ECB rate cut fails to impress markets
THE EURO sank to a one-month low and stocks retreated as the European Central Bank yesterday disappointed investors anticipating a more aggressive effort to fight the debt crisis.
A Dublin broker described yesterday’s trading as disappointing, saying investors were hoping for a trump card from the ECB to kick things in the right direction.
He added that the cut in lending and deposit rates by China was “unexpected but positive”.
THE ISEQ index closed down 0.12 per cent at 3,215, with Origin Enterprises, Donegal Creameries and UTV among the shares nursing losses.
The airlines both fared well, with Aer Lingus rising 3.37 per cent to €1.07 and Ryanair up 1.54 per cent to €4.07.
It was also a good day for exploration groups, with Providence Resources climbing 3.55 per cent to €6.70, Petroceltic up 11.76 per cent and Ormonde Mining rising 7.95 per cent.
The tide turned for building materials giant CRH though, as the index heavyweight fell 2.06 per cent to €15.21 following gains in recent days. The group accounts for about one-third of the benchmark Iseq index.
UK STOCKS closed little changed as an increase in Bank of England’s bond purchase target and interest rate cuts in Europe and China offset concern that economic risks persist in the euro area.
Xstrata gained 3.1 per cent, leading mining shares higher. Shares in Petroneft rose 5.26 per cent in London with six million shares traded. The share price is up 17.5 per cent since results last Friday.
GKN, a UK maker of components for Airbus SAS jetliners, surged 13 per cent – the most in three years – after agreeing to buy Volvo’s aircraft-engine unit.
Tate and Lyle also rose, increasing 1.6 per cent after Exane BNP Paribas raised its recommendation on the shares to outperform, the equivalent of buy, from neutral.
Dunelm Group gained 3.7 per cent to 531 pence after saying it estimates full-year pre-tax profit at about £96 million, higher than analysts’ estimate of £92 million.
Royal Bank of Scotland and Lloyds Banking Group fell.
The FTSE 100 Index rose 0.1 per cent to 5,692.63 in London.
EUROPEAN SHARES slipped from two-month highs and the euro slumped broadly, hitting a one-month low against the dollar yesterday, after the European Central Bank lowered its benchmark interest rate to a record low.
The ECB cut its main rate below one per cent for the first time, reducing it by 25 basis points to a record low of 0.75 per cent, and cutting its deposit rate to zero, in a bid to tackle the euro zone debt crisis.