Babcock Regulatory News (BAB)

18 May 2015 11:11

European stocks wavered in a tight range and the euro slipped back against the dollar Monday, as investors kept an eye on developments in Greece.As of 1155 BST, the Stoxx Europe 600 Index was down 0.3% and the CAC 40 was off 0.5%, while Germany's DAX was 0.2% higher. The euro, meanwhile, slipped to $1.1418, having racked up healthy gains last week as the dollar pulled back due to uninspiring economic data. With no data releases of note due on Monday, investors are likely to keep an eye out for any headlines on Greece, following news in the Greek press that the country only just made its latest payment to the International Monetary Fund after the government discovered that it could use a reserve account it wasn't aware of. Talks between Athens and European Union and IMF lenders have deadlocked over their demand for reforms. Over the weekend, German politicians kept up the pressure on Greece as economy minister Sigmar Gabriel said in an interview that a third aid package would not be possible unless changes are made. "We have had a quiet European open with most of the gains led by the Dax," said Atif Latif, director of trading at Guardian Stockbrokers. "Still much of the price action will be dictated by headlines from Greece. As yet investors are looking to sell rallies as the news today has been thin," he added. "Earnings this far have been strong and we see some evidence of profit taking as the main market catalysts will be the implementation of new reforms in the UK, Brexit headlines and for Germany the lead will be Greece headlines," said Latif. Bank of America Merrill Lynch said in a note on Monday that investors are trapped in "the Twilight Zone" - the transition period between the end of quantitative easing and the first rate hike by the Federal Reserve. It said that until US macro is unambiguously robust enough to allow the Fed to hike safely, "investors will be cursed by mediocre returns, volatile trading rotation and flash crashes." On the corporate front, Silver miner Fresnillo surged 4.4% after reiterating its output guidance for this year following a tough 2014. Babcock was also on the front foot, up 1.8% after the company posted a 47% rise in pre-tax profit and a 10% increase in the full-year dividend for the year ended March 31st 2015. Aveva stormed ahead, gaining nearly 9% following a report in the Sunday Times that France's Schneider Electric held talks with bankers about a bid for the software solutions company. On the downside, though, Austrian oil and gas company OMV was under pressure, off 6% after it posted a 46% drop in first-quarter net income on the back of low oil prices and production shutdowns in Libya and Yemen. BHP Billiton also bucked the trend, down 4% as the miner's spin-off South32 started trading with a market value of $9bn on Monday - the lower end of analysts' forecasts. In terms of sectors, banks were in focus after German newspaper Handelsblatt reported that Fitch Ratings is preparing to downgrade a number of European banks, including Germany's Commerzbank. The Stoxx Europe 600 banks index was off 1%.