Retreat in energy stocks erodes values

A SLIDE in US consumer sentiment and a retreat among energy stocks knocked markets back yesterday after reasonable early trade.

Most European markets started well but lost ground after figures from the US revealed that consumer sentiment weakened in March following a strong reading in February. Big energy players such as Total and Royal Dutch Shell lost ground, denting indices in London and Europe.

DUBLIN

The market started well but activity fizzled out during the afternoon session, according to traders, who said many investors are sitting on the fence as they fear a correction in stock markets.

The big performer in terms of volume and money was international food and ingredients specialist Kerry Group, which gained 2.58 per cent to close at €34.65 after almost 700,000 shares changed hands.

Market heavyweight, building materials group CRH opened well and hit the €15.90 market at one stage. But interest in the shares tailed off and it closed 0.44 per cent ahead at €15.685.

Ryanair, up 1.1 per cent at €4.477, and Aer Lingus, up 2.65 per cent at 97 cent, had a good day on the back of positive sentiment towards the sector in Europe.

Bookmaker Paddy Power lost ground, shedding 2.1 per cent to close at €46.70, although volumes in the stock were light, with just 35,000 or so units sold.

LONDON

London’s benchmark FTSE 100 dropped 33.15, or 0.56 per cent, to 5,869.55 after earlier rising as much 0.7 per cent. The broader FTSE All-Share Index was down 0.5 per cent.

One of the big movers was Royal Bank of Scotland, which owns Ulster Bank.

It jumped 3.3 percent to 28.67p on reports that the government has held talks about selling part of its stake in the lender. The treasury said it will only sell the government’s holding when it obtains maximum value for taxpayers.

Energy stocks were a big drag on the index. Royal Dutch Shell fell 1.2 per cent to 2,223p as crude declined on reports that the US is considering a release from the Strategic Petroleum Reserve. BP fell 2.2 per cent to 471.35p and Cairn Energy slid 2.2 per cent to 333.3p.

Wolseley slid 3.3 per cent to 2,435p after the world’s largest supplier of heating and plumbing products reported first-half net income and sales that were in line with analyst estimates.

Caterer Compass Group declined 2.5 per cent to 651p after it said that “economic uncertainty” may continue to put pressure on like-for-like volumes in some regions in the second half.

EUROPE

The Stoxx Europe 600 Index retreated 0.4 per cent to 267.17 after earlier advancing as much as 0.7 per cent.

The benchmark measure has still increased 9.3 per cent this quarter, its biggest rally in the first three months of a year since 1998.

Part of the reason for the fall was French oil and gas giant Total, an index heavyweight, whose price is under pressure as a result of problems with a North Sea gas rig.

Total fell 6 per cent to €38.56, its biggest decline since December 2008, as the oil company assessed how to stop the leak from its Elgin platform in the UK North Sea. The rig supplied more than 1 per cent of the UK’s gas last year, according to its Department of Energy and Climate Change.

Benchmark indices fell in 13 of the 18 western European markets.

Hochtief AG, Germany’s largest construction company, slid 5.3 per cent to €50.27 as trading in Australian subsidiary Leighton was halted before a quarterly review. Deutsche Lufthansa AG added 2.2 per cent to €10.70. JPMorgan Chase Co raised its recommendation on the company to overweight, meaning that investors should own a larger proportion of the shares than are represented in benchmark indices.

Nutreco NV fell 6.5 per cent to €53.89 after peer Marine Harvest ASA said it may produce 500,000 tons of salmon feed a year. Feed costs account for 50 per cent of expenses for salmon farming.

Vestas Wind Systems, the world’s largest wind-turbine maker, slid 4.6 per cent to 58.15 kroner. Suzlon Energy Ltd beat it to a contract to supply 54 six-megawatt turbines to PNE Wind AG’s Gode Wind I project.

US

The SP 500 was down less than 0.1 per cent to 1,415.73 at 1.27 pm New York time. The benchmark measure for American equities had gained 1.7 per cent over the previous two days.

Homebuilders rallied on signs that the market may have stabilised. Lennar gained 5.3 per cent to $27.81 after reporting that net income for the three months ended February 29th fell to $15 million, or 8 cents a share, ahead of market expectations.

Drugstore chain Walgreen added 1.1 per cent to close at $34.73. It reported second quarter profits that beat analysts’ predictions. – (Additional reporting: Bloomberg/Reuters)