London pre-open: Stocks to pause after previous surge, Greece in focus

UK stocks are expected to open flat on Tuesday morning after a surge the previous session as investors await further developments on Greece.

City sources predict the FTSE 100 will open five points lower than Monday’s close of 6,825.67.

Hopes over a short-term funding deal for Athens increased on Monday following a last-minute proposal by Greece’s government at the weekend. While an emergency EU summit failed to result in a new cash-for-reforms agreement, leaders expressed hopes that a deal will be struck this week, sending the FTSE 100 up over 1.7%.

“The prospect of a deal on Greece by Wednesday evening following months of tough negotiations is likely to keep the mood in the markets very upbeat this week,” said Oanda analyst Craig Erlam.

On Tuesday’s agenda will be a raft of purchasing managers’ indices from Europe, including the overall composite PMI for the Eurozone which is expected to fall to 53.5 in June from 53.6.

Overnight, the Chinese manufacturing PMI by HSBC improved to 49.6 in June from 49.2, beating the 49.5 estimate.

US durable goods orders, US new home sales and the Markit US manufacturing PMI will also be released during the session.

Stocks to watch

In response to recent press speculation, Ladbrokes confirmed on Tuesday that it is in merger talks with the board of Gala Coral. Ladbrokes said they are in discussions regarding a possible merger of Ladbrokes and Coral Retail, Eurobet Retail and Gala Coral’s online businesses, to create an enlarged business which would be listed on the main market of the London Stock Exchange.

International distribution and outsourcing group Bunzl said revenue for the first half of 2015 is expected to have grown 6% thanks largely to the positive impact of acquisitions. Organic revenue growth of 1% was lower than in 2014, mainly due to slower growth in North America caused by the net impact of some lost business and price declines on plastic resin based products. The FTSE 100 group also announced that it has acquired four businesses in the US, Colombia, Canada and France.

Oilfield services outfit Petrofac has said it performed mostly in line with expectations in the first half, though development of a flagship project in the Shetland Islands will incur further costs of £30m.