13th Jul 2015 09:44
LONDON (Alliance News) - London stock prices are higher Monday mid-morning, as are European markets, after eurozone leaders and Greece reached an "agreekment" on a new bailout programme for the cash-strapped country.
The FTSE 100 is up 0.6% at 6,716.70 points, while the FTSE 250 is up 0.7% at 17,607.71 and the AIM All-Share is up 0.2% at 751.52.
In Europe, investors also are cheering the news coming from Brussels, with the CAC 40 index in Paris up 2.1% and the DAX 30 in Frankfurt up 1.6%.
After hours of last-ditch negotiations with Greek Prime Minister Alexis Tsipras, eurozone leaders unanimously agreed to a new bailout programme for Greece.
"We had only one objective: to reach an agreement. After 17 hours of negotiations, we have finally reached it. One can say that we have 'agreekment'," European Council President Donald Tusk said in a press conference following the summit.
"Leaders have agreed in principle that they are ready to start negotiations on an European Stability Mechanism programme, which in other words means continued support for Greece," Tusk said.
The new bailout being considered for Greece amounts to approximately EUR80 billion, EU Economy Commissioner Pierre Moscovici had told the French broadcaster RTL shortly before the deal was struck, describing the new aid as "massive".
Greece's deal with its creditors keeps the country in the EU, Prime Minister Alexis Tsipras said after the meeting.
"We faced difficult decisions and hard dilemmas," he said, adding that the deal achieved after marathon talks in Brussels is the best possible. "The measures will inevitably create recessionary trends, but the growth package, the restructuring of debt, and secured funding for the next three years" will mean that "Grexit is past," he says.
German Chancellor Angela Merkel said "the eurogroup is ready to grant longer grace period and longer loan maturities" for Greece, but said a "nominal haircut" of its debt is out of the question.
Despite the apparent breakthrough, Eurogroup President Jeroen Dijsselbloem said a final deal on Greece's new bailout is still "weeks" away, as the agreement has to be approved by several European parliaments, including Athens, before the bailout negotiations can be launched.
Dijsselbloem said the finance ministers' Eurogroup panel will later on Monday look at the possibility of short-term "bridge financing" to quickly funnel aid to near-bankrupt Greece. The Mediterranean country needs EUR7 billion that has to be paid to the European Central Bank on July 20.
"Among the immediate next steps, however, will be another meeting of the ECB Governing Council, which will have to decide later today whether to augment its [emergency liquidity assistance] or await this week?s vote in the Greek parliament before doing so," says Daiwa Capital Markets analyst Chris Scicluna, noting that Thursday?s ECB monetary policy meeting press conference also seems likely to be dominated by Greece.
The euro rose sharply to USD1.1196 after the deal was announced, but it has lost those early gains and now is lower at USD1,1074.
Outside Greece, Asian stocks closed higher Monday, with the Japanese Nikkei up 1.6%. In China, the Hang Seng ended up 1.3% and the Shanghai Composite finished up 1.4%, closing higher for third and fifth consecutive time, respectively, after having suffered severe declines the past week.
Chinese exports increased at a faster-than-expected pace in June, while imports fell less-than-expected, official data showed Monday. Exports rose 2.8% year-over-year in June, exceeding economists' expectations for 1.0% growth. Meanwhile, imports slid 6.1% in June from the previous year, much slower than the 15.5% sharp decline expected by economists.
The trade surplus of the country came in at USD46.54 billion in June, smaller than the USD56.7 billion surplus expected by economists. In May, the surplus was at USD59.49 billion.
In London, International Consolidated Airlines Group is up 1.6% after UBS upgraded the owner of British Airways and Iberia to Buy from Hold, while Burberry Group is up 1.3% at 1,612 pence after Goldman Sachs raised the company's price target to 2,323p from 2,319p, keeping it in its 'Conviction Buy List'.
In the FTSE 250, Alent is the biggest gainer, up 45% at 489p, after US-based Platform Specialty Products on Monday said it has agreed a GBP1.35 billion takeover of the chemicals company. Platform Specialty, a chemicals industry consolidation vehicle, said it will pay 503 pence in cash for Alent shares, a premium of around 49% to Alent's closing price of 337.7 pence on Friday.
International Personal Finance is down 13%. The company on Monday warned there could be financial consequences as a result of potential legal changes in Poland that could result in a cap that covers a broader definition of non-interest costs than previously suggested.
The company, which provides home credit and digital loans, said it is reviewing draft legislation as it works out whether the structure of its products will be affected by a cap that could affect all non-interest costs in connection with a consumer loan agreement, a change from previous proposals that involved a cap on all mandatory, non-interest costs.
By Daniel Ruiz; [email protected]
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