15th Jun 2015 09:38
LONDON (Alliance News) - London shares prices are lower Monday mid-morning, as European stock markets start a week that is expected to be decisive for the Greek debt negotiations, with the European Commission saying there are "significant gaps" between the two sides.
The FTSE 100 idex is down 0.7% at 6,738.88 points, while the FTSE 250 is down 0.9% at 17,788.72. The AIM All-Share is down 0.3% at 772.31.
In Europe, major indices also are lower, with the CAC 40 in Paris down 0.8% and the DAX 30 in Frankfurt down 1.1%.
Greek Prime Minister Alexis Tsipras urged the country's creditors to get "realistic", while accusing the institutions involved in Greece's bailout negotiations of "political expediency" regarding their insistence on pension cuts.
Speaking on Monday to Greece's Efimerida ton Syntakton newspaper after the breakdown in bailout talks over the weekend, Tsipras emphasised that the Greek government has submitted counter-proposals.
On Sunday, European Commission President Jean-Claude Juncker broke off high-level bailout talks with Greek officials, after weekend negotiations failed to deliver progress on "significant gaps" in reform plans for the cash-strapped country.
Greek Minister of State Nikos Pappas met with Juncker's personal representative at the weekend, as well as members of the European Central Bank and the International Monetary Fund, in what the commission described as a last attempt to broker a deal before European markets open on Monday.
"While some progress was made, the talks did not succeed as there remains a significant gap between the plans of the Greek authorities and the joint requirements of Commission, European Central Bank and International Monetary Fund," a Commission spokesperson said.
The gap between measures proposed by Greece and the demands of its creditors amounts to around 0.5% to 1% of gross domestic product, or up to EUR2 billion annually in permanent fiscal measures, the spokesperson said in a statement, adding that Athens' proposals remain "incomplete".
As a result of the lack of progress in the negotiations, investors are looking ahead to Thursday's decisive Eurogroup meeting.
"Will Eurozone finance ministers turn the 'ready to sign' offer brokered by [German Chancellor Angela] Merkel and [French Prime Minister Francois] Hollande and presented by Juncker last week into a formal 'take it or leave it' offer on Thursday?," asks Berenberg analyst Holger Schmieding.
"At this stage, we do not yet expect the ECB to issue a formal ultimatum to Greece on Wednesday, announcing the end of emergency liquidity assistance or a reduction in other kinds of support for Greek banks if Greece does not strike a deal within a few days," says Schmieding. "The ECB would only pull the plug if it has full political backing for that."
Michael Hewson, chief market analyst at CMC Markets, believes unless some significant concessions are made on either side, a default is now more or less inevitable. "And even if a plan were agreed that was agreeable to the creditors, it is unlikely that the Greek government would be able to get it through their parliament."
"It can therefore only be a matter of time before capital controls are introduced, particularly given that the Greek Prime Minister Alexis Tsipras has more or less indicated that he won?t make a deal without debt relief, something that the Greeks do see eye to eye with the IMF on," Hewson adds.
Outside Greece, Standard & Poor's Ratings Services late on Friday downgraded its outlook for UK sovereign debt to negative from stable due to the government's decision to hold a referendum on membership in the European Union by 2017.
"We believe that the UK government's decision to hold a referendum on EU membership by 2017 indicates that economic policymaking could be at risk of being more exposed to party politics than we had previously anticipated, similar to the situation in the US when we lowered that sovereign rating in 2011," S&P said.
At the same time as downgrading its outlook on the UK, S&P affirmed its AAA/A-1+ long- and short-term sovereign credit ratings.
On the London Stock Exchange, Fresnillo, up 0.8%, is the best performer, after being upgraded to Buy by Merrill Lynch. Fellow miner Randgold Resources also is amongst a handful of blue-chip gainers, up 0.4%.
Going in the opposite direction, Standard Chartered is down 2.0% at 1,042.50 pence. Jefferies cut the bank's price target to 656p from 722p, keeping an Underperform rating.
In the FTSE 250, Vedanta Resources is up 1.9%, after it said it is merging two important Indian subsidiaries as it looks to simplify its structure. The move results in the combination of Vedanta and Cairn India. Vedanta Resources' stake in Vedanta is to fall to 50.1% from its current 62.9% holdings, with Cairn India minority shareholders to own 20.2% and Vedanta minorities to own a 29.7% of the combined entity.
Meanwhile, NMC Health, up 1.4%, has announced the acquisition of ProVita International Medical Center, which is describes as the "leading provider" of long-term medical care in the United Arab Emirates, for USD160.6 million in cash.
In the US, Wall Street is expected to open lower, with the DJIA, the S&P 500 and the Nasdaq 100, all pointed down 0.3%.
Still in the economic calendar Monday, ECB President Mario Draghi is expected to speak in the European Parliament in Brussels at 1430 BST. In the US, industrial production is due at 1415 BST, while NAHB housing market index is expected at 1500 BST.
By Daniel Ruiz; [email protected]
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