Stocks slide on euro zone worries

SHARES IN the US and Europe retreated yesterday and the euro slipped as investors cast doubt on efforts to tighten fiscal rules in the euro zone that aim to prevent the region’s debt crisis from deepening.

In addition, there were concerns about European finance ministers ability to reach a target to boost resources from the International Monetary Fund by up to €200 billion after Britain said it would not take part in a plan aimed specifically at helping the euro zone through its problems.

In a three-hour conference call the finance ministers assessed plans for a new “fiscal compact” they hope to wrap up by the end of January, EU officials said.

US stocks skidded, and European shares closed lower in thin trade as weak Chinese housing data fueled worries about demand and hurt mining stocks. A further fading of optimism about a solution to the debt crisis also weighed on share prices.

DUBLIN

In Dublin, the Iseq rose just 0.3 per cent in another topsy-turvy day on the Irish stock market as shares performed well in the morning but fell away in the afternoon.

Bank of Ireland did climb 2.5 per cent after the bank reported yet another disposal as part of its deleveraging of the bank with the sale of its asset-based lender Burdale for a €690 million gain.

The only Irish bank still trading on the main stock market, it ended the day down 3.8 per cent or a third of a cent at 7.5 cent a share after a wild swing driven by light trading volumes.

Elan rose 3.1 per cent, or almost 30 cent, to €9.44 after an upgrade by Deutsche Bank and rumours circulating in the afternoon that it may be the subject of a $16 (€12.30) a share bid from pharmaceutical giant Bristol-Myers Squibb.

Building materials group CRH rose 3 per cent or 41 cent to close at €13.80 on the Irish bourse on what was its first day of trading as a member of the FTSE 100, where it fell 0.2 per cent to £11.53.

Food group Greencore rose 5.1 per cent to 66 cent, while Kerry Group fell 2.1 per cent to €27.65.

Industrial services group DCC declined 1.2 per cent or 22 cent to €18.30 on concerns that its retail distribution business SerCom may be affected by the downturn in consumer sales reported by HMV which issued a profit warning.

Aer Lingus fell 1.5 per cent despite news of Etihad Airways increasing its stake in Air Berlin leading to speculation that the Middle Eastern airline may want the Irish carrier’s Heathrow slots.

Explorer Petroceltic finished the day 2 per cent ahead after announcing the sale of an 18.375 per cent interest in an Algerian production-sharing contract to Italian energy provider Enel in a deal it says could be worth up to $180 million.

EUROPE

European shares edged higher in thin trade, though strategists said that worries about the effects of the euro zone sovereign debt crisis would cap any further gains in the short term.

The FTSEurofirst 300 index of European shares rose 0.1 per cent to close at 957.45 points, going as high as 966.10 and as low as 949.99 in choppy trade.

LONDON

Banks dragged London’s leading shares index lower after UK chancellor George Osborne said he would push through plans for a radical industry shake-up.

Osborne said he had accepted the key recommendations of the Independent Commission on Banking’s report, which includes requiring banks to ring-fence their retail and investment arms.

This, and continued gloom over the euro zone, hit banking shares and saw the FTSE 100 Index fall 22.4 points to 5,365.

Lloyds fell 1p to 23.5p, and Barclays was off 5.5p at 166p. Shares in RBS, which is 83 per cent owned by the taxpayer, were hit as Osborne said that it would further scale down its investment banking arm and focus more on the UK. Its shares were down 0.6p at 19.4p.

The pound was up at £1.19 against the euro after the single currency was knocked after European Central Bank president Mario Draghi said Europe’s economic outlook is subject to “high uncertainty” and that the law forbids him from stepping up government bond purchases.

NEW YORK

US stocks fell, while Treasuries and the dollar rose. Markets were hit by uncertainty over whether euro zone leaders would reach agreement on how to raise money for its bailout fund.

ASIA

Asian stocks fell overnight as news of the death of North Korea’s leader Kim Jong Il fuelled uncertainty facing the regions’ markets.

South Korea’s Kospi index fell by more than 4 per cent at one point while the threat of increased instability meant the Korean won slumped against the traditional safe haven of the dollar.