9th Jul 2015 09:42
LONDON (Alliance News) - UK shares are mostly higher Thursday mid-morning as the market waits for Greece to send a new reform proposal to its international creditors to avoid ejection from the eurozone, while Chinese stocks closed higher, rebounding from Wednesday's losses.
Investors also will focus this afternoon on the Bank of England's UK interest rate decision, expected at 1200 BST.
The FTSE 100 is up 0.8% at 6,541.53, the FTSE 250 is up 0.7% at 17.223.64, and the AIM All-Share is flat at 743.76. In Europe, stocks are also higher, with the CAC 40 in Paris up 1.2% and the DAX 30 in Frankfurt up 1.0%.
"Attention has now turned back to Greece with traders eagerly awaiting reform proposals from Athens expected later today," says Rocky Muddar of TradeNext. "The City seems to be losing patience with Greece, if a deal is not struck within the next four days, traders will begin aggressively pricing in a Grexit."
Greek Prime Minister Alexis Tsipras promised to implement pension and tax reforms in a bid to win fresh aid from skeptical creditors. He told the European parliament on Wednesday that he would submit a detailed reform plan to the Eurozone on Thursday aimed at resolving the country's debt crisis.
"The Greek government will [Thursday] file new concrete proposals, credible reforms, for a fair and viable solution," he told the European Parliament in Strasbourg, France.
On Wednesday, the cash-strapped country requested a new bailout package from the eurozone bailout fund, the European Stability Mechanism, one week after Greece's previous aid package was left to expire because Athens and its creditors were unable to agree on required economic reforms.
Athens is seeking a bailout loan "with an availability period for three years", according to a copy of the Greek request seen by dpa. Eurozone leaders have set a Sunday deadline for Greece to agree a new plan for financial assistance.
Outside Greece, the Bank of England is expected Thursday to keep UK interest rates on hold at 0.5% and maintain stock of purchased assets at GBP375 million.
"No change is expected and a ?standard? statement will therefore be issued, with the minutes of the meeting due in a couple of weeks," says Lloyds Bank. "It is worth noting that, from next month, the policy announcement, minutes and quarterly Inflation Report will be released simultaneously, which could lead to some market volatility."
Investors also are encouraged by gains made in Chinese stock prices Thursday after Wednesday's sell-off, which saw the Hang Seng index closing down 5.8% and the Shanghai Composite 5.9%. On Thursday, both indices closed higher, with the Hong Kong index up 3.7% and the Shanghai index up 5.8%. Wednesday's sell-off had capped several weeks in declines for Chinese stocks.
In the latest measures to stop the slide in share prices, China's central bank said Thursday that it has injected CNY35 billion into the money market through open-market operations. The bank also will allow the national margin trading service provider to issue short-term bonds in the interbank market to replenish liquidity.
The country's securities regulator said late Wednesday that big shareholders who hold more than 5% of a company's shares must not reduce their holdings in the coming six months. Any disregard of the rule would be "treated seriously", the regulator said in a statement. Meanwhile, China's state asset regulator ordered the country's centrally administered state-owned enterprises not to sell shares of their listed companies amid "abnormal market volatility".
Consumer prices in China were up 1.4% on year in June, the National Bureau of Statistics said on Thursday. That exceeded forecasts for 1.3% and was up from 1.2% in May. On a monthly basis, consumer prices were flat. Producer prices contracted 4.8% on year in June versus forecasts for a fall of 4.6%, which would have been unchanged.
Risk appetite also has increased amongst investors following dovish minutes from the most recent US Fed policy-setting meeting, which showed that most US Federal Reserve members are not ready to raise interest rates.
Other than the BoE decision, the only significant economic event is US jobless claims due at 1330 BST.
In London, Associated British Foods is up 3.7%. The company, which owns Primark and British Sugar and which operates an agriculture and consumer goods arm, said its results for the full year will be harder hit than expected by the weak euro. It also said revenue in the first 40 weeks was flat at actual rates amid continued tough trading in its sugar business, offset a still-buoyant performance by discount fashion retailer Primark.
Primark sales rose by 9% in the period, and by 13% in constant currencies, driven by an 8% increase in selling space and high sales densities in stores it has opened in the past year. Trading in its grocery and agriculture businesses also remains on track, but AB Foods said the woes in its British Sugar arm continue to bite.
"In our view, financial years 2015 and 2016 are transition years for AB Foods although we expect earnings will rebound strongly by financial year 2017 as the EU sugar industry consolidates and sugar profits recover," says Liberum analyst Robert Waldschmidt.
Barratt Developments is up 3.2% after the housebuilder said it expects to post a 45% rise in annual profit for the year to the end of June, as it sold more houses at higher prices over the period. Barratt said it expects total completions for the year to the end of June to be up by 11% to 16,447 units from 14,838 a year earlier, on the back of strong consumer demand and increased site numbers.
Smith & Nephew is up 2.0% at 1,108.50 pence after Berenberg upgraded it to Buy from Hold, lifting its price target to 1,275p from 1,080p. Meanwhile, Prudential is up 2.1% after Goldman Sachs upgraded the life insurance company to its Conviction Buy List from Buy.
In the FTSE 250, IP Group is up 5.2% after securing a GBP30 million, eight-year debt facility from the European Investment Bank, giving the company funds to invest in companies spun out from universities in the UK. IP Group, which works to commercialise technology and intellectual property developed at universities, said the facility represents an "evolution" in its capital structure, providing it with additional long-term capital.
By Daniel Ruiz; [email protected]
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