Stocks up on German ESM ruling

EUROPEAN STOCKS advanced to a 14-month high after Germany’s top constitutional court cleared the way for the ratification of the euro area’s permanent bailout fund.

The decision from the German court led to a rally in Irish bond yields.

Ireland’s nine-year bond yield dropped 19 basis points to 5.41 per cent after reaching 5.40 per cent, the lowest level since August 2010.

DUBLIN

THE ISEQ finished slightly ahead yesterday after the German court approved its participation in Europe’s permanent bailout fund.

“The news from Germany was greeted with a surge in the markets early on but it eased into the afternoon session,” was how one stockbroker in Ireland summed up the day’s trading.

United Drug, which is quitting the Dublin market for a London listing, was the main mover, up 3.8 per cent at €2.751.

CRH, which accounts for 22.6 per cent of the Iseq, was up 1.8 per cent on the day at €15.375.

Packaging group Smurfit Kappa was the other main mover, up just more than 2 per cent at 7.20.

Stockbroker Davy noted yesterday that German independent producers confirmed that increases of €40-€50 per tonne in recycled containerboard prices have been achieved already in September.

Independent News & Media, was the biggest loser among the main Iseq stocks on the day, down 2.9 per cent at 0.165.

LONDON

UK STOCKS fell for a third day, with Vodafone Group pulling the FTSE 100 Index lower.

Vodafone sank to a three-month low as people familiar with the matter said Verizon Communications will take longer to approve a dividend.

Separately, Apple’s introduction of a new version of the iPhone today may lead to a price war among European telecom operators.

Barratt Developments tumbled 6 per cent after the homebuilder didn’t pay an annual dividend.

The FTSE 100 slipped 10.11 points, or 0.2 per cent, to 5,782.08 at the close in London, erasing gains of as much as 0.5 per cent.

The gauge has still rallied 9.9 per cent since the 2012 low on June 1st as European Central Bank policy makers agreed on an unlimited bond-buying programme and speculation grew the Fed will boost stimulus.

EUROPE

BAE SYSTEMS jumped the most in nine years after the company began talks with European Aeronautic, Defence and Space Co, for a possible combination.

Barratt Developments lost 6.6 per cent after the housebuilder said it wont pay an annual dividend.

The Stoxx Europe 600 Index rose 0.1 per cent to 272.91, the highest close since July 8th last year.

The Stoxx 600 has advanced 17 per cent from its 2012 low on June 4th, boosted by speculation central banks will do more to stimulate growth.

The Stoxx 600 climbed in late afternoon trading yesterday as speculation grew that the US Federal Reserve will boost stimulus.

The gauge last week surged the most since June as European Central Bank policy makers agreed to an unlimited bond-buying plan to help lower borrowing costs in the region.

The Federal Constitutional Court in Karlsruhe yesterday dismissed motions filed by groups including an opposition political party that sought to halt German ratification of the €500 billion fund, known as the European Stability Mechanism, and a deficit-control treaty championed by Chancellor Angela Merkel.

The court stipulated that Germany set a cap of about €190 billion on its liabilities before ratifying the ESM, unless parliament decides to back extra funds.

US

US STOCKS rose yesterday after a major step forward in resolving Europe’s debt crisis and before a Federal Reserve decision on Thursday on injecting more stimulus into the flagging US economy.

The Dow Jones industrial average was up 12.31 points, or 0.09 per cent, at 13,335.67 in early trading.

The Standard & Poor’s 500 Index was up 1.46 points, or 0.10 per cent, at 1,435.02.

The Nasdaq Composite Index was up 0.78 points, or 0.03 per cent, at 3,105.31.

The S&P 500 index has advanced more than 9 per cent since the start of June on hopes for global central bank stimulus. But the index has been unable to significantly pierce the 1,438-1,440 level, seen by many analysts as a significant resistance point.

Facebook jumped 5.5 per cent to $20.50 after chief executive Mark Zuckerberg hinted at new growth areas from mobile to search in his first major public appearance since the social networks rocky IPO in May.

Apple slipped 0.1 per cent to $660.13 before it was due to unveil its newest iPhone, widely expected to offer 4G wireless technology and a larger display. – (Additional reporting by Bloomberg and Reuters)