The imminent prospect of France losing its coveted triple-A credit rating weighed on equity markets today, dragging European shares down to a two-week closing low.
Investor sentiment also suffered amid fears that the euro zone crisis will curtail global growth, with the result that the main indices in Europe closed down between 1.7 and 3.3 per cent. However, the declines were also the result of thin volumes in the market - those investors who chose to flee to safety found that there were few buyers on the other side of the trade, pushing equity values down.
The Iseq index slightly outperformed the main European indices, finishing the day down 1.5 per cent. However, it was a day of decline for some of its heaviest hitters, including cement-maker CRH, which fell 3.4 per cent to €13.18, and Ryanair, which ended the session down 1.7 per cent at €3.73. Paddy Power, which announced a three-year deal with the British Columbia Lottery Corporation, fell 32 cent to €39.49.
Bank of Ireland dropped 4.65 per cent to 8 cent, while AIB fell 5.3 per cent to 7 cent, on a day when European banks fell sharply on concerns about the knock-on effects of a possible downgrade of France.
Independent News & Media, which later announced that it has spent up to €1.6 million on the English language school International House Dublin, slipped 1 cent to 21 cent. Among the main climbers, industrial holdings group DCC managed an 8 cent rise to €18.51, while pharmaceutical group United Drug advanced 2.5 per cent to €2.05 and fruit distributor Fyffes rose 2.6 per cent to 39 cent.
Elsewhere, UK stocks sank the most in three weeks, led by a selloff in mining companies, after the US Federal Reserve refrained from announcing additional measures to bolster the world's largest economy. The benchmark FTSE 100 Index dropped 123.35, or 2.3 per cent, to 5,366.8 at the close in London.
US stocks fell in early trading as weak commodity prices sparked a selloff in the energy and materials sectors and as a falling euro and high Italian bond yields kept Europe’s debt crisis in focus.
(Additional reporting Bloomberg/Reuters)
