7th Jul 2015 06:36
LONDON (Alliance News) - London share prices are called to open higher Tuesday, ahead of an emergency eurozone summit at which Greece is due to present its latest debt-bailout proposals.
UK department store chain 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. Online fashion retailer ASOS also reported growth in sales in the first four months of its year and said sales for the full year should be at the higher end of its guided growth range.
IG says futures indicate the FTSE 100 to open 13 points higher at 6,548.30. The index closed down 0.8% at 6,535.68 points Monday.
Greece's stance in its upcoming round of negotiations with fellow eurozone members is supported by all Greek political parties save the Communist Party, said Defence Minister Panos Kammenos on Monday.
"The prime minister will go to Brussels to negotiate on behalf of all the Greek people," according to Kammenos in televised comments after a meeting among opposition leaders, Greek Prime Minister Alexis Tsipras and Greek President Prokopis Pavlopoulos.
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.
"The situation has to be solved," Merkel said, adding that the last offer made to Greece before it opted for a controversial referendum was "generous."
"It's up to Tsipras to put forward a serious and credible proposal that translates into a long and lasting programme," Hollande said. Tsipras spoke with both Hollande and Merkel before the German and French leaders met in Paris.
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.
"This move is likely to increase criticism that the [European] Central Bank is getting involved in exerting political pressure and acting beyond its mandate of price stability, and as lender of last resort, which any credible central bank should do as a matter of course," says Michael Hewson, chief market analyst at CMC Markets UK.
"All the ECB has done is make it more likely that Greek banks will run out of money in a matter of days," Hewson writes. "Furthermore it remains highly unlikely that the Greek government will be able to make it to the next key payment deadline of July 20 when a EUR3.5 billion bond to the ECB becomes repayable."
In Asia on Tuesday, the Japanese Nikkei 225 closed up 1.3%. In China, the Hang Seng in Hong Kong trades down 0.8% and the Shanghai Composite is down 1.9%.
Wall Street ended lower Monday. The DJIA and the Nasdaq Composite closed down 0.3%, while the S&P 500 ended down 0.4%.
In the UK, industrial and manufacturing production figures are due at 0930 BST.
"Last month saw a stronger-than-expected 0.4% month-on-month increase in output. This reflected a 5.6% rise in mining and quarrying, itself overwhelmingly driven by an 8.7% climb in oil and gas output," says Lloyds Bank, looking ahead to the economic data. "However, this surge in extractive sector activity stands in stark contrast to manufacturing which fell by 0.4% on the month."
"Overall industrial output growth is expected to soften by 0.2% on the back of an anticipated sharp reversal in the strength of oil and gas output over the last few months," says Lloyds. "Meanwhile, both the recent strength of sterling and survey evidence point to a tepid 0.1% pickup in manufacturing."
The UK NIESR GDP estimate is due at 1500 BST.
Outside economic data, Marks & Spencer Group 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.
ASOS 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.
ASOS 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.
Goldman Sachs raises Associated British Foods' price target to 3,150 pence to 3,120p, keeping a Buy rating, while cutting Experian's price target to 1,227p from 1,257p, reiterating a Neutral stance. UBS upgrades Land Securities Group to Buy from Neutral, lifting its price target to 1,425p from 1,300p.
Also in the economic calendar, in the US, the trade balance is due at 1330 BST and the Redbook index is due at 1355 BST.
By Daniel Ruiz; [email protected]
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