Global stock markets slide on Greece debt crisis

Stock markets in Britain, Europe and the US have fallen after Greece closed its banks and imposed capital controls.

Stock markets in Britain, Europe and the US have fallen after Greece closed its banks and imposed capital controlsThe moves by the Greek authorities came after the European Central Bank decided not to extend any extra emergency funding.

London’s FTSE 100 index was down 1.47% and Germany’s Dax index fell more than 2%. In the US, the Dow Jones fell nearly 1% early in the session.

Bank stocks are among the hardest hit, with shares of Deutsche Bank and Commerzbank both losing more than 4%.

The Athens Stock Exchange and Greek banks will be closed all week.

On the money markets, the euro lost ground against other major global currencies.

The London FTSE 100 share index was down 98.47 points at 6,655.23 with other European markets seeing even bigger falls. Earlier in Asia, Japan’s Nikkei index fell nearly 3%.

On the currency markets, the euro saw volatile trading in Asia, falling by 2% at one point. However, it has since recovered some ground, with the euro down 0.15% against the dollar at $1.1149.

The euro has weakened against the pound, with one euro now worth £0.7089, while the pound buys €1.4108.

Oil prices are heading lower. Brent crude oil futures fell more than 1.5% to $62.10 a barrel.

Bond yields (an indication of borrowing costs) for Italy, Spain and Portugal – which are considered some of the weaker eurozone economies – rose sharply.

In contrast, German bond yields fell. German bonds are seen as safer investments in times of crisis.

Greece was due to make a €1.6bn payment to the IMF on Tuesday – the same day that its current bailout expires.

Last week, talks between Greece and the eurozone countries over bailout terms ended without an agreement, and Prime Minister Alexis Tsipras then called for a referendum on the issue to be held on 5 July.

At the weekend, the Greek government confirmed that banks would be closed all week, and imposed capital controls, limiting bank withdrawals to €60 (£42) a day.

There is zero chance of the European Central Bank turning Emergency Liquidity Assistance back on – life-saving lending to banks – unless Greeks give an affirmative vote to a bailout proposal from the rest of the eurozone and the IMF, which Juncker sees as a proxy for Greece’s monetary future.

As for Athens, most of the Syriza government detests the bailout offer – for the way it pushes up VAT and cuts pensions.

So we will have the bizarre spectacle of a Prime Minister, Alexis Tsipras, arguing both against the bailout and for remaining inside the eurozone – so goodness only knows how he will vote.

And Greek people will be torn between fear and loathing of bailout proposals that will damage the living standards of many of them, and fear and loathing of abandoning the euro and seeing their banks closed.

UK government borrowing deficit falls in May

UK government borrowing debt fell to £10.13 billion in May, the Office for National Statistics (ONS) said, down from £12.35 billion a year earlier.

UK government borrowing debt fell to £10.13 billion in MayA rise in income tax and VAT receipts helped to cut UK government borrowing in May, official figures have shown.
It was the lowest borrowing figure in May for eight years.

Public sector net debt excluding public sector banks now stands at £1.5 trillion, the ONS said, which is 80.8% of gross domestic product (GDP).

“While the deficit in the financial year ending 2015 has fallen by more than a third since its peak in the financial year ending 2010, public sector net debt has maintained a gradual upward trend,” the ONS said in a statement.

Income tax receipts recorded their highest level for May in four years, rising £0.5 billion, or 5.3%, from a year earlier to £10.8 billion. VAT receipts rose by £0.6 billion, or 5.6%, to £10.7 billion.

The ONS also said that it now estimated total public sector borrowing in the financial year to March 2015 was £89.2 billion, or 4.9% of GDP.

While this figure was slightly higher than the previous estimate, it was still £9.3 billion lower than the previous year’s total.

Analysts said the drop in government borrowing during May was good news for Chancellor George Osborne at the start of the new fiscal year.

Last week, the chancellor said he would attempt to bind future governments to maintaining a budget surplus when the economy is growing.

However experts say that the rise in public sector debt above £1.5 trillion will be troubling for Mr Osborne.

UK inflation rate goes positive

The UK inflation rate- as measured by Consumer Prices Index (CPI) rose to 0.1% in May, up from -0.1% in April.

