Market jitters over prospects for China

THE DUBLIN market mirrored movements in its European counterparts on a day influenced mainly by signs of weaker than expected growth prospects in the Chinese economy.

Falling house prices and rising fuel prices in China were taken as indicators that the government in Beijing is trying to manufacture a moderate slowdown.

The Iseq index finished the day down 0.88 per cent and few Irish stocks managed to move their price in the opposite direction.

DUBLIN

With the reporting season largely over there was nothing by way of local news for the market to react to.

Rising oil prices had little effect on the Ryanair price, which bucked the market trend by recording a positive movement in its share price. A reduction in capacity in the sector appears to be working as a counterweight to the effect of oil price rises on airline stocks, traders observed.

Ryanair closed at €4.28, an increase of 0.47 per cent. Aer Lingus, however, fell by an almost equivalent percentage, 0.42 per cent, to close at €0.94.

Building materials group CRH fell by 1.79 per cent to close at €16.22, thereby shedding most of its gains last Friday.

Banks were down marginally around Europe, and Bank of Ireland was no different, closing at €0.13, a fall of 0.73 per cent.

Betting business Paddy Power dropped 0.11 per cent, to close at €46.5. The UK budget, due to be announced today, will be watched closely by investors in this stock, who might be concerned about the effects of any changes to the betting tax regime.

LONDON

UK stocks tumbled by the most in two weeks as concern about slowing growth in China, the world’s second biggest economy, sparked a selloff in metal producers. Rio Tinto and BHP Billiton dropped more than 4 per cent after executives from both companies warned of a slowdown in China and as copper inventories rose in Shanghai.

Glencore International slid 1.6 per cent to 413.8p after the largest publicly traded commodity supplier agreed to buy Viterra . for Can$6.1 billion ($6.15 billion) to add grain assets in Canada and Australia.

Debenhams climbed 1.1 per cent to 76.55p as the UK’s second largest department store company reported a 2.4 per cent rise in sales at stores open at least a year in the eight weeks to March 3rd.

Vodafone rose 2.1 per cent, buoyed by sector rotation out of cyclical stocks and as Morgan Stanley suggested it was a good time to buy into the stock on valuation grounds, traders said.

EUROPE

Financials and commodity-linked stocks were among the top fallers as European shares retreated from eight-month highs, with waning growth in China and mixed US data being cited by traders.

The pan-European FTSEurofirst 300 index of top shares was down 1.1 per cent at 1,093.45 points, having last week hit its highest level since July.

Traders citing the prospect of falling demand in Russia and a media report that Chinese car sales would miss growth forecasts was weighing on the auto sector, which has come under pressure from analysts’ downgrades in recent days.

Daimler and BMW were the biggest losers in the sector, down 4.4 per cent and 5.0 per cent respectively.

Banks and insurers, which have ridden the wave of liquidity created by central bank stimulus measures, also fell, while brokers turned more cautious on the sectors given the gains of around 20 per cent they have achieved in 2012.

Banco Santander and BBVA each shed around 1.0 per cent as Berenberg Bank initiated coverage on the Spanish banks with a “sell” rating.

Germany’s DAX index slid 1.39 per cent, and France’s CAC 40 index retreated 1.32 per cent.

NEW YORK

US stocks declined, snapping a three-day advance for the Standard and Poor’s 500 index.

Industrial and commodity shares slumped as China raised fuel prices by the most in two years, and BHP Billiton said the nation’s steel production was slowing.

Caterpillar and Alcoa dropped more than 1.9 per cent. Adobe Systems sank 4.3 per cent as its profit forecast missed some estimates.

Bank of America jumped 2.3 per cent.

Tiffany and Co surged 6.6 per cent after forecasting profit that beat projections.

Peabody Energy, the biggest US coal producer, declined 5.7 per cent to $31.55.

Walt Disney dropped 0.4 per cent to $43.25. The world’s largest entertainment company said the box office disappointment John Carter would post a loss of about $200 million, possibly the biggest ever for a single film.

The S&P 500 lost 0.3 per cent to 1,405.29 at 2pm New York time, trimming an earlier decline of as much as 0.9 per cent.

(Additional reporting, Bloomberg, Reuters)