European shares in positive territory despite Italian banks

Italian shares underperformed positive European markets on Thursday as the country’s bank stocks slumped to five-week lows on jitters over next month’s constitutional reform referendum.

A bounce in basic resources and energy stocks helped the pan-European STOXX 600 index rise 0.6 per cent, making up for losses seen in the previous session, but Milan’s blue-chip FTSE MIB index ended flat.

Over in New York, the S&P and the Nasdaq were slightly higher in late morning trading as investors assessed remarks by Federal Reserve chair Janet Yellen at a congressional testimony.

DUBLIN

The Dublin market closed higher despite a late sell-off in shares of FBD and IFG. The Iseq index of leading shares outperformed its peers, ending the day up 1.5 per cent or 97.27 points to 6.276.43.

Insurer FBD lost almost 7 per cent to €5.90, although analysts noted that the stock had performed well until late in the day and with the share price falling heavily despite low volumes being traded.

Financial services firm IFG, which updated investors on Thursday, also suffered from an afternoon sell-off, with the stock ending down 4.71 per cent to €1.62 after trading at around €1.68 for most of the day.

Smurfit Kappa was a little weaker, down 2 per cent to €20.24, but most pillars gained on the day. Iseq heavyweight CRH was up 1.4 per cent to €31.94, while Bank of Ireland was up 2.7 per cent to 22 cent.

Kerry closed up 2.2 per cent to €63.50, while Ryanair gained 2.9 per cent to €14.35 on reports this week that the airline may reach a deal with Aer Lingus on passenger transfers.

LONDON

British shares rose on Thursday, helped by gains among mining firms, although Royal Mail dropped after an earnings update. The blue chip FTSE 100 index ended up 0.7 per cent, slightly outperforming the broader European market.

Royal Mail was the biggest faller, slipping 7 per cent after its first-half profit dropped despite a stronger performance in Europe. The group also plans to cut more costs in order to gain a larger share of the parcels market.

The rally was broad-based among the top gainers, with Carnival, Mondi and housebuilder Barratt Developments gaining between 1.7 and 3.5 per cent. Barratt Developments rebounded after dropping 2.8 per cent in the previous session following a disappointing update.

Mining stocks provided the biggest support to the blue chip index, with Anglo American and BHP Billiton up 2.9 per cent and 1.8 per cent respectively.

EUROPE

Italy's lenders UniCredit and Banco Popolare fell 5.6 and 4.8 per cent respectively and were among the biggest losers on the STOXX index as the FTSE MIB index ended flat. Further undermining their shares were fresh worries that higher provisions may be needed to cover for bad loans.

Deutsche Bank has forecast that banks could push the FTSE MIB down 6 per cent by early next year if the “No” campaign wins in Italy’s constitutional reform referendum next month, which is its base case scenario. While Italy’s bank index fell 2.4 per cent after touching earlier in the session its lowest point since October 14th, Europe’s banking index added 0.3 per cent.

South African financial services group Investec climbed 8.5 per cent to a six-month high after reporting a jump in half-year profit, buoyed by a strong showing at its asset management and wealth arms.

Among top losers, Ahold Delhaize fell 3.7 per cent after the supermarket operator missed expectations for third-quarter results due to weakness at its US grocery chains.

WALL STREET

While the S&P 500 and Nasdaq rose in early trading, the Dow was little changed, weighed down by a fall in Wal-Mart. Shares of the world's largest retailer fell 4.4 per cent after reporting lower-than-expected quarterly comparable sales.

The Dow Jones industrial average was down 17.19 points, or 0.09 per cent, at 18,850.95. The S&P 500 was up 3.93 points, or 0.18 per cent, at 2,180.87. The Nasdaq Composite index was up 13.10 points, or 0.25 per cent, at 5,307.69.

JPMorgan and Bank of America were up about 1 per cent, while Cisco fell 5.3 per cent to $29.90 after its current-quarter forecast fell below analysts' estimates. –

Additional reporting: Reuters