Shares fall as ECB questions bad loans

European shares fell yesterday, following Asia lower and led by banks after the European Central Bank said it would quiz euro zone lenders about high levels of bad loans, while oil prices tumbled on the prospect of more supply from Iran. US stock and bond markets were closed for the Martin Luther King jnr holiday.

DUBLIN

Volume on the Dublin market was much lighter courtesy of the US markets being closed. The Iseq index rallied in the morning, but ultimately closed down 0.5 per cent, or 35.46 points lower, at 6,286.84.

Paddy Power climbed 1.6 per cent to €119.90, still riding high on last Friday's news that its proposed merger with Betfair had received clearance from Irish Competition Authorities. The merger will be completed on February 2nd.

Tullow Oil dropped 3 per cent to €1.64, as oil remained under pressure after sanctions on Iran were lifted.

Smurfit Kappa declined 1.1 per cent to €22.35, while Kingspan fell 1.3 per cent to €22.50. Kerry Group closed down 1.1 per cent at €74.

LONDON

Britain’s top share index fell to its lowest closing level in more than three years, with miners down on lingering concerns about metals demand and UK banks mirroring losses seen by Italian financials.

The blue-chip FTSE 100 equity index finished 0.4 per cent lower at 5,779.92 points, its lowest closing level since late 2012. The UK mining index fell 0.4 per cent, while the banking index was down 1.4 per cent.

Banks featured among the top decliners, with Standard Chartered, Barclays and HSBC falling 1.2 to 2.2 per cent, after losses in Italian banks.

Royal Bank of Scotland Group slipped 1.6 per cent to its lowest price since 2012 amid investor concern that a projected ninth consecutive full-year loss in 2016 could undermine efforts to reinstate dividend payments.

Vedanta Resources tumbled 8.7 per cent, leading a gauge of mining-related companies lower.

EUROPE

A decline in bank shares dragged European stocks down for a third day, with the Stoxx Europe 600 Index extending a one-year low. The benchmark equity measure dropped 0.4 per cent, closing at its lowest level since December 2014. The Stoxx 600 climbed as much as 1.2 per cent later falling 0.8 per cent.

Italian lenders Banca Monte dei Paschi di Siena and Banca Popolare dell'Emilia Romagna sank more than 8.5 per cent on concerns over the levels of their bad debt. Greece's Alpha Bank fell 9.2 per cent.

Italy’s FTSE MIB Index, Portugal’s PSI 20 Index and Greece’s ASE Index all fell more than 2.5 per cent, while benchmark equity gauges of France and Germany dropped less than 0.5 per cent.

Adidas jumped 6.3 per cent after appointing Henkel and Co's Kasper Rorsted as chief executive to succeed Herbert Hainer. Henkel fell 4.1 per cent. Ericsson advanced 2.9 per cent after Nordea Bank raised its rating to buy.

ASIA Asian stocks fell, with Japanese and Australian shares on the cusp of joining China in a bear market, as a continuing collapse in oil prices heightened concern over the strength of the global economy.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell to its lowest since October 2011, down 0.7 per cent.

Japan’s Nikkei tumbled as much as 2.8 per cent to a one-year low before closing down 1.1 per cent. It has lost 20 per cent from a peak hit in June, meeting a common definition of a bear market.

China’s stocks rose after a home-price recovery spread to more cities and speculation grew equities were oversold after the benchmark index entered a bear market last week.

The Shanghai Composite Index gained 0.4 per cent to 2,913.84 at the close, led by property developers and technology companies.

– Additional reporting: Bloomberg, Reuters