LONDON MARKET COMMENT: Stocks Down Amid Uncertainty About Greek Talks

Fri, 12th Jun 2015 09:32

LONDON (Alliance News) - UK shares are trading lower Friday mid-morning as the Greek debt drama retakes centre stage, with European major indices also falling on renewed uncertainty over the negotiations.

Royal Mail is leading blue-chip gainers, recovering some of its losses suffered on Thursday, while Royal Dutch Shell is down after saying it will pull out of a shale gas exploration project in the east of Ukraine.

The FTSE 100 is reading down 0.6% at 6,808.57 points, while the FTSE 250 is down 0.5% at 18,006.45. The AIM All-Share is outperforming up 0.2% at 775.23.

In Europe, the CAC 40 in Paris is down 0.4% and the DAX 30 in Frankfurt is down 0.5%.

Greece could reach a deal with its creditors on its bailout at a meeting of eurozone finance ministers on Thursday next week, the country's state minister said, amid stark warnings by EU and IMF officials over the lack of progress in negotiations.

"I hope it (a deal) will come very soon, on June 18, when the eurogroup takes place," state minister Alekos Flabouraris told the newly relaunched state TV channel ERT.

His comments came a day after the technical team of the International Monetary Fund left the negotiations in Brussels, citing major differences between Greece and its creditors' proposals for reform, and a senior EU official urged Greece to be more "realistic".

In London, Royal Mail leads FTSE 100 gainers, up 1.8%, after falling 4.5% Thursday on the sale of a further 15% stake in the postal firm by the UK government. Shares in the company are also higher after being upgraded to Overweight from Neutral by JPMorgan.

Meanwhile, Royal Dutch Shell has notified Ukraine that it will pull out of a shale gas exploration project in the east of the country, the Financial Times reported, as a result of the ongoing conflict in the region. Insiders cited heightened geopolitical risk and sharp drop in global oil prices, which has made shale gas exploration projects less attractive, the report said.

Shell 'A' and 'B' shares are down 1.2%.

Meanwhile, UK telecommunications regulator Ofcom proposed controls on the wholesale prices BT Group charges for its business lines, with the aim of reducing costs over a three-year period. Ofcom believes the proposed price caps "should lead to significant real-terms price reductions for most customers" in this market, including businesses, schools, universities and libraries. Consumer mobile and broadband operators also would see savings which could be passed on to customers, Ofcom said.

BT Group shares are up 0.7%.

J Sainsbury, down 1.2%, Wm Morrison Supermarkets, down 1.4% and Tesco, down 0.7%, are giving back some of their gains made in the past two days. J Sainsbury on Wednesday reported a drop in retail sales, but its chief executive said he is encouraged by the "early trends" the grocer is seeing.

In the FTSE 250, Ted Baker is up 2.2% at 2,877.00 pence after saying Friday it is on track to meet expectations for its full year following a strong start, with revenue up 24.2% in the eighteen weeks from the beginning of February to June 6.

"The start to the year has been exceptionally strong," said Liberum analyst Tom Gadsby, with the broker keeping a Buy recommendation on the stock and a price target of 3,200p.

Petrofac shares are up 0.6% after UBS upgraded the oil services company to Buy from Neutral.

Bwin.Party Digital Entertainment and Petra Diamonds are the biggest mid-cap losers, down 10% and 9.8%, respectively. Two shareholders in Bwin.Party are looking to sell 50 million shares in the online gambling company, and Petra Diamonds said it expects to report lower revenue when it next reports annual results, as average prices for selling its diamonds have come under pressure.

Eurozone industrial production growth slowed sharply in April to its slowest pace in three months and came in below economists' expectations, figures from the Eurostat showed. Industrial production grew a working-day adjusted grew 0.8% year-on-year, following 2.1% growth in March, which was revised up from 1.8%. Economists had forecast a 1.1% increase in April. The latest growth was the smallest since January's 0.6% gain.

Still ahead in a light economic calendar Friday, the US producer price index is due at 1330 BST, while the Reuters/Michigan consumer sentiment index is at 1500 BST.

By Daniel Ruiz; danielruiz@alliancenews.com