European shares dip on interest rate worries

European shares dipped on Friday at the end of a central bank policy-packed week that reinforced views that interest rates could stay higher for longer.

Dublin

Shares in AIB were down more than 4.2 per cent on Friday, closing the session at €3.81. The bank said the taxpayer holding has fallen to less than 52 per cent, putting it close to returning to majority private ownership for the first time since the financial crisis. The Ireland Strategic Investment Fund, which holds the investment on behalf of the Minister, has been drip-feeding stock on the market in recent weeks.

Bank of Ireland shares also dipped lower, shedding 6.6 per cent to €8.69, and Permanent TSB was off just under 1 per cent.

Elsewhere, Ryanair was off 2.5 per cent and Paddy Power owner Flutter Entertainment closed at €180.05, a decline of 1.2 per cent. Smurfit was also lower, down 1.3 per cent.

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Shares in Glanbia were up under 1 per cent, while ferries group Irish Continental rose 0.3 per cent.

London

British equities slipped on Friday with homebuilders leading declines, rounding off a week filled with losses after the Bank of England’s (BoE) bumper rate hike, while drugmaker GSK jumped after reaching a settlement in its heartburn drug litigation.

The benchmark FTSE 100 fell 0.5 per cent, while the FTSE 250 mid-cap index lost 1.5 per cent for the day.

Rate-sensitive homebuilders were the top losers this week after the BoE raised its bank rate by an unexpected 50-basis points on Thursday in its bid to curtail runaway inflation.

Persimmon, which is part of the blue-chip FTSE 100, dropped 4 per cent after HSBC downgraded the homebuilder’s rating to “hold” from “buy”, while the broader index was down 2.9 per cent.

In a bright spot, GSK jumped 4.9 per cent after the drugmaker reached a litigation settlement in the US over its heartburn drug Zantac.

Meanwhile, British banks agreed to give homeowners who miss mortgage payments a year of grace before foreclosing, as the government sought to ease the strain of rising interest rates.

The banks index fell 1 per cent at close.

Europe

The STOXX 600 index closed 0.3 per cent lower after data showed euro zone business growth stalled this month as the downturn in manufacturing deepened.

The index has lost 2.9 per cent for the week, posting its worst weekly performance in over three months, as investors digested more interest rate hikes from major central banks including the Bank of England, Norges Bank and Swiss National Bank, and the spectre of elevated inflation for longer.

Germany’s DAX index shed 1.0 per cent, leading losses among regional peers as shares of Siemens Energy sank 37.3 per cent.

The company, which supplies equipment and services to the power sector, warned that the impact of quality problems at its Siemens Gamesa wind turbine unit would be felt for years.

New York

Wall Street’s main indexes fell on Friday and were set for weekly declines as hawkish comments from Federal Reserve officials fuelled worries of interest rates staying higher for longer.

Market heavyweights, including Tesla, Nvidia and Microsoft, were down between 0.8 per cent and 1.7 per cent, pressuring the tech-heavy Nasdaq.

At 12:14pm. ET, the Dow Jones Industrial Average was down 172.59 points, or 0.51 per cent, at 33,774.12, the S&P 500 was down 26.28 points, or 0.60 per cent, at 4,355.61, and the Nasdaq Composite was down 117.01 points, or 0.86 per cent, at 13,513.60.

CarMax jumped 8.6 per cent after the used-car retailer’s first-quarter profit exceeded market expectations, benefiting from cost cuts.

Starbucks fell 2.3 per cent as the coffee chain’s unions said about 3,500 workers will strike next week in the US after it claimed the company banned Pride month decorations at its cafes.

Declining issues outnumbered advancers for a 2.27-to-1 ratio on the NYSE and for a 2.30-to-1 ratio on the Nasdaq.

The S&P index recorded 14 new 52-week highs and four new lows, while the Nasdaq recorded 25 new highs and 98 new lows. – Additional reporting: Reuters