Shares hit by Greek and US uncertainty

Uncertainty over

Greece and doubt over the strength of the US economy weighed on global markets, with European exchanges ending May trading in negative territory and US shares also in decline.

DUBLIN The Irish market gave up 1.38 per cent, closing 87.53 Iseq index points weaker at 6,274.6.

“Europe started out down, and went lower and lower over the course of the day,” said one Dublin trader. “Ireland did not remain immune from that contagion – it just drifted off across the whole day.”

Kingspan was a rare bright point, adding 2.47 per cent to close at €20.78 after touching a high of €20.95. Still, it was a downbeat session overall, with buyers absent and financials in decline amid anxiety over Government pressure on bank s to cut mortgage rates.

Bank of Ireland shares dropped 2.52 per cent, to finish at 34.8 cent at it cut fixed-rate mortgage charges but held its variable rates steady. Permanent TSB added 1 cent to close at €4.13 but remains well off the €4.50 level, at which it raised money from private investors.

Ryanair finished out at €11.60, down 1.94 per cent on the day amid expectation in the market that it will accept IAG's offer for its Aer Lingus shares. Smurfit Kappa was down at the close by €1.18 or 4.21 at €26.85.

LONDON Britain’s top share index fell sharply late yesterday as US stocks dropped, taking the shine off May’s gains. The FTSE 100 index fell 56.49 points, or 0.8 per cent at 6,984.43 by the close.

Traders attributed the volatility to end-of-month positioning heading into the weekend, with investors nervous over developments in Greece’s talks with international lenders.

Euro zone officials suggested a deal was far from imminent, despite Greek hopes that one would be struck by Sunday.

Selling on Wall Street also put pressure on the FTSE.

The slump left the FTSE 100 up just 0.3 per cent this month. The index has rallied 2.6 percent since lows hit on May 7th, boosted by a Tory election victory that investors said removed uncertainties over regulation and the economy.

EUROPE German and French stocks dragged European shares to their biggest decline in a month amid investor concern Greece won’t reach an agreement in time for a debt repayment.

The Stoxx Europe 600 Index tumbled 1.7 per cent to 399.87 at the close of trading, trimming its monthly gain to 1 per cent. Benchmark gauges of French and German stocks fell at least 2.3 per cent as automakers led declines among industry groups. Greece’s ASE Index slid 1.4 per cent.

“The declines today are broad-based, which suggests it’s also some end-of-month rotations,” said Espen Furnes, who helps oversee $85 billion at Storebrand Asset Management in Oslo.

“As long as Greece is in the news, it will be a concern, although the real economic implications for the rest of Europe are negligible.”

Greece hasn’t yet said how it will make almost €1.6 billion in International Monetary Fund payments scheduled for next month, with the first transfer due on June 5th.

NEW YORK US stocks fell, paring a monthly advance, while Treasuries rose after May economic data raised concern over the strength of the US economy following a first-quarter contraction.

The Standard and Poor’s 500 Index lost 0.4 per cent just before noon, poised for its first weekly drop in four. The yield on 10-year Treasury notes dropped three basis points to 2.11 per cent. Oil rose.

The US economy contracted 0.7 per cent in the first quarter, adding to evidence the Federal Reserve won’t be in a hurry to raise interest rates even as officials believe the setback in growth was temporary.

Separate data raised concern the recovery isn’t as robust as forecast, as consumer confidence decreased to a six-month low. – (Additional reporting by Reuters/Bloomberg)