European stocks were making moderate gains on Friday morning but the mood on financial markets was cautious with the focus firmly on Cyprus ahead of pivotal day for the country's future in the Eurozone.
According to government spokesman Christos Sylianides this morning, the "next few hours" are key as parliament convenes to vote on measures. He told reporters in a government statement that the Cyprus and the Troika are in "hard negotiations [...] in order to conclude solutions that will save the banking system, the economy in general and will bring back calmness in the country".
He classified this afternoon as "really critical hours" and transmitted the government's message that "everyone must demonstrate the highest level of responsibility".
Reports this morning suggested that Cyprus could be looking to restructure two of its banks and force losses on big depositors, sparing those with deposits of less than €100,000 from any levies. This follows an overwhelming rejection of a proposed raid on all customer accounts earlier this week.
Analysts at Bank of America Merrill Lynch said this morning that a workable deal for Cyprus should: " address debt sustainability concerns; be acceptable to the Cypriot Parliament, but also Germany's Parliament and the rest of the Eurozone; provide sufficient support to the banking sector to avoid substantial withdrawals of deposits; and address the risks to economic growth."
They said: "Without a deal, we see a risk that Cyprus could be faced with a disorderly default and euro exit."
FTSE 100: BP jumps after share buyback announcement
Oil giant BP was a high riser after saying that it intends to carry out a share repurchase programme with a total value of $8.0bn. The decision to buy-back shares
follows the completion of the sale of BP's 50% interest in TNK-BP to Russian oil company Rosneft. Market forecasts were for a buyback closer to $5-6bn.
Heading the other way was high-end fashion group Burberry which sunk in sympathy with sector peer Mulberry after the latter warned on profits this morning. Mulberry said that trading since Christmas has been "disappointing" reflecting a reduction in tourist spend in London.
Banking stocks were also under pressure today with RBS, Lloyds, Standard Chartered and HSBC in the red. HSBC was shrugging off an upgrade by Bank of America, while Lloyds was lower on concerns that a poor financial performance from the Co-Op in 2012 could ruin plans for the group to take over hundreds of Lloyds branches.
Energy provider National Grid gained after HSBC lifted its rating on the stock to 'overweight' and raised its target price from 780p to 850p.
FTSE 250: HomeServe drops on job losses
Home energy repairs group HomeServe was registering heavy losses early on after saying that a fall in customer numbers next year will lead to the loss of 300 jobs. Nevertheless, the firm said that it will likely meet forecasts for the year to March 31st.
Closed life fund consolidator Phoenix was a high riser after unveiling strong full-year results, underpinned by solid cash generation from its operating companies. Cash generation was £690m, at the upper end of the £600-700m target range.
Publishing and events group Euromoneywas lower after saying that due to the on-going difficulties in the Eurozone total revenues for the half year ended March 31st are expected to show a headline decrease of around 1.0% year-on-year.
FTSE 100 - Risers
BT Group (BT.A) 275.80p +3.57%
BP (BP.) 461.30p +2.65%
AstraZeneca (AZN) 3,202.50p +2.22%
Sainsbury (J) (SBRY) 375.50p +2.07%
Marks & Spencer Group (MKS) 396.40p +1.64%
BAE Systems (BA.) 390.40p +1.48%
Tate & Lyle (TATE) 849.00p +1.31%
Centrica (CNA) 356.80p +1.22%
Smith & Nephew (SN.) 749.00p +1.22%
National Grid (NG.) 752.00p +1.14%
FTSE 100 - Fallers
Burberry Group (BRBY) 1,335.00p -3.75%
Petrofac Ltd. (PFC) 1,452.00p -3.26%
Evraz (EVR) 226.80p -2.03%
Royal Bank of Scotland Group (RBS) 294.90p -1.86%
IMI (IMI) 1,269.00p -1.78%
Weir Group (WEIR) 2,231.00p -1.50%
Melrose Industries (MRO) 257.40p -1.45%
Eurasian Natural Resources Corp. (ENRC) 290.10p -1.43%
Aberdeen Asset Management (ADN) 410.70p -1.35%
CRH (CRH) 1,474.00p -1.27%
FTSE 250 - Risers
Phoenix Group Holdings (DI) (PHNX) 647.00p +6.85%
Barr (A.G.) (BAG) 558.50p +3.52%
QinetiQ Group (QQ.) 208.20p +2.21%
TalkTalk Telecom Group (TALK) 265.60p +2.19%
Howden Joinery Group (HWDN) 233.90p +2.01%
Bank of Georgia Holdings (BGEO) 1,480.00p +1.79%
Kier Group (KIE) 1,221.00p +1.75%
Brewin Dolphin Holdings (BRW) 210.00p +1.69%
Hays (HAS) 96.60p +1.68%
Informa (INF) 520.00p +1.66%
FTSE 250 - Fallers
Homeserve (HSV) 206.80p -7.26%
SDL (SDL) 425.10p -3.74%
Euromoney Institutional Investor (ERM) 900.00p -3.23%
Dixons Retail (DXNS) 32.38p -2.94%
Elementis (ELM) 259.90p -2.62%
Soco International (SIA) 389.80p -2.55%
Essar Energy (ESSR) 137.80p -2.27%
Morgan Crucible Co (MGCR) 287.90p -2.07%
Workspace Group (WKP) 341.00p -2.01%
EnQuest (ENQ) 138.50p -1.91%