Irish stock market fails to reflect positive mood

European stock markets hit 6½-year highs yesterday after the US Dow Jones index rose to new levels overnight.

However, the Irish stock market failed to catch the mood, continuing to underperform global markets.

A profit warning from high-flying drinks group C&C torpedoed a positive start for the Iseq index of Irish shares yesterday.

One of the 10 largest companies on the Irish exchange, its 15 per cent slide more than offset a moderate recovery among the financial stocks, which have suffered recently amid rising interest rates and concerns over the Irish property market.

In Europe, shares closed up for the second straight day, reflecting a tentative revival of investor risk appetite as this week's housing market-related jitters abated.

And in the US last night the Standard & Poor's 500 index hit a lifetime high in late-session trading as stocks rose on news that General Electric had increased a stock-buyback plan and a report showed consumer sentiment had risen in early July.

The S&P 500's previous record of 1,553.11 was set on March 24th 2000, in the waning days of the internet bubble. Earlier in yesterday's session the Dow crossed 13,900 for the first time and also hit a record lifetime high.

The record for the S&P 500, a measure of the largest US stocks, comes a day after a market rally in which the Dow racked up its biggest one-day points gain in more than four years.

Optimism about economic growth, corporate takeovers and profits have helped the markets to hit record levels, analysts said.

The calming of fears over possible spillover effects from troubles in the US sub-prime mortgage market - which caters for borrowers with poor credit histories - were also mirrored in European government bond markets as debt prices fell.

The iTraxx Crossover index, the most widely watched barometer of European credit sentiment, also entered calmer waters after extreme jitters related to sub-prime concerns.

Banks were among the main gainers in Europe after a Dutch court removed much of the legal uncertainty around a bidding battle for ABN-Amro.

The FTSEurofirst 300 index of leading European shares closed 0.4 per cent stronger at 1,627.3, its highest close since November 2000. It ended below the day's high of 1,635.6, but is still up nearly 10 per cent so far this year.

Germany's 30 share DAX index rose 0.5 per cent, hitting a record high earlier, while Britain's FTSE 100 rose 0.3 per cent and France's CAC 40 gained 0.2 per cent.

European investors face a hefty serving of earnings to digest next week, and if results beat expectations as roundly as they did in the first quarter, this could restore some of the equity market's confidence.

"The broader picture here is that the equities markets, although we keep seeing these big blue days . . . if you look over the last six to eight weeks, the markets are trading by and large, roughly sideways," said Andrew Bell, European strategist at Rensburg Sheppards Investment Management.

Shares of energy companies also rose as crude oil prices jumped more than 1 per cent, or $1.43, to settle at $73.93 a barrel.

- (Additional reporting: Reuters)