FTSE 100 holds steady, US futures rise - UPDATE

UK stocks held steady today as traders took to the sidelines as they awaited the outcome of talks between Greek Prime Minister Lucas Papademos and other leaders of the ruling coalition.

The FTSE 100 stood at 5,894 in early afternoon, up just four points from Tuesday’s close.

At today’s meeting, Papademos will try to convince the leaders of the New Democracy, Pasok and Laos parties to pass another round of austerity measures, which is a condition of the next €130 billion bailout from the EU and the IMF.

Papademos has already finalised the terms of the financial aid package with EU officials. The deal reportedly calls for a 20 percent reduction of wages and more layoffs in the public sector.

The widely unpopular austerity measures have triggered mass protests and the government may not survive April’s election if it opts for further budget cuts.

However, if no deal is in place and Greece misses out on more financial support from its official sector lenders – collectively known as the Troika – it will go into a default as soon as next month when it has to repay a €14.5 billion bond.

“What is more worrying for the long-term stability of Greece, and thus the Eurozone, was the latest poll from Athens which showed a dramatic drop in support for the political parties that support Papademos and the technocrats,” said analyst at forex.com Kathleen Brooks.

“This makes the upcoming April election even more critical as it could give power to extreme parties, which may only make Greece’s problems worse.”

In the meantime, the Wall Street Journal reported that the European Central Bank has agreed to exchange its Greek debt bought on the secondary market for bonds issue by Europe's bailout fund, the European Financial Stability Facility (EFSF).

Reckitt Benckiser (LON:RB., up 3.3pct at 3,492p) topped the FTSE 100 leaderboard after the maker of the Strepsils, Durex and Clerasil brands said its revenues growth will be ahead of the market in 2012.

Shares in part-nationalised banks Lloyds (LON:LLOY, up 2.3pct at 36.08p) and Royal Bank of Scotland (LON:RB., up 1.7pct at 29.37p) also were in demand as concerns over their exposure to the euro zone debt crisis eased.

Miners did well today, recovering from yesterday’s sell-off. Kazakhmys (LON:KAZ, up 1.9pct at 1,182p) led the sector, followed by Xstrata (LON:XTA, up 1.5pct at 1,218p) and Rio Tinto (LON:RIO, up 1.4pct at 3,923p).

Meanwhile, Sage Group (LON:SGE, down 3.4pct at 293.5p) was headed in the opposite direction as it went ex-dividend.

International Power (LON:IPR, down 3pct at 332.5p) also showed up among the heaviest fallers in the blue chip index after cautioning investors that it may miss its 2013 earnings target of €1 billion due to a decline in hydro prices in Brazil.

Other notable fallers included engineering group Weir (LON:WEIR, down 1.7pct at 2,015p) and clothing retailer Next (LON:NXT, down 1.7pct at 2,709p).

US markets

Financial bookmakers are currently expecting US stocks to rise in early trade.

Futures for the Dow Jones Industrial Average (DJIA) rose 33 points (0.25 percent) in pre market and futures for the broader S&P 500 index climbed 2.5 points (0.2 percent).

Today’s US data will include weekly oil inventories from the Department of Energy. Analysts polled by Bloomberg forecast a gain of 2.5 million barrels in US crude stockpiles, indicating that energy demand in the US was in decline last week.

On the corporate front, wireless carrier Sprint Nextel (NYSE:S) reported a loss of US$1.3billion in the final three months of 2011, translating into 43 cents per share, up from a loss of 10 cents per share in the same period of 2010.

The bigger than anticipated loss despite a five percent increase in revenues to US$8.7 billion and was a result of the fee the company had to pay Apple to start selling the iPhone.

The earnings report from Time Warner (NYSE:TWX) was better, showing a bigger than expected profit of US$773 million on revenues of US$8.19 billion, up 4.7 percent from the fourth quarter of 2010.

UK corporate news

BHP Billiton (LON:BLT, down 1pct at 2,156.5p) posted its first decline in interim profit as euro zone uncertainty suppressed demand for commodities and pushed prices lower.

As a result, the world’s largest miner saw its net profits slump 5.5 percent to US$9.94 billion in the final six months of 2011 despite a 9.7 percent surge in revenues to £37.5 billion.

On top of the lower prices, the company’s performance was impacted by strikes at its Escondida copper mine in Chile and cost inflation.

Rio Tinto (LON:RIO, up 1.5pct at 3,925p) has decided to invest a further US$4.3 billion in the major expansion of its Pilbara iron ore operations in Western Australia.

This investment includes US$2.2 billion to extend the life of the Nammuldi iron ore mine and US$1.2 billion for Cape Lambert port and rail early works needed for the proposed capacity expansion to 353 million tonnes per annum.

The expansion project is currently in final feasibility study with a final investment decision expected later in the year.

In the FTSE 250, home maintenance insurer Homeserve (LON:HSV, down 10.5pct at 246.2p) admitted that rectifying issues in the UK business is taking longer than anticipated and it has decided to cut its workforce by 7 percent, or 200 staff.

In November 2011 the firm suspended all its UK telesales and marketing activities following a review by accountants Deloitte.

The review showed cases "where its (Homeserve's) sales processes did not meet the company's required standards," Homeserve had said.

In today’s interim management statement, the group said that, while it is making progress in reinvigorating its customer focus and restarting marketing activity, this is taking longer than anticipated.

Fellow midcap SuperGroup (LON:SGP, down 17pct at 582p), which owns the Superdry brand, said it expected pre-tax profit for the full year to be towards the lower end of "market expectations".

It came after the firm announced solid trading over Christmas but then a slowdown in the last three months of last month.

During the 13 weeks  to January 29, retail sales stood at £78.5 million - 27.8 per cent up on the same period last year.

Group sales were up 25.3 per cent at £102.5million, compared to £81.7 million a year earlier.