European sell-off as IMF spreads gloom

EUROPEAN SHARES fell in thin trade yesterday as gloomy economic data and corporate reports set the backdrop for a tough start to the third-quarter reporting season in the US.

The FTSEurofirst 300 index fell 0.5 per cent in a broad-based sell-off as the IMF cut its expectations for global growth.

The Iseq index fell by 0.91 per cent, with the largest stock on the Dublin exchange, building materials group CRH, falling by 3.41 per cent.

DUBLIN

THE FALL in the value of CRH shares to €14.17 came after a direct peer of the building materials group in the US, Owens Corning, lowered its guidance on profits. CRH also announced that a possible purchase of a cement business in India was not going to go ahead.

Aer Lingus fell 0.91 per cent to €1.09 as the company warned that a €750 million deficit in its pension scheme could see current employees receive as little as 4 per cent of the pensions they are expecting.

The other airline on the exchange, Ryanair, ended the day at €4.53, a fall of just 0.13 per cent, indicating perhaps that investors had not put much store in the prospect of the low-fares group landing a deal on the purchase of Stansted. The airport’s owner, Ferrovial, said it would exclude Ryanair and any Ryanair-related consortium from the Stansted sale process.

Bank of Ireland fell 2.97 per cent to €0.09 on a day when sentiment in the sector was unfavourable.

C&C had a good day, ending up 1.26 per cent at €3.77. Traders said the share was having a good run and the price change reflected the momentum behind the group.

The 4.08 per cent rise in the price of INM to €0.13 was a reflection of the lack of liquidity in the share.

LONDON

UK STOCKS declined for a second day as factory output fell more than estimated. Factory output dropped 1.1 per cent from July, when it rose 3.1 per cent, the Office for National Statistics said.

Marks and Spencer Group climbed 3.2 per cent to 381.3 pence after JPMorgan Chase said the company, along with Debenhams and Home Retail, would be the key retail stocks to own in the first half of 2013 as consumer economic indicators stabilise.

Debenhams added 2.1 per cent to 107.2 pence, while Home Retail rose 3.2 per cent to 97.3 pence.

Capita Plc, a supplier of services for the British army, slid 3.7 per cent as Panmure Gordon and Co and Seymour Pierce downgraded the stock.

Aggreko fell to a two-month low after HSBC Holdings reduced its recommendation on the power- generator supplier.

Hays jumped 5.7 per cent as the recruiter’s net fees fell less than estimated.

EUROPE

EUROPEAN STOCKS decline as the region’s finance ministers gathered in Luxembourg to discuss the sovereign debt crisis.

Banco Popular Espanol and Bankia paced declining shares. Alcatel-Lucent dropped to the lowest in at least 23 years as Credit Suisse Group said weakness should continue into the third quarter.

Vedanta Resources led mining companies higher, limiting losses in Europe.

STMicroelectronics climbed 2.9 per cent to €4.44 after Europe’s largest semiconductor company and Ericsson said they were working with an adviser on options for their unprofitable chipmaking venture ST-Ericsson. The 50-50 partnership has not turned profitable since it was formed in 2009.

NEW YORK

US STOCKS dropped, sending the S&P 500 index lower for a third day. Nine out of 10 groups in the S&P 500 retreated as technology companies led declines.

Apple fell for the fourth straight day, extending its drop from a record to more than 10 per cent, as Nomura Holdings said the company faces “increasing challenges”.

Intel slipped 2.7 per cent as Sanford C Bernstein downgraded the shares. Alcoa was little changed before unofficially starting the earnings season.

Apple lost 1.7 per cent to $627.48. Shares of the iPhone maker have fallen since October 3rd, the longest losing streak since July. Apple is down 11 per cent since reaching an all-time record of $702.10 on September 19th. The company is likely to face challenges beyond 2013 as smartphone penetration growth in developed market slows, wrote Nomura Holdings analyst Stuart Jeffrey.

Intel, the world’s largest semiconductor maker, dropped 2.7 per cent to $21.91. The stock was cut to underperform, the equivalent of sell, at Bernstein, which said the downgrade was based on long-term trends rather than expectations for the coming quarter.

Netflix lost 8.9 per cent to $66.95 after Bank of America lowered its rating on the video-subscription service to underperform from buy, citing increasing competition. – (Additional reporting, Bloomberg)