UK inflation rate goes positiveThe biggest contribution to the rise came from transport, notably air fares, the Office for National Statistics said.

In April, CPI inflation turned negative for the first time since 1960, mainly due to a drop in air and sea fares.

ONS statistician Philip Gooding said: “Last month CPI turned negative, mainly because of falling transport fares due to the timing of Easter. This month, that fall has been reversed.”

He added that the falls in food and fuel costs over the past year “have eased this month, helping to push inflation up”.

While the prices of food and fuel rose in May from the previous month, the prices were still lower than a year earlier.

However, while the overall effect of food and fuel on CPI inflation pulled the rate down by about 0.5 percentage points in May, this was less pronounced than the month before when the prices had a negative effect of 0.7 percentage points.

In May Retail Prices Index (RPI) inflation, a separate measure which includes housing costs, was 1%, up from 0.9% in April.

Bank of England governor Mark Carney has said he expects inflation to remain low in the short term.

The Bank expects near-zero inflation to help the UK economy by boosting the spending power of households.

Chancellor George Osborne said “a powerful mix of low prices and rising wages” was “good news for working people and family budgets”.

Nevertheless, he said: “Of course the job is not done and we will continue to remain vigilant to all risks, particularly when the global economic situation is so uncertain.”

Greek worries wise money markets

European stock markets have fallen sharply as senior EU officials have discussed a possible Greek default for the first time.

European stock markets have fallen sharply as senior EU officials have discussed a possible Greek defaultThe Athens stock exchange closed nearly 6% lower, while Germany’s Dax and France’s Cac 40 closed more than 1% lower.

Stocks in the National Bank of Greece fell by more than 10%, while Piraeus Bank fell more than 11.5%.

According to official sources quoted by news agencies, senior eurozone officials meeting in Bratislava on Thursday held their first formal talks on the possibility that Greece might default on its debt payments.

Also on Thursday, officials from the International Monetary Fund (IMF) pulled out of talks with Greek politicians in Brussels, citing “major differences”.

Greece is seeking to avoid defaulting on a €1.5 billion debt repayment to the IMF by the end of June.

Shares on the Athens Stock Exchange had soared on Thursday amid renewed optimism about Greece’s talks with its creditors.

The index climbed more than 14% – the best performance in several weeks, but the IMF’s withdrawal has dampened investors’ moods.

On Friday, Jeroen Dijsselbloem, president of the Eurogroup of finance ministers, said a deal without the IMF was “unimaginable”.

However, German Chancellor Angela Merkel urged all parties to continue negotiations.

Speaking at a business conference in Berlin, Ms Merkel said: “Where there’s a will there’s a way, but the will has to come from all sides, so it’s important that we keep speaking with each other.”

In London shares continued their downward slide as fears over Greece’s ability to negotiate a settlement with European creditors dented sentiment.

At the close, the benchmark FTSE 100 index was down 61.82 points, or 0.9%, at 6,784.92.

The top riser was Royal Mail, up 2.78%, recouping some of Thursday’s losses.

The postal services company had fallen 4.5% on news that the government had sold 15% of its remaining 30% stake in the company, raising £750m.

The biggest faller on the 100-share index was Johnson Matthey, down 3.1%. On the FTSE 250, platinum producer Lonmin fell 7.1%, compounding earlier losses in the week, after mining and commodity firm Glencore distributed its 23.9% stake in the company to investors.

On the currency markets, the Pound was up 0.41% against the Dollar at $1.5581 and up 0.25% against the euro at €1.3818.

UK trade deficit drops to £1.2 billion in April

The UK trade deficit dropped to £1.2 billion in April from £3.1 billion in March according to the Office for National Statistics.

UK trade deficit dropped to £1.2 billion in April from £3.1 billion in March An £8.6 billion deficit on goods was partially offset by an estimated surplus of £7.4 billion on services the ONS said.

The ONS added that in the quarter to April, exports were flat after 0.3% growth in the first quarter, but imports were up 2.1%, the same as in the three months to March.

UK exporters have struggled in the face of weak demand in the eurozone.

Part of the deficit dip was down to a fall in imports of art and furniture, said the ONS. Another factor was less oil being imported.

