Stocks fall as euro zone stress persists

STOCKS ACROSS Europe fell for a third day on concerns that a summit of the region’s political leaders later this week will not lead to decisive measures to contain its debt crisis as Germany’s Angela Merkel hardened her resistance to debt sharing.

“It was another bad day across the board in Europe,” is how one trader in Dublin summed it up. “It wasn’t a nice start to the week.”

Dublin

JUST FOUR stocks on the main market rose in Dublin yesterday – food groups Aryzta and Glanbia, bookmaker Paddy Power and biotech group Elan.

The biggest mover was Aryzta, which has its main listing in Switzerland. It was up 1.67 per cent at just under €37.50.

Glanbia and Paddy Power rose by just under 1 per cent each to €5.50 and €52 respectively. However, trading volumes in all these stocks were modest.

The biggest loser was builders merchanting and DIY chain Grafton which closed down 7.2 per cent at €2.45, albeit on small volumes.

Grafton had traded up for most of the day but fell just before the close of trading when a tranche of shares were offloaded by one holder of the stock.

Packaging group Smurfit Kappa was 4 per cent lower at €4.80 while cider maker CC, which holds its annual meeting on Thursday, finished 3.85 per cent lower at €3.25.

London

DUBLIN-BASED Shire tumbled 11 per cent, the largest decline on the benchmark FTSE 100 Index, after the Food and Drug Administration approved a generic version of its second-biggest selling treatment for use in the US.

Shire closed at 1,743 pence after the FDA approved a generic version of the drugmaker’s attention-deficit hyperactivity disorder treatment, Adderall XR.

Brian Bourdot, an analyst at Barclays, cut his profit forecast for the company by 14 per cent.

SABMiller fell 1.7 per cent after the stock was downgraded. The FTSE 100 dropped 63.04, or 1.1 per cent, to 5,450.65 at the close in London, extending its slide from the beginning of this year to 2.2 per cent.

The gauge has declined 5.5 per cent so far this quarter.

“In this febrile atmosphere, there is little that seems capable of lifting markets from their gloom,” Chris Beauchamp, a market analyst at IG Index in London, wrote in a note. “With yields on Spanish and Italian bonds creeping higher once again, the stage is now being well set up for this week’s summit.”

BT Group, the UK’s largest fixed-line telephone company, dropped 2 per cent to 201 pence. The stock was downgraded to neutral from buy at Citigroup.

Lloyds Banking Group and Barclays led bank shares lower, falling 3.1 per cent to 30.41 pence and 3.2 per cent to 194.25 pence, respectively.

Royal Bank of Scotland Group lost 2.6 per cent to 236.8 pence. Standard Chartered slid 2.3 per cent to 1,354.5 pence.

Europe

UNICREDIT AND BNP Paribas led a selloff in banks, both falling at least 5 per cent.

Mobile phone handset maker Nokia lost 11 per cent amid speculation that Samsung Electronics’ earnings may miss estimates.

The Stoxx Europe 600 Index retreated 1.5 per cent to 242.82 at the close of trade, extending its decline in the past three days to 2.7 per cent and erasing the gauge’s advance for the year.

The Stoxx 600 fell in the final two days of last week after German business confidence slid to a two-year low, adding to concern that the euro area’s sovereign-debt crisis is derailing growth.

Chancellor Merkel dismissed the possibility of debt-sharing to resolve the area’s financial crisis, even as Spain announced it would formally seek aid for its ailing banks.

At a conference in Berlin, she said that “euro bonds, euro bills and European deposit insurance with joint liability and much more” would be economically wrong and counterproductive”.

Billionaire investor George Soros called on Europe to start a fund to buy Italian and Spanish bonds, saying policy makers should create a European Fiscal Authority to purchase the debt in return for the countries implementing achievable budget cuts.

US

US STOCKS fell in early trading, after last week’s drop in the Standard and Poor’s 500 Index, on concern a European Union summit will fail to tame the region’s debt crisis.

All 10 groups in the SP 500 slid as energy and financial shares had the biggest losses.

Exxon Mobil, Bank of America and Apple slid more than 1.8 per cent.

Pfizer and Bristol-Myers Squibb dropped at least 1.6 per cent as blood thinner Eliquis failed to win approval.

Constellation Brands surged 13 per cent, the most in a decade, as the world’s largest wine company may benefit from a potential deal between Grupo Modelo SAB and Anheuser-Busch InBev NV. – Additional reporting by Bloomberg