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LONDON (Alliance News) - UK shares have reversed a higher open to trade flat mid-morning Monday, while there is increased optimism over the Greek debt deal after German Chancellor Angela Merkel called for a limited form of debt relief for the country.
The FTSE 100 trades flat at 6,550.76, the FTSE 250 also is flat at 17,625.95, and the AIM ALL-Share is up 0.1% at 750.76.
In Europe, the CAC 40 in Paris is up 0.5% and the DAX 30 in Frankfurt is up 0.4%.
Chancellor Angela Merkel on Sunday called for debt relief for Greece, ahead of the German parliament vote on the latest bailout for Athens on Wednesday and amid concern that its debt burden is unsustainable. German parliament is widely expected to approve the latest Greek bailout.
In an interview with the public broadcaster ZDF, the leader of Europe's biggest economy rejected calls for forgiving some of Greece's debt but she said she saw "wiggle room" on the interest rates it is charged and the maturity dates of its loans.
Merkel's comments come after the European Commission and the European Central Bank argued in a new analysis that debt relief measures, including extending repayment periods, would allow Athens to achieve debt sustainability, a solution advocated by the International Monetary Fund. The IMF is awaiting decisions on debt relief for Greece before deciding whether to participate in the latest bailout, which has caused some dissent amongst German ranks.
"Like [Greek Prime Minister Alexis] Tsipras' issues within Syriza, the biggest concern for Merkel could be further rebellion from her Christian Democratic Union (and sister party Christian Social Union), with reports suggesting up to 65 dissenters. One of the key problems for the CDU is the lack of IMF support for the deal; the Washington-based institution is unlikely to come on board until after debt relief talks in October, and then only if those talks are successful," says Connor Campbell, financial analyst at Spreadex.
Late Friday, Eurozone finance ministers approved the third bailout package in five years for Greece, which will commit to reforms and spending cuts in return for EUR86 billion in aid. Some of the countries in the eurozone, including Germany, require their parliaments to be consulted on the new bailout. Others that do so are Austria, Estonia, Portugal and Spain. Greece's Parliament approved it Friday.
The bailout package will be needed for Greece to make its EUR3.2 billion loan repayment to the European Central Bank on Thursday.
Oil prices continue to be under pressure, with West Texas Intermediate touching a fresh six-and-a-half year low. WTI hit an intraday low of USD41.61, slipping below the previous low of USD41.65 made last Thursday. Brent oil currently trades at USD48.86 a barrel.
The low oil price is weighing on the share price of oil-related companies. Weir Group is down 1.1% and BP down 0.4%. In the FTSE 250, Ophir Energy is down 4.2% and Premier Oil is down 2.8%.
Mining stocks also are being sold, with Glencore touching a new all-time low and trading down 1.0%. BHP Billiton is down 1.1% and Rio Tinto is down 0.7%.
In the FTSE 250, Clarkson is by far the worst performer, down 7.1%. The shipping services company reported a fall in pretax profit in the first half, as an increase in revenue was more than offset by higher administrative expenses and costs connected to its acquisition of rival shipping broker RS Platou ASA, and said it made a "solid" start to the year.
It said it made a GBP10.8 million pretax profit in the six months to the end of June, compared with GBP14.1 million in the corresponding period the prior year. Revenue increased to GBP145.3 million from GBP111.7 million, while administrative expenses were up to GBP127.8 million from GBP91.0 million.
Bovis Homes Group is also one of the worst performers in the FTSE 250, down 4.2%. The stock is down even though the company said it is on track to deliver its expected volume of new homes, and it is confident in its outlook for 2015 as a whole, after reporting a 8.9% increase in pretax profit for the first half and a record number of legal completions.
The housebuilder said it made a GBP53.8 million pretax profit in the six months to the end of June, compared with GBP49.4 million in the corresponding half the prior year, as revenue increased to GBP350.7 million from GBP322.1 million.
Shore Capital has put its Buy recommendation for the company Under Review, saying that the stock has surpassed its fair value estimate of 1,141.00 pence. The stock currently trades at 1,150.10p, still near its 52-week high of 1,205.02p.
Still ahead in the economic calendar is US Empire State Manufacturing Survey at 1330 BST, and US National Association of Home Builders housing market index at 1500 BST.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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