16th Jun 2015 09:37
LONDON (Alliance News) - UK shares are lower Tuesday mid-morning, with the increasingly rancorous Greek debt negotiations in the background and with the news that UK inflation rose in May after falling into negative territory in April.
Meanwhile, several stocks are moving on broker rating changes, including cigarette firms British American Tobacco and Imperial Tobacco Group, which are leading FTSE 100 gainers.
The blue-chip index is down 0.5% at 6,677.31, while the mid-cap FTSE 250 is down 0.3% at 17,671.25. The AIM All-Share is down 0.4% at 767.84.
In Europe, major indices are faring worse, with the CAC 40 in Paris down 0.8% and the DAX 30 in Frankfurt down 1.1%.
Athens' eurozone partners are drawing up an emergency plan to head off the threat of economic chaos in Greece if the nation fails to reach a deal with its creditors this week, German media reported Tuesday.
The plan includes the imposition at the weekend of capital controls to halt a possible run on Greek banks, according to the daily Sueddeutsche Zeitung.
The Eurogroup of finance ministers are due to meet Thursday to take stock of the long-running and increasingly fraught negotiations between Greece and its creditors - the European Commission, the European Central Bank and the International Monetary Fund.
"Rhetoric surrounding the Greek negotiations is becoming increasingly belligerent, not the best recipe for agreement," says Hantec Markets analyst Richard Perry, adding: "The situation is deteriorating."
In the UK, consumer prices increased in May after falling in April for the first time since 1960, the Office for National Statistics reported Tuesday. Consumer prices rose 0.1% from last year as expected by economists, offsetting April's 0.1% year-on-year fall.
Month-on-month, the consumer price index gained 0.2%, the same as in April, and matched expectations. Core inflation, which excludes energy, food, alcoholic beverages and tobacco, rose to 0.9% from 0.8% in April.
The pound declined after the release of the inflation data and currently trades at USD1.5573.
Meanwhile, Germany's consumer prices increased for the fourth straight month in May at the fastest pace in seven months, as initially estimated, final data from the statistical office Destatis showed.
Consumer prices rose 0.7% from last year, following a 0.5% increase in April. The annual increase matched the preliminary estimate published on June 1. The latest figure was the highest since October last year, when inflation was 0.8%. Month-on-month, consumer prices rose 0.1%, after remaining unchanged in the previous month. The figure matched its preliminary estimate.
On the London Stock Exchange, tobacco companies British American Tobacco and Imperial Tobacco are the biggest blue-chip gainers, up 2.6% and 1.3%, respectively, after Credit Suisse reinitiated its coverage with an Outperform recommendation.
Meanwhile, National Grid is up 0.3%, joining a short list of 11 stocks in the green in the blue-chip index, after being upgraded to Overweight from Equal-Weight by Morgan Stanley.
In the FTSE 250, bookmaker Ladbrokes is up 2.5% after being upgraded to Overweight from Equal-Weight by Morgan Stanley, while according to traders, London-focused estate agency Foxtons Group, down 1.7%, was downgraded to Sell from Neutral by Goldman Sachs.
Outside broker ratings, industrial equipment rental company Ashtead is down 1.7% even though it posted strong growth in profit and revenue for its recently-ended financial year. Ashtead reported growth in both the UK and US, hiked its dividend, and gave a positive outlook.
Royal Mail shares are down 1.9%. The UK's communications and postal regulator Ofcom has widened its review of the regulation of the UK's formerly state-owned legacy postal operator in light of the decision by competitor Whistl to pull its plans to launch its own direct delivery services in the UK.
Ofcom said it wants to look at what changes to the overall postal framework might be appropriate to secure the so-called universal postal service - Royal Mail's obligation to deliver to every address in the UK. It also wants to look at how best to ensure Royal Mail continues to become more efficient in the absence of any competitor in the direct-delivery market, and whether the company's wholesale and retail prices are affordable while being sufficient to cover the costs of the universal service.
In the AIM All-Share, Flowgroup shares are down 35% after the company reduced the number of boiler installations it had planned for 2015 and said it would instead focus on its cost reduction programme. The company has been hit by a ruling by the European Court of Justice that a UK sales tax reduction on energy-saving products breaches EU laws.
In the US, Wall Street is called to open lower ahead of the Federal Market Open Committee meeting, with a decision on US interest rates and projections for US inflation and economic growth expected Wednesday evening. The DJIA and the S&P 500 are pointed down 0.5% and the Nasdaq 100 is pointed down 0.6%.
Still in the economic calendar Tuesday, in the US, housing starts data are due at 1330 BST, while the Redbook index is due at 1355 BST.
By Daniel Ruiz; [email protected]
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