Last year, companies began stockpiling oil as the price of the commodity collapsed.

The deficit – a description of how much imports exceed exports by value – was less than economists had expected.

“Monthly trade figures are notoriously volatile but today’s significant improvement is nonetheless very welcome, but there is no room for any complacency,” said David Kern, chief economist at the British Chambers of Commerce.

“The longer term trend still shows a worsening in the trade position in recent months. It is clear that we are not making enough, sustained, progress in closing the trade gap.”

The UK’s trade deficit for 2014 widened to £34.8 billion, the biggest gap since 2010.

What these figues continue to point out is the futility of focusing our exports on countries which are struggling economically rather than English speaking countries with growing economies.

Flat month for UK markets

U.K. shares cut their monthly gains in the last minutes of trading at the end of May.

U.K. shares cut their monthly gains in the last minutes of trading at the end of MayIn what was otherwise a volatile day for the markets, the FTSE 100 plunged in afternoon trade to close the month 56.49 points lower at 6,984.43 amid continued uncertainty regarding the Greek debt situation and disappointing first-quarter GDP data from the US.

Greeks say they will pay the IMF their next debt installmenty this week as capital flight hits a new record.

The FTSE 100 Index slid 0.8 percent to 6,984.43 at the close of trading in London. The gauge fell 0.7 percent this week, trimming its monthly gain to 0.3 percent. The volume of shares changing hands was 32 percent greater than the 30-day average.

The broader FTSE All-Share Index dropped 0.7 percent on Friday, while Ireland’s ISEQ Index lost 1.4 percent.

A slew of upgrades sent shares higher. Engineering group Weir advanced 48p, or 2.4pc, to £20.24 after Credit Suisse raised its price target from £19.15 to £22.05.

Ophir Energy also made gains of 4.2p, or 3.3pc, to close at 131.4p as Barclays raised its target price to 225p from 200p owing the upgrade to the company’s ability to “take advantage of declining industry costs”.

Conversely, Ashtead Group tumbled to the bottom of the FTSE 100 for the second consecutive day, falling 41p to £11.20 after its US rival United Rentals had talked down May activity at an industry conference in the US on Thursday.

Joining the laggards, Synergy Health plummeted in afternoon trade, shedding 72p, or 3.8pc, to £18.23 following a move by the US Federal Trade Commission to block its $1.9bn merger with US peer Steris. Both companies said they would fight the lawsuit. Analysts at Canaccord Genuity described it as a “simple transaction” that has become “complex”.

UK government borrowing unexpectedly falls to £6.8 billion in April

UK government borrowing fell unexpectedly to £6.8 billion in April, down from £9.3 billion a year earlier.

UK government borrowing unexpectedly falls to £6.8 billion in AprilIt is the lowest April government borrowing figure since April 2008, when public borrowing stood at £2.5 billion.

The Office for National Statistics (ONS) also revised its previous estimate of borrowing for the full financial year up slightly to £87.7 billion, from £87.3 billion.

But that was still comfortably below the government’s target of £90.3 billion.

As it is the start of the financial year little can be gleaned from the public borrowing figures as yet.

And as the ONS itself warned last week, borrowing figures in the first few months of the financial year are often subject to revisions.

In his March Budget, Chancellor George Osborne forecast public sector net borrowing would amount to £75.3 billion this financial year.

Last month, official figures showed the economy grew by 0.3% in the three months to the end of March, compared with 0.6% in the last three months of the year.

Mr Osborne plans to hold a new Budget on 8 July, when he is expected to outline his strategy to eliminate the deficit by the end of 2017 and achieve a Budget surplus in 2018-19.

It is expected he will outline £30 billion of spending cuts to government departments, including £12 billion of cuts to welfare spending.

It is also possible the chancellor may revise the government’s borrowing targets.

A Treasury spokesman said the borrowing figures showed the government’s deficit reduction plan was working, with borrowing in April £2.5 billion lower than the same month a year ago.

“We have more than halved the deficit, but at just under 5%, it is still one of the highest in the developed world,” the Treasury official said.

“There is no shortcut to fixing the public finances, so we have to continue with the hard work of identifying savings and making reforms necessary to finish the job and build a resilient economy.”

