London close: UK markets hit two-week high despite Greek impasse

Fading optimism over an imminent short-term funding deal for Greece didn’t stop UK stocks from rising for the fifth straight day, as decent gains from a number of blue chips bolstered markets.

The FTSE 100 ended the day up 0.15% at 6,844.80, its highest close since 11 June.

Supermarket stocks, oil and gas producers and miners all finished with decent gains in London, as the Footsie bucked the trend seen across the continent following negative news flow from Brussels.

Creditors on Wednesday rejected the proposals put forward by Greece at the weekend and instead responded with their own terms for a cash-for-reforms deal, only to be turned down by politicians in Athens.

An agreement is needed to prevent Athens from defaulting on its €1.6bn repayment to the IMF next week, though both sides still seem far apart on certain issues such as controversial taxes and spending cuts.

IG analyst Joshua Mahony said: “The back and forth nature of negotiations was always likely to bring anything but a last-minute solution as both sides try to squeeze every possible concession out of their opposition.”

Germany is reportedly insisting that Greek politicians approve a new cash-for-reforms deal by Monday before bailout funds can be unlocked.

However, German finance ministry spokesman Martin Jaeger on Wednesday downplayed the likelihood of an imminent deal, saying: “Our impression is that there’s still a long way to go”.

In other news, the Commerce Department’s updated estimate for first-quarter US economic growth showed that gross domestic product contracted at an annualised pace of 0.2% compared with the 0.7% decline originally reported. This upwards revision was in line with estimates.

Blue chips provide a lift

Sainsbury’s stock was rising strongly after being boosted by a Societe Generale ratings increase to ‘buy’ and target price upgrade from 260p to 315p, pointing to a resilient profile and attractive valuation.

Sector rivals Morrisons and Tesco were also in demand after the news of a mega-merger between European peers Ahold and Delhaize. Elsewhere in the retail sector, high street fashion group Next also rose after Barclays Capital lifted its recommendation to ‘overweight’.

Oil major Shell was in the lead in the energy sector after Deutsche Bank upgraded the shares to ‘buy’, saying that the risk/reward balance is “now firmly in our favour” ahead of the impending BG Group takeover.

Meanwhile, Credit Suisse upgraded BHP Billiton to ‘neutral’ from ‘underperform’, saying it is “now more constructive” on the stock after a 11% fall over the last three months.

Among the fallers was Sage which dropped sharply after the software company’s boss told analysts not to expect an acceleration in the rate of top-line growth.

Airline giant IAG was flying lower on speculation that its takeover of Aer Lingus could be delayed by the European Union Commission’s competition law directorate.

Chemicals company Elementis plummeted 17% on the FTSE 250 after warning that its full-year earnings per share will miss market expectations due to a significant reduction in oil projects in North America.

Market Movers
techMARK 3,198.09 -0.51%
FTSE 100 6,844.80 +0.15%
FTSE 250 17,924.78 -0.40%

FTSE 100 - Risers
Royal Mail (RMG) 524.00p +2.85%
Carnival (CCL) 3,344.00p +2.64%
Morrison (Wm) Supermarkets (MRW) 184.50p +2.61%
Sainsbury (J) (SBRY) 275.50p +2.34%
Royal Dutch Shell 'A' (RDSA) 1,898.50p +2.32%
BG Group (BG.) 1,109.50p +1.93%
Royal Dutch Shell 'B' (RDSB) 1,916.50p +1.51%
Severn Trent (SVT) 2,193.00p +1.39%
BHP Billiton (BLT) 1,373.50p +1.29%
BAE Systems (BA.) 480.40p +1.29%

FTSE 100 - Fallers
Sage Group (SGE) 516.00p -6.01%
Inmarsat (ISAT) 948.50p -2.42%
Taylor Wimpey (TW.) 189.40p -2.37%
Barratt Developments (BDEV) 618.00p -2.29%
Hargreaves Lansdown (HL.) 1,223.00p -2.08%
Persimmon (PSN) 1,990.00p -1.97%
Weir Group (WEIR) 1,800.00p -1.96%
GKN (GKN) 352.30p -1.78%
International Consolidated Airlines Group SA (CDI) (IAG) 517.00p -1.71%
Hammerson (HMSO) 635.00p -1.32%

FTSE 250 - Risers
JD Sports Fashion (JD.) 703.00p +4.15%
Telecom Plus (TEP) 881.00p +3.65%
Workspace Group (WKP) 918.00p +3.15%
OneSavings Bank (OSB) 308.00p +2.67%
Fidessa Group (FDSA) 2,264.00p +2.63%
Stagecoach Group (SGC) 417.00p +2.56%
Capital & Counties Properties (CAPC) 422.80p +2.22%
Fidelity China Special Situations (FCSS) 164.40p +2.11%
Aldermore Group (ALD) 298.10p +2.09%
Poundland Group (PLND) 321.70p +1.97%

FTSE 250 - Fallers
Elementis (ELM) 257.60p -17.44%
Hunting (HTG) 619.00p -6.78%
Serco Group (SRP) 127.00p -4.73%
Bodycote (BOY) 742.00p -3.32%
Just Eat (JE.) 411.50p -2.93%
Debenhams (DEB) 90.30p -2.64%
Berkeley Group Holdings (The) (BKG) 3,306.00p -2.62%
Bovis Homes Group (BVS) 1,117.00p -2.62%
Redrow (RDW) 444.10p -2.52%
Euromoney Institutional Investor (ERM) 1,115.00p -2.45%