Iseq stable as European shares dip

European shares were lower at mid-session today, extending losses for a fourth session on investor caution after Egypt president Hosni Mubarak refused to step down.

The Iseq index of shares was relatively static, rising only 3.5 points by 10.30 am to 2940.61.

Financial stocks bounced back a little after a disappointing session yesterday. After ending yesterday's session down 2.49 per cent, or 0.9 cent, Bank of Ireland gained 1.9 per cent to trade at 36 cent a share this morning. AIB added1.1 per cent to trade at 27.3 cent, after losing 1.82 per cent yesterday.

Irish Life and Permanent extended yesterday's 1.9 cent slide, losing a further 2.2 per cent to trade at 91 cent. Its banking business, Permanent TSB, yesterday announced a significant rise in its new fixed mortgage rates, with the two-year rate rising by 2 per cent and the five and 10 year rates to increase by 3 per cent. NCB Stockbrokers sais the move was not a "great surprise", given the difficulties facing the banking business.

"The group has limited capacity to re-price the asset side of its balance sheet, as a result of its large tracker exposure (60 per cent of total loans). This is placing significant pressure on margin levels as funding costs rise, making the prospect of further asset re-pricing (for all non-tracker products) inevitable," NCB wrote in a note.

In a further blow to the banking system, ratings agency Moody's today dowgraded the senior unsecured debt of six Irish banks amid concerns over the additional State support for financial institutions.

In Europe, Finnish phone maker Nokia was the top faller after unveiling a new strategy that will see it work with Microsoft.

By 1016 GMT, the pan-European FTSEurofirst 300 index of top shares was down 0.7 per cent at 1,161.14 points, after ending lower yesterday on disappointing results news.

"Most of the European markets opened negative today, following on from what happened in Egypt overnight as yesterday they had priced Mubarak would step down," Baron Anyangwe, sales trader at IG Index said.

Portuguese fuel and oil company Galp Energia rose 2.4 per cent after posting adjusted fourth-quarter net profit at the top end of expectations.

Technology stocks featured among the worst performers, with STOXX Europe 600 Technology index dropping 1.5 per cent.

Nokia slumped 9.6 per cent after saying it had teamed up with Microsoft to take on Google and Apple in the fast-growing smartphone market.

"We are somewhat confused. They have announced a big tie-up with Microsoft but at the same time they have not cut R&D," said Nomura analyst Richard Windsor. "Given that the people who were positive on the stock were looking for mid-teens devices margins by 2012, we can see some cuts to estimates."

L'Oreal fell 5.3 per cent after fourth-quarter comparable sales below forecasts.

ThyssenKrupp, Germany's biggest steelmaker, lost 1.3 per cent after announcing rising losses at its new US and Brazilian plants.

On the upside, French tyremaker Michelin gained 1.3 per cent after results beat forecasts.

Legal & General rose 2.6 per cent after a bullish broker note from Nomura.

Across Europe, the FTSE 100 index was down 0.6 per cent, Germany's DAX fell 0.7 per cent and France's CAC 40 was down 1.2 per cent.