9th Feb 2015 10:49
LONDON (Alliance News) - UK shares trade broadly lower Monday morning as a defiant speech by Greek Prime Minister Alexis Tsipras to the country's Parliament unnerves investors, while FTSE-100 gold miners are rebounding from losses on Friday despite a poor set of Chinese trade data.
The FTSE 100 is down 0.8% at 6,800.12, the FTSE 250 down 0.8 at 16,552.09, and the AIM All-Share down 0.1% at 699.93.
Moody's Investors Service on Friday placed its 'Caa1' rating on Greek government debt on review for a possible downgrade, citing high uncertainty about the country's talks with its official creditors. The move came just hours after Standard & Poor's downgraded its rating further into junk status with a negative outlook, saying its limited cash buffers and approaching debt redemptions to official preferred creditors constrain its negotiating flexibility.
Greek Prime Minister Alexis Tsipras said he still considers an agreement with EU countries on Greece's debt crisis possible despite reservations within the EU. Tsipras also told Parliament in Athens Sunday that Greece would propose a bridge deal to its EU partners to secure government funding until June. Greece risks running out of cash by the middle of the year unless a review of the country's progress in meeting the terms of its current bailout is completed by the end of February.
"By rejecting any bailout extension, he has put Greece firmly on a course that will see it clash with the Troika, the ECB and the eurozone. Only time will tell if this is Tsipras? Marathon, or his Thermopylae," says IG market analyst Chris Beauchamp, referring to a famous victory and defeat in ancient Greece.
Finance ministers from the euro area will hold an extraordinary meeting on Wednesday to discuss the situation in Greece, Dutch Finance Minister Jeroen Dijsselbloem said on Twitter late Friday.
On the economic front, China reported Sunday that imports plunged 20% in January, much faster than the 3.2% drop forecast by economists. In December, imports had decreased 2.4%. The decline, the fastest since May 2009, was driven by decreases in imports of coal, oil and commodities.
"This unexpected weakness is likely to increase the pressure on Chinese officials to implement further measures to ease policy further after last week?s triple R cut," says Michael Hewson, chief market analyst at CMC Markets.
On Wednesday last week, China's central bank lowered the reserve requirement ratio of commercial banks by 0.5 percentage point to 19.5% in order to make available more funds for lending.
FTSE 100-listed Randgold trades up 0.6%, among the best performers, after dropping 4.3% on Friday. The miner reported Monday that its pretax profit fell in 2014 on weaker gold prices, but it raised its final dividend by 20%, adding it is going to continue to commit to "significant expenditure" in 2015.
Gold miner peer Fresnillo is the best performer in the blue-chip index, up 2.6%, after dropping 4.1% on Friday after the price of gold was hit by dollar strength following a strong US non-farm payrolls report. Gold is quoted Monday up at USD1,241.67 an ounce.
Rolls-Royce Holdings is down 1.4% Monday, even though the engine maker said it has signed three contracts with Pratt & Whitney worth up to USD442 million to produce and support LiftSystems for the US's F-35B Lightning II aircraft.
Standard Chartered is among the worst performers in FTSE 100 after Deutsche Bank cut its rating to Sell from Hold.
In the AIM All-Share, Max Petroleum is down 65% after saying the company said it is "unviable" unless it can secure further investment and successfully restructure its debt due to the fall in the oil price. The group said it is negotiating with Sberbank regarding restructuring its USD82.8 million loan owed to the bank.
US stock futures indicate the DJIA, S&P 500, and Nasdaq 100 all to open lower by 0.6%.
In the economic calendar Monday, the US labor market conditions index for January is due at 1500 GMT.
By Daniel Ruiz; [email protected]
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