The UK stock market ended on the back foot on Friday as concerns about ongoing Greek debt talks continued to weigh on investor sentiment. The FTSE 100 was down 0.90% at 6,786 at the close after the International Monetary Fund’s technical team quit discussions due to a lack of progress from Athens.
The IMF on Thursday said there were still “major differences” to be overcome and chose to leave negotiations taking place in Brussels and return to Washington. Particular areas of contention are pension and labour market reform.
However, Greek officials hope to meet with creditors over the weekend to deliver a counter proposal.
Negotiations between the parties have failed to reach an agreement as Greece needs its creditors to release bailout funds. Greece has to repay €1.6bn in liabilities due by the end of the month.
Economic data on Friday by the Office for National Statistics revised up its historic estimates for construction output, meaning that UK GDP probably expanded by 3.1% in 2014 instead of the initially reported 2.8%.
In the US, the University of Michigan’s index on consumer confidence rose to 94.6 in June from 90.7 the previous month, better than the 91.4 predicted by analysts.
Meanwhile, Eurozone industrial production in April rose 0.8% year-on-year, down from 2.1% in March and below expectations for 1.1% growth. Month-on-month, output grew 0.1%, compared with a revised 0.4% decline in March and weaker than analysts’ expectations for a 0.4% increase. The region still looks to be on course to grow by a reasonable but unexciting 0.3-0.4% in the second quarter, building on the steady expansions seen since the third quarter of last year.
With regards to gold, the uncertainty over what will happen to Greece should ultimately result in a higher gold price. However, with US consumer confidence rising sharply to beat analyst forecasts, Gold and silver have tended to struggle. An equity market correction and/or a slowdown in the pace of the US expansion as offers the best lifeline to gold in the current environment.