London midday: Stocks trip on lower copper and iron ore prices

London stocks were underperforming their Eurozone peers slightly come midday as commodity prices took it on the chin.

Over the weekend Greece's anti-austerity Syriza party came within a whisker of gaining an outright majority.

Ironically, that meant that for now the worst political scenarios in the Mediterranean country had been avoided.

Nevertheless, market participants deemed that there was still scope for China’s largest export market to be impacted. Analysts also cited the prospect for lower steel output ahead of the Chinese Lunar New Year celebrations as potentially leading to excessive stocks of iron ore.

As of 12:30 the FTSE-100 was to be seen 33 points lower at 6,799.55.

Economists expect little volatility as a result of elections

Deutsche Bank’s George Saravelos wrote last night that, “the election outcome in Greece this evening is at the very top-end of an “anti-austerity” mandate that the electorate could deliver.”

Syriza won 36.4% of the vote compared to 27.8% for the governing New Democracy party and are projected to win 149 seats versus the 151 needed for a majority on the 300 seat parliament, German broker Deutsche Bank pointed out in a note to clients.

Even so, various economists seemed sanguine that even under a worst case scenario the threat to the Eurozone as a whole was rather limited given the financial reforms put in place over the last few years.

Erik Nielsen, global chief economist at Unicredit Bank AG, wrote: “A disaster scenario, which would lead Greece onto a slippery slope out of the Eurozone, cannot be excluded.

"Breaking with Europe would be a terrible move for Greece – but the rest of the Eurozone, particularly as the ECB has already announced the opening shot of QE, will skate through with only temporary and minor volatility.”

The Eurozone's finance ministers were expected to broach the situation in the Mediterranean country when they met later on Monday.

The yield on Greek 10-year sovereign bonds was higher by 33 basis points higher to 8.77%, albeit after having earlier tapped the 9.28% mark on an intra-day basis.

Commodities take a hit, iron ore down

Three-month copper futures were down 2.7% to $5,510 per metric tonne out on the LME. Iron ore with 62% content for delivery at Qingdao, China, was off by 4.35 to $63.54 a dry metric tonne.

Front month Brent crude futures were falling by -1.2% to $48.21 per barrel on the ICE. In a note sent to clients on Friday Barclays Research detailed the growing glut of oil being stored offshore which could act as a brake on any recovery in the price of crude later in the year.

Speaking on Saturday at the World Economic Forum in Davos, Switzerland, Bank of England Governor Mark Carney said markets may be underestimating for how long oil prices might stay low - thanks to the ongoing technology revolution in energy.

The Russian rouble was also registering losses after fighting in Ukraine engulfed the port city of Mariupol over the weekend. As of 11:57 the country’s currency was depreciating by 3.05% to 65.65 per dollar.

German business sentiment rises for a third month

The German IFO institute's widely-followed gauge of business confidence, for the month of January, edged slightly past forecasts, rising for a third consecutive month to a level of 106.7 from 105.5 in the month before.

The Munich-based think-tank said: “Companies were far more satisfied with their current business situation and the majority was also optimistic about the business outlook”

IAG leads the pack

IAG, the owner of British Airways, will reportedly announce that Irish airline Aer Lingus has accepted its recent takeover bid. The Irish carrier confirmed on Sunday that it was considering a new offer of €2.50 per share in a move which values it at €1.3bn. The FTSE 100 group may, however, face difficulties getting Irish officials to agree to the takover.

Rolls-Royce has been awarded a contract to supply engines for major Chinese locomotive manufacturer CNR Dalian, marking its entry into that country's market for freight locomotives for export. The british engineer is to deliver 232 of its MTU Series 400 engines to CNR, the most powerful ones in that model series. They will be used in Transnet Freight Rail's new locomotives which the South African operator is in the process of upgrading.

Energy supplier SSE has announced a 4.1% cut to its gas prices from 30 April and said its full-year results would be in line with expectations but warned of continuing challenging business conditions in its new financial year.

Diamond mine operator Petra Diamonds saw sales jump by 16% in the first six months of the year, to reach $214.8m, but warned that it may not meet analysts' expectations for full-year profits. The miner's increased sales in the period were in part thanks to the sale of two exceptional diamonds for a combined revenue of $38.7m.

Executives at Aveva are finding it hard to see through the debris left behind by the oil price collapse, the company said on 26 January. In a trading statement covering the period between 1 October of 2014 and 23 January of 2015 the engineering and design technology company said that: "We are experiencing increased uncertainty and reduced visibility in the Oil & Gas market". That segment accounts for 45% of the firm's revenues.

techMARK 3,084.84 -0.20%
FTSE 100 6,799.38 -0.49%
FTSE 250 16,427.44 -0.19%

FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 554.50p +3.45%
Dixons Carphone (DC.) 433.20p +1.95%
Mondi (MNDI) 1,171.00p +1.83%
Shire Plc (SHP) 4,904.00p +1.83%
London Stock Exchange Group (LSE) 2,408.00p +1.43%
Ashtead Group (AHT) 1,108.00p +1.37%
easyJet (EZJ) 1,757.00p +1.27%
SSE (SSE) 1,510.00p +1.21%
SABMiller (SAB) 3,473.00p +1.06%
Schroders (SDR) 2,884.00p +1.02%

FTSE 100 - Fallers
Tullow Oil (TLW) 356.60p -3.96%
Coca-Cola HBC AG (CDI) (CCH) 1,074.00p -3.42%
BHP Billiton (BLT) 1,388.50p -2.56%
Fresnillo (FRES) 875.50p -2.40%
Anglo American (AAL) 1,077.50p -2.36%
Tesco (TSCO) 230.20p -2.17%
Babcock International Group (BAB) 1,031.00p -2.09%
BP (BP.) 424.50p -1.83%
Royal Dutch Shell 'B' (RDSB) 2,233.00p -1.80%
BG Group (BG.) 875.80p -1.78%

FTSE 250 - Risers
Indivior (INDV) 176.70p +6.70%
AO World (AO.) 297.10p +3.05%
Go-Ahead Group (GOG) 2,564.00p +2.97%
Electrocomponents (ECM) 207.00p +2.63%
Close Brothers Group (CBG) 1,567.00p +2.62%
Man Group (EMG) 179.60p +2.45%
Oxford Instruments (OXIG) 795.50p +1.99%
Synthomer (SYNT) 255.10p +1.92%
Berkeley Group Holdings (The) (BKG) 2,401.00p +1.91%
Betfair Group (BET) 1,578.00p +1.81%

FTSE 250 - Fallers
Vedanta Resources (VED) 394.50p -8.26%
Hunting (HTG) 426.00p -7.47%
Telecom Plus (TEP) 980.00p -5.59%
Afren (AFR) 18.79p -4.86%
Petra Diamonds Ltd.(DI) (PDL) 172.00p -4.71%
Kaz Minerals (KAZ) 188.90p -4.16%
Premier Oil (PMO) 138.30p -3.96%
Drax Group (DRX) 360.50p -3.76%
Cairn Energy (CNE) 172.50p -3.36%
BlackRock World Mining Trust (BRWM) 302.50p -3.29%