June 29, 2012 / 6:02 AM / 8 years ago

UK Stocks-Factors to watch on Friday, June 29

* Britain’s FTSE 100 index is set to jump to a one-week high in the open on Friday, after an EU summit unexpectedly yielded a raft of measures to tackle the euro zone crisis, but troubles in the UK banking sector will keep a lid on gains.

* Futures on the UK bluechip index were up 2.67 percent or 81.5 points at 3131.50 points by 0628 GMT. Financial boookmakers had forecast a rise of 87 to 93 points. For more on the factors affecting European stocks, please click on

* Risk appetite across markets has been lifted overnight by signs that an EU summit - for which investor expectations were very low - has actually come up with some measures to tackle the euro zone crisis.

* Euro zone leaders agreed on Friday to take emergency action to bring down Italy and Spain’s spiraling borrowing costs and to create a single supervisory body for euro zone banks by the end of this year, a first step towards a banking union.

* After hours of argument, they also agreed that the bloc’s future permanent bailout fund, the European Stability Mechanism, would be able to lend directly to recapitalise banks without increasing a country’s budget deficit and without preferential seniority status.

* Given the very low expectations ahead of the summit, positioning leaves markets vulnerable to a sharp upward correction, but strategists cautioned that previous relief rallies have proved short lived and that many details remain to be explained on the unveiled measures.

* Oil and copper prices rose on the news, potentially offering support to Britain’s heavyweight energy and mining companies.

* The UK blue chip index closed down 0.6 percent, or 30.86 points, at 5,493.06 On Thursday, with banking shares battered by concerns over the financial impact of an investigation into the fixing of interbank lending rates which has already engulfed Barclays.

* Although the euro zone developments will offer some support to financial shares, trouble for the sector is set to continue. Britain’s financial regulator said on Friday it had reached agreement with Barclays, HSBC, Lloyds and RBS in relation to the mis-selling of interest rate hedging products, exposing a second scandal in as many days.

* Lloyds issued a separate statement saying it did not expect the financial impact from the settlement to be material.

* A relatively bare corporate calendar in the UK is unlikely to detract investors from the EU summit and the bank scandal. The market will, however, pay some attention to a raft of euro zone data including flash inflation for June, and to U.S. personal incomes and consumption data as investors seek to determine the chances of rate cuts or more quantitative easing from the central banks.

* RBS is set to be fined about 150 million pounds ($233 million) for offences of market manipulation similar to those that inflicted huge damage on Barclays, the Times reports.

* CAIRN ENERGY is selling around a 3.5 percent stake in its former unit Cairn India, and expects to receive about $360 million. [ID:nWLA9453

* AMEC has acquired Serco’s nuclear Technical Services business for a cash consideration of 137 million pounds.


> Financial Times

> Other business headlines Multimedia versions of Reuters Top News are now available for: * 3000 Xtra : visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News visit http://topnews.reuters.com (Reporting By Toni Vorobyova; Editing by Andrew Heavens)

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