Euro area tribulations affect bourses

THE IRISH exchange was weak yesterday, like most of its counterparts around Europe.

Macro features, in particular the ongoing debacle in the euro area, were the main influence on the day’s outcome. Volumes were slight in Dublin and elsewhere.

That said, Dublin stocks have had a good few days and the drop in the Iseq yesterday was in part due to profit-taking, traders said.

DUBLIN

THE ISEQ index closed down 0.33 per cent, a decent performance relative to other exchanges. There was little market-specific news, though a Central Bank on the mortgage market was seen by traders as being a contributor to the outcome for Bank of Ireland.

The report said the number of borrowers missing mortgage repayments for 90 days or more rose again in the three months to the end of June, to 10.9 per cent. Bank of Ireland stock closed at €0.085, a drop of 2.3 per cent.

Food company Kerry was up again, continuing its good run of the past few days. It closed at €37.61, a rise of 0.83 per cent.

Other stocks that traders said were in good demand were CC, Grafton, DCC and Kingspan. CC rose 0.42 per cent to €3.56, Grafton was up 0.62 per cent to €3.25, DCC was 0.24 per cent ahead on €20.85, while Kingspan fell 0.39 per cent to €7.67.

There was some profit-taking in Ryanair which closed at €4.21, a fall of 0.61 per cent. Market giant CRH ended the day down 0.25 per cent, at €14.22.

LONDON

THE FTSE 100 Index, which started the session on the front foot, gave up its gains to close just 2.4 points ahead at 5776.6.

Sentiment had been boosted after minutes from the US Federal Reserve revealed a strong consensus for additional action to aid the still-weak economy, while poor manufacturing data in China added to speculation Beijing will consider a stimulus move.

But investor nerves were frayed amid ongoing tensions in the euro zone as Greek prime minister Antonis Samaras continued his campaign to get European leaders to give him more time for austerity measures to turn around his country’s beleaguered economy.

The reversal in market sentiment saw the pound slip back slightly, having earlier hit three-month highs against the dollar.

In a busy session for corporate results, Guinness and Smirnoff firm Diageo was 1 per cent higher after reporting an 11 per cent rise in operating profits to £3.2 billion for the year to June 30th.

WH Smith also made strong gains in the FTSE 250 Index after it revealed that full-year profits will be at the top end of City expectations. Building supplies firm SIG was another top FTSE 250 performer, up 8.5p to 102.6p after it reported a 1.9 per cent drop in underlying interim pre-tax profits to £34.7 million, but said it planned another £7 million of cost savings in 2013.

Elsewhere, Mr Kipling maker Premier Foods edged a penny higher to 67.3p after reducing its debt mountain with the £200 million sale of its Hartley’s jam and Robertson’s marmalade division to US-based Hain Celestial.

EUROPE

EUROPEAN STOCKS dropped for a second day as German finance minister Wolfgang Schäuble dampened optimism that Greece will get more time to cut its debt and as bond yields climbed in Spain.

The Stoxx Europe 600 Index retreated 0.5 per cent to 267.88 at 4:30 p.m. in London. The gauge earlier advanced as much as 0.6 per cent on speculation central banks from the US to China will further ease monetary policy to support growth. The equity benchmark has still rallied 14 per cent from this year’s low on June 4th.

“There are many negative factors weighing on the market, notably the uncertainty associated with the sovereign debt crisis and a weak outlook for earnings,” Nathalie Benatia and Christopher Jeffery, strategists at BNP Paribas, wrote in a report to clients.

“However, these are currently being offset by market anticipation of further policy assistance. We expect this anticipation to build over the coming weeks.”

National benchmark indexes declined in 15 out of 18 western-European markets. France’s CAC 40 Index slid 0.8 per cent and Germany’s DAX Index fell 0.97 per cent. Spain’s IBEX 35 Index dropped 1 per cent as the nation’s benchmark bonds fell, pushing 10-year yields up by the most in almost three weeks.

NEW YORK

US STOCKS fell as expectations for swift stimulus action from the Federal Reserve faded and Chinese and euro zone data pointed to stalling global growth.

A slump in Hewlett-Packard shares weighed on the technology sector, but the SP 500 stayed above a support level at 1,400, which is seen as a positive sign.

The Dow Jones industrial average was down 0.88 per cent at 13,057.46.

The Standard Poor’s 500 Index ended 0.81 per cent off at 1,402.08, while the Nasdaq Composite Index was down 0.66 per cent at 3,053.40. – (Additional reporting Bloomberg, Reuters)