London close: Footsie rises as markets await news from Greece

23rd Jan 2012 16:32

- Markets await news from Greece.- Essar Energy jumps over 10%.- EU approves sanctions against Iran.UK stocks finished the day with impressive gains as investors awaited developments from Greece. Meanwhile, finance ministers of the Eurozone were meeting in Brussels to discuss terms of the Greek debt restructuring.The Institute of International Finance (IIF) seems to have hardened its stance in its negotiations with Greece. Charles Dallara, the Managing Director of the IIF, the body which is negotiating on behalf of private sector investors (PSI) in the Greek bond swap, indicated yesterday that private bondholders have made their best offer and that it is now up to the International Monetary Fund (IMF) and the European Union to decide whether the deal is acceptable and whether it will be enough to stave off a default or not. Reports last week suggested that private bondholders were willing to take a haircut of between 65% to 70% as part of a "voluntary" debt swap plan and that the coupon on the new bonds issued would be somewhere between 3% and 4%. Speaking today on CNBC PIMCO chief executive Mohammed El-Erian indicated that he believes Greece will indeed be able to reach an agreement although implementation risks are high. No less important, the tense situation in the Persian Gulf, through which 20% of the world's oil supplies transit every day. Thus, investors awoke this morning to news that British, French and US warships had entered the Strait of Hormuz in a show of defiance of Iranian threats. In response to the above events analysts at Barclays Capital have today written that, "Most of this decision is largely in the price already, with the decision to phase in pressurising prices last week, as this allows for countries to build some inventories before the ban comes into effect. (...) if inventories are not as tight as they were in Q3, the impact on prices will be somewhat muted." Amongst the upside risks to be watched for according to them however is the political instability in Iraq and Sudan, as well as the possibility of higher than expected demand from China. ESSAR SURGES IN AFTERNOON TRADE, IMI & WEIR OFF ON BROKER DOWNGRADESThe share price of India-focused integrated energy company Essar Energy increased by over a tenth on Monday afternoon after the firm increased its best estimate contingent resources at the Raniganj coal bed methane exploration block. Total proven and probable reserves at the block came in at 113bn cubic feet (bcf) gross, or 18.8m barrels of oil equivalent (mmboe). As such, best estimate contingent resources are now 445 bcf gross, or 74.1mmboe, compared with the previous evaluation, carried out in December 2009, which showed 201bcf gross, or 34mmboe. Industrial engineers IMI and Weir led the fallers all day after both stocks were hit with broker downgrades. UBS downgraded IMI from buy to neutral, saying it "can't get excited" over the group's growth prospects, while Weir was cut by JP Morgan Cazenove from overweight to neutral, which warned that demand could be affected by low prices of natural gas. Life insurer Prudential was making decent gains on the back of M&A chatter in the global industry. Last week's rumours that AIA is considering a takeover of ING's Asian divisions for $6bn "reinforces the attraction of the region", according to analysts at RBS. The broker reiterated its buy rating on Prudential, saying that the stock, with "fast-growing and cash-generative Asian businesses", is "well-placed, in our view, to benefit from these trends". The rumour-mill was also working to boost the prices of other stocks: nationalised lender Royal Bank of Scotland was performing well on unconfirmed reports that Chief Executive Officer Stephen Hester has waived his bonus, which was expected to be around £1.6m this year; while Rockhopper was in demand after the Sunday Times reported this weekend that US giant Anadarko Petroleum Corp could be considering a move to take over the oil and gas company. Defence contracting giant BAE Systems was rising on the news it is in discussions with the government of Oman to supply multiple Typhoon fighter aircraft. Meanwhile, airline International Consolidated Airline Group (IAG) was flying high after it said the first flight of its new low cost airline, Iberia Express, will take off on March 25th.FTSE 250 MOVERS: CABLE & WIRELESS ROCKETS, RENISHAW RISES AFTER UPGRADECable & Wireless Worldwide's share price shot up by a third in late trading, but the telecom firm's media relations department said that they did not know any reason for the dramatic movement. By the close, the stock had gained 33.52%.Renishaw was a high riser after UBS upgraded the precision tool maker from neutral to buy, saying that the long-term story outweighs near-term risks. Oilfield support services provider Hunting followed suit, rising 4% after saying results for 2011 are set to be above market expectations after a strong finish to the year. Meanwhile, oil firm Afren fell after announcing that despite 2011 average production increasing year-on-year, it was held back by a longer-than-anticipated period of facilities related downtime at the Ebok field in Nigeria due to safety requirements and commissioning workBCFTSE 100 - RisersEssar Energy (ESSR) 135.60p +10.69%Fresnillo (FRES) 1,784.00p +3.42%Prudential (PRU) 716.50p +3.24%Glencore International (GLEN) 435.85p +3.03%Royal Dutch Shell 'B' (RDSB) 2,399.00p +2.98%BAE Systems (BA.) 322.50p +2.81%Vedanta Resources (VED) 1,178.00p +2.79%Standard Life (SL.) 219.30p +2.62%ARM Holdings (ARM) 590.50p +2.61%SABMiller (SAB) 2,389.50p +2.58%FTSE 100 - FallersWeir Group (WEIR) 1,884.00p -3.58%IMI (IMI) 855.00p -2.56%Man Group (EMG) 119.10p -1.73%Next (NXT) 2,614.00p -1.62%Tate & Lyle (TATE) 665.50p -1.41%Reckitt Benckiser Group (RB.) 3,364.00p -1.35%SSE (SSE) 1,236.00p -1.20%Burberry Group (BRBY) 1,341.00p -1.03%Severn Trent (SVT) 1,517.00p -0.98%United Utilities Group (UU.) 594.00p -0.92%FTSE 250 - RisersCable & Wireless Worldwide (CW.) 23.90p +33.52%Renishaw (RSW) 1,210.00p +10.81%Carpetright (CPR) 607.00p +8.30%Dixons Retail (DXNS) 14.60p +7.91%Heritage Oil (HOIL) 198.90p +6.25%Computacenter (CCC) 395.10p +4.17%Domino's Pizza UK & IRL (DOM) 476.80p +3.65%Soco International (SIA) 305.10p +3.49%Galliford Try (GFRD) 491.50p +3.15%Aberdeen Asset Management (ADN) 240.80p +2.99%FTSE 250 - FallersAfren (AFR) 117.90p -5.38%Kesa Electricals (KESA) 68.25p -4.55%Drax Group (DRX) 510.00p -4.14%Go-Ahead Group (GOG) 1,287.00p -2.50%Spirent Communications (SPT) 122.30p -2.47%Ocado Group (OCDO) 85.60p -2.34%Big Yellow Group (BYG) 271.00p -2.10%Salamander Energy (SMDR) 243.20p -2.05%easyJet (EZJ) 414.40p -1.92%Provident Financial (PFG) 980.00p -1.90%