.

In the economic calendar Monday, 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.

US futures point to a broadly higher opening. The DJIA is indicated up 0.9%, while the S&P 500 and the Nasdaq 100 are both indicated up 0.6%.

By Daniel Ruiz; danielruiz@alliancenews.com

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