7th Jul 2015 09:41
LONDON (Alliance News) - London shares are lower Tuesday mid-morning as investors await the start of a new eurogroup meeting due at 1200 BST, while shares in Marks & Spencer Group and ASOS are down even though both posted growth in sales in their latest updates.
The FTSE 100 is down 0.1% at 6,527.12, the FTSE 250 is down 0.1% at 17,421.42, and the AIM All-Share is off 0.1% at 757.74.
In Europe, the CAC 40 is down 0.3% and the DAX 30 is down 0.1%.
European Commission President Jean-Claude Juncker told the European Parliament Tuesday that he would like to see financially embattled Greece stay in the eurozone.
"Nobody should even think about throwing the Greeks out," Juncker said ahead of a crucial summit of eurozone members Tuesday evening in Brussels. However, he said there was little chance of a solution being found at the summit, which will be preceded by a meeting of the common currency's finance ministers.
"If there could be a solution today, then it would in turn be a too simple one," Juncker said.
Greek Prime Minister Alexis Tsipras is expected to present Greece's latest debt bailout proposals to the eurozone finance ministers Tuesday.
French President Francois Hollande and German Chancellor Angela Merkel said Monday that they respect the outcome of the weekend's Greek referendum opposing more austerity and are open to negotiations. Hollande stressed the "urgency" of finding a solution to the economic impasse, while Merkel said it is up to Tsipras to make proposals about how to lead the Greek economy forward.
Also Monday, the European Central Bank maintained its emergency liquidity assistance for Greek banks at the June 26 level of EUR89 billion, with haircuts on collateral for ELA adjusted. The decision by the Governing Council of the ECB comes after discussing a proposal from the Bank of Greece. ELA can only be provided against sufficient collateral.
Meanwhile, UK industrial output expanded unexpectedly in May on strong oil and gas production, figures from the Office for National Statistics showed Tuesday.
Industrial production rose 0.4% month-over-month in May, defying economists' expectations for a 0.2% fall. It was the fourth consecutive monthly gain. The increase in May was mainly due to higher oil and gas production, which surged 7.3% from a month ago. On an annual basis, industrial production climbed at a faster pace of 2.1% in May, following a 1.2% hike in April. Economists had expected a 1.6% growth for the month. Production has been rising since September 2013.
Meanwhile, UK manufacturing production fell 0.6% in May from the month before, while it was expected to increase by 0.1%. Manufacturing production grew 1.0% in May from a year ago, but slower than a 1.8% rise expected by economists.
The pound fell to USD1.5508 after the data release.
Marks & Spencer Group reported year-on-year growth in sales in the first quarter of its financial year and said that all guidance for the full year remains unchanged. The clothing and food retailer said that total group sales were up 1.3% in the 13 weeks to June 27 from a year before, as food sales grew 3.2% and general merchandise revenue rose 0.2%. On a like-for-like basis, food sales grew 0.3% but general merchandise declined 0.4%.
Regionally, sales in the UK were up 1.9% but remained flat on a like-for-like basis, while international revenue fell 3.9%. Online revenue continued to rise strongly at 38.7%. M&S said it is on track to deliver its full-year guidance of 150 to 200 basis points gross margin improvement in general merchandise.
FTSE 100-listed M&S is down 0.6%, while AIM giant ASOS is down 1.4% at 3,799p.
ASOS also reported growth in sales in the four months to June 30 in both its UK and international businesses and said that sales for the full year should be at the higher end of its guided growth range. The online fashion retailer said that retail sales in the four months grew 20% on the same period the year before, with UK sales rising 27% and international revenue up 16%, all at actual currency rates. It said that the rise in international sales benefited from price investments which it is making to try to turn that part of the business around.
Total group revenue, which includes retail sales, delivery receipts and third-party revenue, grew 21% in the period. ASOS added that retail gross margin was up around 280 basis points on the prior year.
Following the update, Numis has downgraded ASOS to Add from Buy, but lifts its price target to 4,250p from 4,000p.
Roll-Royce Holdings is the worst blue-chip performer again Tuesday following Monday's losses on the aerospace and engineering group's profit warning. On Tuesday, JP Morgan has downgraded the company to Underweight from Neutral, cutting its price target to 640p from 900p. The stock is down 3.3% at 771.5p Tuesday, having dropped 8.2% Monday.
Smiths Group shares are down 2.7%. The engineering company said it has appointed Andrew Reynolds Smiths as its new chief executive, with plans for him to take the helm on September 25. Reynolds Smith is currently the chief executive of GKN Automotive, the driveline systems and powder metals components arm of GKN, another FTSE 100-listed engineering company, which is down 0.9%.
Land Securities Group is up 1.3% at 1,246 pence after UBS upgraded the real estate investment trust to Buy from Neutral, lifting its price target to 1,425p from 1,300p. Meanwhile, Lloyds Banking Group is up 1.1% at 85.09p after Investec upgraded the bank to Hold from Sell, and Societe Generale lifted its price target to 102p from 98p, keeping a Buy stance.
Still in the economic calendar, in the US, the trade balance is due at 1330 BST and the Redbook index is at 1355 BST.
By Daniel Ruiz; [email protected]
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Related Shares:
LloydsMarks & SpencerLand SecuritiesSmiths GroupASOSRolls-Royce