European stocks hit four-month lows

Greece dragged European stocks to their lowest level in almost four months yesterday after weekend debt talks between the Mediterranean nation and its creditors broke down.

Markets are now looking to Thursday’s meeting of euro zone finance ministers, which may be a make-or-break session deciding whether it can avert default.

DUBLIN

Market jitters saw the Iseq index retreat by 0.7 per cent to fall back to 6,168.25.

An outperformer was oil producer Dragon Oil. It soared after it agreed a £3.7 billion takeover as Dubai-based Emirates National Oil Company raised its offer for the business. The stock rose 9.2 per cent, to finish up at €10.08.

Smurfit Kappa is to be added to the S&P Europe 350, S&P Euro Plus and S&P Euro and S&P UK indices. However, the stock didn't respond positively to the news yesterday, as it fell back by 1.9 per cent, to finish down at €26.

Bank of Ireland gave up 2 per cent to close down at €0.35, but Permanent TSB went a little stronger, adding 1.9 per cent, to close up at €4.33, albeit on not much volume.

Index heavyweight CRH was a little weaker, retreating by 0.7 per cent, to fall back to €25.34. Paddy Power touched €78 during the day, but finished up by 25 cents at €77.70, as Davy Stockbrokers set a target of €90 a share, on the grounds that its current share price is not reflective of the strength of the underlying business.

Aer Lingus continues to drift away from IAG's €2.50 bid price, falling back by 1.7 per cent, to €2.37. However, as one broker noted, there is "no volume" in the stock, with just 160,000 shares traded.

LONDON

UK stocks fell to their lowest level since March, following three straight weeks of declines for the FTSE 100 Index. The FTSE 100 fell 1.1 per cent to 6,710.52, with all but four stocks retreating. The broader FTSE All- Share Index lost 1.1 per cent.

EasyJet fell 2.3 per cent after RBC Capital Markets downgraded the airline from outperform to underperform, the equivalent of a sell rating. British Airways owner IAG also declined. Barratt Developments and Taylor Wimpey fell after Citigroup said house-builder returns were likely to be muted. Standard Chartered dropped 2.4 per cent after Jefferies cut its target price to 656 pence from 722 pence.

EUROPE

Uncertainty over a resolution to the Greek crisis saw the Stoxx Europe 600 Index slip 1.6 per cent to 383.02. Greece's ASE Index dropped 4.7 per cent, with Alpha Bank and Piraeus Bank tumbling at least 9 per cent.

Italy’s FTSE MIB Index posted the second-worst performance among western European markets, with a 2.4 per cent decline. In Paris, the CAC 40 index closed down 85.8 points.

Among stocks moving on corporate news, Metro fell 4.7 per cent after agreeing to sell its Galeria Kaufhof stores to Hudson's Bay for €2.83 billion. Deutsche Annington Immobilien slid 5.6 per cent. The property company said its funds from operations per share would be hurt by a planned capital increase of about €2.25 billion needed to finance the acquisition of Sudewo Group.

Telekom Austria dropped 3.9 per cent after saying that chief executive officer Hannes Ametsreiter would step down at the end of next month.

US

US stocks retreated, with the Standard and Poor’s 500 Index below its average price during the past 100 days. All of the 10 major S&P 500 sectors were lower, with the technology index leading the decline with a 0.71 per cent drop.

Microsoft's 1.3 per cent fall weighed the most on the Nasdaq and the S&P while United Technologies' 1.8 per cent drop was the biggest drag on the Dow.

Data yesterday showed that manufacturing activity in New York State slowed in June, while US industrial production unexpectedly fell in May, mainly because of a strong dollar and a drop in spending by energy companies. – (Additional reporting Bloomberg/Reuters)