20th Mar 2015 10:48
LONDON (Alliance News) - London main stock indices are mixed Friday mid-morning, with CRH leading the FTSE 100 after the on-again, off-again merger between Switzerland's Holcim and France's Lafarge appeared to be back on.
The FTSE 100 is trading flat at 6,965.12, while the FTSE 250 is up at 17,474.14. The AIM All-Share index is down at 714.26.
TSB Banking Group is amongst the best performers in the FTSE 250, up 4.2% at 333.60p, after the UK lender said it has agreed a deal that will see Spain's Banco de Sabadell buy it for about GBP1.7 billion. The two banks said they have agreed a deal that values TSB at 340 pence per share. The acquisition has the approval of Lloyds Banking Group, which must sell its 50% stake in TSB by the end of 2015 to comply with European state aid rules after it required a government bailout in the financial crisis of 2007-09.
TSB Chairman Will Samuel said that Sabdell's offer is a "vote of confidence" in the bank.
Irish construction materials firm CRH is the best FTSE 100 performer, up 4.3%, after the boards of Holcim and Lafarge on Friday said they have reached an agreement on revised terms of their proposed USD41 billion merger, with Holcim getting a more favourable exchange ratio and the heads of both cement companies to be co-chairmen of the merged entity.
The mega-deal had run into problems earlier this week after the board of Swiss-based Holcim said it would no longer pursue a merger with France's Lafarge on the current terms and wanted to hold talks about changing the exchange ratio and "governance issues".
CRH announced last month that it had agreed a deal with the pair to pay EUR6.5 billion to buy assets from the companies primarily in Europe, Canada, Brazil and the Philippines. The Irish building materials company expects the deal to boost earnings per share by about 25% in the first full year of ownership of the assets, which it expects to be 2016. CRH shareholders approved the deal on Thursday with 99.99% in favour.
The market focus has turned Friday to the Greek debt negotiations in Brussels but the markets are still digesting the US Federal Reserve statement that left investors none the wiser as to when the US central bank will start raising interest rates.
"The UK [FTSE 100] index is hair-raisingly close to crossing the 7000 mark but faces an unfriendly, and sparse, economic landscape this Friday, where the biggest news is likely to be the ongoing, and all too familiar, stand-off between Greece and its creditors," says Spreadex analyst Connor Campbell.
As urged by EU leaders, Greek Prime Minister Alexis Tsipras agreed to submit a list of reforms within days. EU leaders sought more concrete steps on reforms and efforts to overcome the standstill on the aid programme.
German Chancellor Angela Merkel, French President Francois Hollande, European Council President Donald Tusk, European Central Bank President Mario Draghi, Eurogroup Chairman Jeroen Dijsselbloem and EU Commission President Jean-Claude Juncker met Tsipras in Brussels.
"In the spirit of mutual trust, we are all committed to speed up the work and conclude it as fast as possible," the leaders said in a statement on Friday.
"Within the framework of the Eurogroup agreement of 20 February 2015, the Greek authorities will have the ownership of the reforms and will present a full list of specific reforms in the next days," it added.
Athens and its European partners have had trouble seeing eye to eye since Tsipras' leftist government assumed office in January on a promise to end the austerity associated with EUR240 billion in rescue loans that Greece has received since 2010.
Daiwa Capital Markets analyst Robert Kuenzel says: "One cannot escape a sense of ?déjà vu? pervading the outcome of the meeting. Perhaps the only change compared to a month ago is that one month less remains for Greece to ensure a sea-change in the reform process."
"It is possible that Draghi managed to drive home to Tsipras exactly how severe the consequences of a Greek payment default would be on financial stability and the economy, a point the [Greek] government has so far shown no apparent awareness of. But in the very short term, the more conciliatory mood between Greece and its creditors should calm Greek depositors, whose withdrawals on Wednesday reached levels not seen in a month," Kuenzel adds.
Eurozone current account surplus in January grew from a year ago, as both the trade surplus and primary income rose sharply, figures from the European Central Bank revealed Friday. The current account surplus rose to EUR29.4 billion from EUR18.1 billion a year ago. In December, the surplus was EUR22.5 billion.
Investors are still dealing with the uncertainty caused by the Fed's statement released on Wednesday in which the central bank removed the word "patient" from its guidance but said it isn't "impatient" to raise US interest rates.
"With the market?s fixation on central bank intervention; stock, bond and FX markets have been more tightly linked than usual. Volatility has been the name of the game in currency markets for the last forty-eight hours with the FOMC inserting another side to what has recently been a one-way bet on the US dollar," says CMC Markets Jasper Lawler.
"The volatility is likely to die down in the next few days but a battle will certainly still be raging between dollar-bulls and bears. With major currencies massively oversold at multi-year lows and the Fed having shifted rate-hike expectations, the US dollar may become a bit more sensitive to disappointing economic data than it has been," Lawler adds.
US futures point to a flat to higher opening, with the DJIA pointed up 0.1% and the S&P 500 and the Nasdaq 100 pointed flat.
By Daniel Ruiz; [email protected]
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