London close: Optimistic mood ahead of Eurogroup, but risks remain

17th Feb 2012 17:10

-Merkel optimistic about Eurogroup meeting.-Miners lead gains on Footsie.-Retailer rise on economic data.London's benchmark index finished the week strongly - up 53 points on last Friday's close of 5,852 - as markets expressed confidence that the next Greek bailout can be secured on Monday. After a conference call between Italian Prime Minister Mario Monti, Greek Prime Minister Lucas Papademos and Angela Merkel, Steffen Seibert, the spokesman for the German Chancellor, said that the three premiers are "optimistic that the finance ministers can find a solution to the pending questions at the Eurogroup meeting on Monday and thereby contribute to the stabilisation of Greece". There was again talk that the Eurozone could lower the interest rate which it charges Greece on its loans, now at 4%. National central banks, however, are said to be against accepting losses on their holdings of Greek debt. That when current projections indicate that without further measures the debt-to-GDP ratio will only fall to 129% by 2020, and not the 120% sought by its creditors. Eurozone authorities however are thought to be willing to study all the options available to them so as to meet that target. "Greece can still escape a disorderly default if it takes decisive action to convince international creditors about its willingness to implement austerity measures," said Barclays Capital analysts in their 'Global Economics Weekly' report.Meanwhile, the International Monetary Fund is reported to be contributing just €13bn to the €130bn Greek bailout, lower than previously thought, with Eurozone governments having to pick up the slack, according to a report this afternoon by the Wall Street Journal. Nevertheless, officials have said that the size of the contribution has not yet been finalised.Lastly, and as an aside, according to some accounts there does seem to be a certain amount of worry amongst Eurozone authorities as regards the possible opposition to the reforms that could arise following the elections. This is because three of the larger left-wing political formations, the so-called Democratic Left party (16%), the Communists (14%) and SYRIZA (13.5%) are against an agreement with the 'troika'. The political weight of the left has historically been quite hefty in Greece, a country which after the Second World War very nearly ended up on the other side of the "curtain." MINERS, BANKS RISE ON GREEK OPTIMISMMiners performed well; the improving outlook for the Eurozone debt crisis calmed any concerns over global demand. Vedanta Resources was a top riser, gaining 4.5%, while Randgold Resources, Xstrata and Kazakhmys also made firm gains.Anglo American rose after notching up record underlying earnings in 2011. Group revenue including associate companies climbed 11% to $36.5bn from $32.9bn, while earnings before interest, tax, depreciation and amortisation (EBITDA) also moved up 11% to a record level of $13.3bn from $12.0bn.Royal Bank of Scotland and Lloyds were higher on the back of hopes that the Greek crisis could be coming to an end. Both groups will report their full-year results next week. Sector peers HSBC and Barclays were making smaller gains.Emerging markets asset manager Ashmore was the worst performer of the day after HSBC downgraded its rating to underperform from neutral. Meanwhile sector peers Schroders shrugged off a downgrade by Citi from neutral to sell to finish in the blue.Imperial Tobacco was making gains on further rumours of takeover discussions with Japan Tobacco. Sector peer British American Tobacco was heading the other way.RETAILERS RISE AFTER SALES DATARetailers were performing well after UK retail sales volumes increased by 0.9% month-on-month (2.0% year-on-year) in January, according to the Office for National Statistics (ONS). The consensus estimate was for a decrease of 0.4% month-on-month. The general retail sector closed up 1.35%, with Marks & Spencer, Next, Morrison, Home Retail and Sports Direct providing a lift.Sector heavyweight Tesco, however, fell into the red on the same day that Nomura cut its target price by 14% saying "the roll-out of Tesco's trial initiatives will take time to change customer perception and behaviour, and as such we expect the newsflow to improve only gradually across 2012." The firm was also making headlines after igniting outrage across Britain with a job advert which offered prospective employees a permanent night shift - with no wages. Tesco has claimed the advert, which said the only payment would be job-seeker's allowance and expenses, was a "mistake". FTSE 100 - RisersCRH (CRH) 1,343.00p +5.25%Vedanta Resources (VED) 1,312.00p +4.54%Weir Group (WEIR) 2,051.00p +4.16%IMI (IMI) 960.00p +3.62%Admiral Group (ADM) 997.00p +3.58%Meggitt (MGGT) 386.30p +3.29%Royal Bank of Scotland Group (RBS) 27.60p +3.18%Lloyds Banking Group (LLOY) 35.45p +3.11%Wolseley (WOS) 2,407.00p +2.21%InterContinental Hotels Group (IHG) 1,410.00p +2.03%FTSE 100 - FallersAshmore Group (ASHM) 390.60p -1.88%G4S (GFS) 280.10p -1.44%Essar Energy (ESSR) 122.30p -1.05%British American Tobacco (BATS) 3,115.00p -1.05%Shire Plc (SHP) 2,278.00p -0.96%BHP Billiton (BLT) 2,023.00p -0.81%Tesco (TSCO) 317.90p -0.75%Fresnillo (FRES) 1,720.00p -0.75%Experian (EXPN) 945.50p -0.63%GlaxoSmithKline (GSK) 1,414.00p -0.60%FTSE 250 - RisersHome Retail Group (HOME) 109.10p +6.13%Supergroup (SGP) 550.00p +5.06%Afren (AFR) 131.60p +5.03%Carpetright (CPR) 641.50p +4.65%Provident Financial (PFG) 1,031.00p +4.14%Persimmon (PSN) 588.00p +4.07%SIG (SHI) 107.10p +3.98%Sports Direct International (SPD) 286.80p +3.91%Kesa Electricals (KESA) 83.45p +3.86%Taylor Wimpey (TW.) 46.95p +3.71%FTSE 250 - FallersCSR (CSR) 227.70p -3.44%Centamin (DI) (CEY) 92.55p -3.09%Telecity Group (TCY) 677.50p -2.45%Ashtead Group (AHT) 238.60p -2.33%BH Global Ltd. USD Shares (BHGU) 11.65 -2.10%Domino's Pizza UK & IRL (DOM) 479.00p -2.09%Perform Group (PER) 271.40p -2.02%Exillon Energy (EXI) 243.00p -1.50%Allied Gold Mining (ALD) 118.20p -1.50%Misys (MSY) 309.60p -1.40%BC