UK inflation rate turns negative

The main measure of UK inflation turned negative in April for the first time on record- with the rate falling to -0.1%.

UK inflation rate turns negativeIt is the first time that the Consumer Price Index (CPI) inflation has turned negative since 1960, based on comparable historic estimates, the Office for National Statistics said.

The biggest contribution to the fall came from a drop in air and sea fares.

Bank of England governor Mark Carney said he expected inflation to remain very low over the next few months.

But Mr Carney added that “over the course of the year, as we get towards the end, inflation should start to pick up towards our 2% target”.

The latest inflation figures show that transport costs were 2.8% lower in April than the same time a year ago, while food was 3.0% cheaper.

Chancellor George Osborne said the inflation figure should not be mistaken for “damaging deflation”.

He added that the lower cost of living – driven by last year’s fall in oil prices – would be a welcome relief for family budgets, in an environment in which average wages were finally beginning to rise.

“Of course, we have to remain vigilant to deflationary risks and our system is well equipped to deal with them, should they arise,” Mr Osborne added.

The latest inflation figure means that a basket of goods and services that cost £100 in April 2014 would have cost £99.90 in April this year.

The last time we saw a price fall in the UK was March 1960, before even I was born, when there was a drop (probably) of 0.6%.

Almost nothing changed between March and April’s inflation figures- the ONS says that the thing that did move, which was the price of air fares and sea fares, was depressed by the timing of Easter.

The prices that are used to calculate the CPI are collected in a few days in the middle of the month. In 2014, Easter fell during those days, which meant transport fares were inflated.

This year it didn’t, so fares were lower, which means today’s tiny deflation may be seen as a technical effect.

3i surges on strong earnings leading UK shares higher

UK shares gained value on London trading after falls overnight on Wall Street and in most of Asia.

3i surges on strong earnings leading UK shares higherThe benchmark FTSE 100 gained 0.34% to close at 6,973.04.

Private equity firm 3i Group was the biggest gainer which rose 3% after a strong set of full year results.

The company, which owns the Agent Provocateur lingerie business, says its net asset value had increased by 14% to 396p a share.

Mondi was another big winner in the FTSE 100, adding nearly 2.8%.

On Wednesday, shares in the packaging company jumped nearly 9% after the company reported a 29% rise in first-quarter operating profits.

Three of the five biggest losers on the 100 share index were companies going ex-dividend which means that anyone buying those shares will not receive the next dividend payments.

GlaxoSmithKline, Kingfisher and Aberdeen Asset Management all shed more than 1%.

On the currency markets, the Pound hit a five month high against the dollar, trading at $1.5748, but was little changed against the euro at €1.3868.

FTSE 100 flat despite strong UK shop sales

Shares in the Next shop group rose after the retailer reported stronger than expected sales- but the FTSE was held back by falling mining stocks.

FTSE 100 flat despite strong UK shop salesNext said that full-price sales for the 13 weeks to 25 April climbed 3.2%, helped by April’s warm weather, and its shares rose more than 3%.

But after a mixed morning, the FTSE 100 was down 3.36 points at 7,027.17.

Mining shares pulled the index lower after Antofagasta cut its copper output forecast.

Shares in Antofagasta fell 3.4% and other miners also dropped, with BHP Billiton down 2.6% and Rio Tinto 1.6% lower.

Shares in Barclays slipped 0.75% after the bank announced it was setting aside a further £800m to cover the cost of settling an investigation into foreign exchange rate-rigging. Barclays also took a further £150m hit to cover payment protection insurance (PPI) mis-selling.

The top riser in the FTSE 100 was Weir Group. The company said first quarter orders from its oil and gas business were down 23%, but this was not as bad as expected and its shares rose 4.1%.

Weir also said it cut costs at its oil and gas business by a further £10m.

In the FTSE 250, shares in Greggs rose 3.3% after the bakery chain announced a £20m special dividend.

Greggs said the dividend would replace a previously-proposed share buyback.

The firm also reported a 5.9% increase in same-store sales in the 16 weeks to 25 April, beating expectations.

On the currency markets, the Pound rose 0.19% against the dollar to $1.5368 and slipped 0.04% against the euro to €1.3968.