Greek worries dampen sentiment

Fri, Mar 30, 2012, 01:00

EUROPEAN AND US stock markets declined yesterday after an SP official said that Greece may have to restructure its debt again. Market sentiment was also dampened by disappointing jobless data from the US.

Oil declined to the lowest level in almost six weeks as US equities declined, and France said governments were moving closer to an agreement on a release from emergency stockpiles to curb price gains.

DUBLIN

The Iseq index took its lead from macro-events, closing down 1.6 per cent at 3,233 in line with global trends.

Financial stocks were in the spotlight in light of the recent structural developments in the sector and ahead of results from AIB today and Irish Life and Permanent next week.

ESM-listed Irish Life and Permanent, which is to sell Irish Life to the State for €1.3 billion, closed up 2.4 per cent to €0.043.

Bank of Ireland fell 3 per cent to €0.124, with the bank announcing late in the session details of a repo arrangement with the IRBC and the State.

Through this arrangement Bank of Ireland will repurchase long-term Irish government bonds from the IBRC.

The deal will be put to shareholders at an egm.

IFG was the big winner yesterday among financial-related stocks as the market reacted favourably to the news that it is to sell its international division.

IFG presented a strong set of full-year results for 2011, with revenue up 7 per cent at £110.8 million and adjusted operating profit of £18.6 million.

The pensions and financial services company climbed 5 per cent in Dublin yesterday to finish at €1.45.

EUROPE

European stock markets fell the most in three weeks after the head of sovereign ratings at S&P said in London that Greece may need to restructure its debt again.

An indicator of economic confidence in the euro region unexpectedly declined in March, also weighing on sentiment. An index of executive and consumer sentiment in the 17-nation euro area fell to 94.4 from a revised 94.5 in February, the European Commission said.

National benchmark indexes fell in all of the 18 western European markets except Iceland.

France’s CAC declined 1.43 per cent. Germany’s DAX slumped 1.77 per cent.

HM, Europe’s second largest clothing retailer, dropped the most in six months as earnings missed estimates.

Banca Monte dei Paschi di Siena, Italy’s oldest and third biggest bank, tumbled 10 per cent after posting a record loss.

Daimler, the maker of Mercedes luxury cars, dropped 3.2 per cent to €44.35, while shares of Volkswagen, Europe’s largest carmaker, decreased 2.5 per cent to €129.55.

A gauge of European car-makers was the second worst performer among all 19 industry groups in the Stoxx Europe 600 index.

LONDON

The FTSE 100 index closed down 66.96 points or 1.15 per cent at 5,742, extending its falls into a third straight session and reaching a new low point for the month at 5,726.50.

Weaker energy stocks were the main drag on the blue-chip index, with crude oil down almost 1.5 per cent as demand worries were exaccerbated by weak global data.

Clothing retailer Marks & Spencer was also a big blue-chip casualty, shedding 2.9 per cent.

Peer Next fell 1.0 per cent on the back of the HM results.

With just one trading session left before the month-end, the UK blue-chip index is on course to post a fall of around 2.1 per cent in March, after a choppy month in which it rallied to its highest levels since July 2011, before dropping back.

US

US stocks were on track for a third day of losses after jobless claims data failed to meet heightened market expectations as stocks come off their best first quarter in 14 years.

New US jobless claims fell to a four-year low last week but still missed forecasts, while the prior week’s number was revised up.

All 10 S&P sectors fell, with financial stocks down 1.8 per cent.

Wells Fargo fell 2.2 per cent to $33.70 by lunchtime.

Best Buy fell nearly 10 per cent to $24.08 and was the biggest decliner on the S&P 500. The electronics retailer reported weaker-than-expected sales, and said it would close 50 big-box stores and cut 400 jobs.

ATT, Verizon Communications and American Express slid at least 1.6 per cent on analysts’ downgrades.

Red Hat rallied 6.8 per cent to $54.89.

llumina rose 4.4 per cent to $52.07 after Roche Holding increased its offer for the US gene sequencing company in hopes of winning over Illumina shareholders before the annual meeting next month.

Additional Reporting: Bloomberg/Reuters