European equities flat ahead of ECB meeting

The Dublin market outperformed on a flat day for equities across Europe as investors mined data on euro zone economic growth for clues ahead of today's meeting of the European Central Bank (ECB), while new data showed US companies added fewer jobs in May than expected.

The ECB is due to announce its interest-rate decision in Frankfurt, followed by a press conference at which President Mario Draghi will explain any new policy measures. However, some market-watchers suggested investors had already priced in the prospect of new ECB measures and that Draghi would have to surprise them to provide fresh momentum to equity values.

A Eurostat release showed that the euro zone economy expanded 0.2 per cent in the first quarter, matching economists' modest forecasts. DUBLIN Building materials group CRH rose 1.3 per cent to €20.32, as its peers in the cement sector also advanced – Holcim and Lafarge rallied more than 2.8 per cent after a report said that private-equity companies were considering bids for some assets as part of the companies' planned merger. As CRH is the largest constituent of the Iseq index, its gains helped the Dublin market outperform the rest of Europe.

The Iseq's 0.8 per cent climb was also aided by a 2.8 per cent advance for Ryanair, which closed at €7.49 after its publication of healthy May traffic statistics in the morning generated buyer interest throughout the session. Aer Lingus rose 6.2 per cent to €1.55.

Paper and packaging company Smurfit Kappa rose 2.2 per cent to €17.98, as it resumed its recent upward trend. However, Bank of Ireland’s shares were under pressure towards the end of the day, selling off in the final hour, and it closed down 2.9 per cent at 27 cent. LONDON UK stocks fell for a second day, with the FTSE 100 Index closing down 0.3 per cent.

Tesco dropped 1.3 per cent to 293.5 pence after Britain's largest grocer reported its worst quarterly sales performance in 40 years. Sales at UK stores open at least a year fell 3.8 per cent, excluding fuel and value-added tax, in the period ended May 24th, its third straight quarterly drop. Rival supermarket chain Sainsbury's declined 1.9 per cent to 327.6 pence.

SABMiller slid 1.2 per cent to 3,255 pence after analysts at Morgan Stanley downgraded the shares to "underweight", meaning that it no longer recommends buying shares in the world's second-biggest brewer. EUROPE National benchmark indexes rose in 10 of the 18 western European markets, with Germany's Dax and France's Cac 40 little changed.

Volkswagen dropped 1.5 per cent to €192.80, leading automaker stocks lower, as it sold €2 billion of preferred shares to help pay for the takeover of Swedish truckmaker Scania. A gauge of auto companies was the third-worst performer among 19 industry groups in the Stoxx 600. PSA Peugeot Citroen dropped 1.6 per cent to €9.98 and Fiat SpA declined 1.7 per cent to €7.49. Swiss duty-free store operator Dufry jumped 6.4 per cent to 155 francs after agreeing to buy travel retailer Nuance Group, which owns over 350 stores.

US Strong data on US services sector drove gains on Wall Street, reversing earlier losses on an industry report that showed weakness in the US private-sector labour market. Yields on benchmark 10-year US Treasury notes edged higher.

Protective Life surged 18 per cent to $69.32 after Dai-ichi Life Insurance, Japan’s second-largest life insurer, agreed to buy the company for 582.2 billion yen ($5.7 billion).

Under Armour added 5.2 per cent to $53.78. The sportswear retailer was raised to buy from hold by analysts at Jefferies, who cited its long-term sales potential and the brand’s growing popularity among young people and women. – Additional reporting Bloomberg/Reuters