LONDON (ShareCast) - - Germany approves Greek bailout.
- Oil prices threaten to derail economic recovery.
- Essar drops 15% after full-year results.

UK stocks rallied in afternoon trade after the German parliament voted in favour of the €130bn bailout for Greece. The FTSE 100 surged by over 50 points in the final two hours of trade on Monday, but still finished 20 points shy of Friday’s closing price of 5,935.

In her speech in the Bundestag before the vote, German Chancellor Angela Merkel warned politicians that the risks of turning away from Greece now are “incalculable”. “No-one can assess what consequences would arise for the German economy, on Italy, Spain, the Eurozone as a whole and finally for the whole world…The road that lies in front of Greece is long and truly not without risk. That also goes for the success of the new program - no one can give a 100% guarantee of success,” she said.

Parliament then approved the deal in a 496-to-90 vote (with five abstentions), well past the 311 votes Merkel needed to get a majority.

At the weekend, the G20 told Europe that it must first work on raising more funds itself if it expects to receive more financial assistance from the rest of the world. Yet their discussion on the possibility of increasing the International Monetary Fund’s resources was put off as they await “essential input”, mainly for the euro area countries to “reassess the strength of their support facilities in March”.

Currently under discussion in Europe is the possibility of merging the temporary and permanent bailout funds, known as the EFSF (European Financial Stability Facility) and ESM (European Stability Mechanism), respectively. The ESM is supposed to replace the EFSF, but a possible merger would increase this firewall from €500bn to around €750bn, something that Merkel is opposed to.

Weighing on market sentiment today was the recent surge in the price of oil. Brent crude futures were down 1.185% at $124.01 at 17:00 on the InterContinental Europe Exchange, but the recent surge has seen the price come near to its highest level since 2008 due to Iran-related supply concerns. Thoughts are now turning to the effect that elevated prices will have on the recovery in Europe with a director at the International Energy Agency recently warned that the cost of oil in relation to global GDP is at a similar level to 2008, when Brent jumped to $147 a barrel.

ESSAR TANKS AFTER FULL-YEAR RESULTS

The share price of power generation and oil and gas major Essar Energy sank nearly 15% today after reporting a sharp drop in profits in the 12 months ended December 31st. When accounting for the reversal of a sales tax benefit - due to the Indian Supreme Court ruling against a sales tax deferment - the group fell to a pre-tax loss of $881.1m, from a profit of $365.5m the year before.

Shares in HSBC were down nearly 4% despite the group reporting what was initially seen as a decent set of figures, with reported pre-tax profits coming in at $21,782m, ahead of expectations and up from $19,037m the year before. The figure surpassed all other western banks that have issued their 2011 results in the year-to-date.

However, according to Nomura, HSBC said in a conference call following the results that it would be a “heroic” achievement to meet its cost income ratio target of 48-52% by 2013. “Intraday market reaction suggests an element of disappointment, but given that consensus currently has 56% in its cost-income ratio estimates and management were constructive on growth and asset quality, we view the reaction as overdone,” analysts at Nomura said.

Sector peers RBS and Lloyds were also out of favour with the Financial Times reporting that the two banks are looking to tap the ECB's Long-Term Refinancing Operation on Wednesday for a combined €15bn.

Distribution and outsourcing firm Bunzl led the rise after profits were comfortably ahead of expectations in 2011, with the new bits and the old bits of the company all chipping in with strong performances. Oil group BP followed suit after the court hearing regarding the Macondo oil well explosion which was due to start on Monday February 27th was delayed by one week.

Pearson, publisher of Penguin books and the Financial Times, was a heavy faller after seeing sales climb to £5,862m in 2011 from £5,663m in 2010, below the market consensus forecast of £5,919m.

Vedanta Resources declined after confirming that it will be merging its Indian iron ore and copper divisions, Sesa Goa and Sterlite, respectively, to create a new multi-metal mining giant - Sesa Sterlite. The combination is expected to create world's seventh-largest global diversified natural resources major on an EBITDA basis.

High street giant Mark & Spencer was given a lift by UBS which upgraded its rating from neutral to buy.

On the FTSE 250, Bovis Homes shook off an earlier fall to finish in the blue after posting a 74% increase in annual pre-tax profit after it sold more homes at a wider margin. Meanwhile, materials sciences firm Cookson rose after managing to improve margins despite increasing raw materials prices in 2011.

BC

FTSE 100 - Risers
Bunzl (BNZL) 952.00p +2.31%
Marks & Spencer Group (MKS) 360.10p +1.90%
Tate & Lyle (TATE) 709.00p +1.72%
International Consolidated Airlines Group SA (IAG) 162.90p +1.56%
Admiral Group (ADM) 1,062.00p +1.43%
InterContinental Hotels Group (IHG) 1,425.00p +1.42%
Kingfisher (KGF) 284.40p +1.17%
BP (BP.) 501.70p +1.11%
British American Tobacco (BATS) 3,159.00p +1.02%
Whitbread (WTB) 1,720.00p +1.00%

FTSE 100 - Fallers
Essar Energy (ESSR) 107.60p -14.60%
Pearson (PSON) 1,204.00p -3.76%
HSBC Holdings (HSBA) 553.50p -3.72%
Evraz (EVR) 402.70p -2.96%
Hargreaves Lansdown (HL.) 449.30p -2.75%
Lloyds Banking Group (LLOY) 34.90p -2.32%
Kazakhmys (KAZ) 1,137.00p -2.24%
Burberry Group (BRBY) 1,391.00p -2.11%
Royal Bank of Scotland Group (RBS) 27.94p -2.07%
ICAP (IAP) 387.50p -1.90%

FTSE 250 - Risers
Spirit Pub Company (SPRT) 58.50p +5.41%
Rank Group (RNK) 145.10p +4.69%
Perform Group (PER) 282.00p +4.44%
Persimmon (PSN) 627.00p +3.12%
Home Retail Group (HOME) 106.10p +2.71%
Imagination Technologies Group (IMG) 604.50p +2.54%
Cookson Group (CKSN) 685.00p +2.16%
Mondi (MNDI) 591.50p +1.89%
Moneysupermarket.com Group (MONY) 121.60p +1.76%
Galliford Try (GFRD) 588.00p +1.73%

FTSE 250 - Fallers
Kenmare Resources (KMR) 57.50p -4.41%
Afren (AFR) 140.10p -4.04%
Big Yellow Group (BYG) 290.00p -3.43%
Laird (LRD) 169.10p -3.32%
JPMorgan Indian Inv Trust (JII) 380.00p -3.16%
PayPoint (PAY) 575.00p -3.04%
Oxford Instruments (OXIG) 1,137.00p -2.82%
Senior (SNR) 195.40p -2.79%
Rentokil Initial (RTO) 79.75p -2.63%
Diploma (DPLM) 393.50p -2.57%

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE