Clouds gather over European bourses as the US sees a silver lining

Wall Street stocks rose after a four-day dip on the back of better-than-expected results from some well-known retailers

Investors monitor stock market prices: benchmark indices fell in 17 of the 18 western European markets yesterday.  Photograph: Bazuki Muhammad/Reuters

Investors monitor stock market prices: benchmark indices fell in 17 of the 18 western European markets yesterday. Photograph: Bazuki Muhammad/Reuters

Wed, Aug 21, 2013, 01:00

The Iseq dropped about 0.8 per cent yesterday, in line with dips across most European exchanges, as gloom enveloped markets for the second day running over fears of a scaling back of stimulus measures across the Atlantic.

Benchmark indices fell in 17 of the 18 western European markets, with France’s CAC 40 slipping 1.4 per cent and Germany’s DAX down 0.8 per cent. In London, the FTSE 100 fell 0.2 per cent, as gloomy earnings reports fuelled profit-taking on materials and energy stocks, with across-the-board weakness in the financial sector.

US stocks bucked the global trend, however. Stocks in New York rose after a four-day dip on the back of better-than-expected results from some well-known retailers, indicating that American consumers may be starting to gain in confidence.

CRH, the Iseq’s anchor-weight that reported its interim results yesterday, dragged the exchange south after revising downwards its guidance for the second half of 2013. The stock opened down 6 per cent, but after what traders described as a “decent” inter-day rally, it regained some of its lost ground and closed down 2.5 per cent.

Bank of Ireland shook off news earlier in the day that more competition is coming in the mortgage market via Investec, and finished up about 0.5 per cent. In mid-morning trading, it had been down 1.5 per cent.

Glanbia, the owner of Avonmore and Yoplait dairy brands, rallied hard just before closing in anticipation of its interim results announcement today. It traded around the €10 mark for most of yesterday, but in the last hour of trading it rose 4 per cent to close at €10.40.

Swiss chocolate maker Lindt gained 2.2 per cent to 43,160 Swiss francs, after it raised its profitability forecasts. It reported first-half earnings growth that beat analysts’ estimates as improving economic conditions proved a boon to chocolate consumption. First-half net income rose 40 per cent to 48.8 million Swiss francs (€39.6 million).

Several buildings materials firms dropped, as they reported similar weather-related issues to CRH.

Holcim, the world’s largest maker of cement, dropped 2.1 per cent to 66.30 Swiss francs. HeidelbergCement, the third biggest, slid 2.5 per cent to €54.40.

UK stocks dropped for a second day, led by banks and insurance companies, as investors remained skittish about the scaling back of financial stimulus. A gauge of banking shares in the FTSE 350 Index declined 0.5 per cent to its lowest level in six weeks. Lloyds Banking Group lost 1.6 per cent to 73.8 pence and Barclays dropped 0.7 percent to £2.86.

BHP Billiton fell 1.7 per cent to £19.24. The world’s biggest mining company said full-year profit slumped 30 per cent after prices declined. Net income at the group, which reports in dollars but is traded in sterling in London, dropped from almost $15.5 billion to $10.9 billion in the year to the end of June.

The bookie Ladbrokes advanced 3.1 per cent to £1.97 after Deutsche Bank upgraded it to buy from hold. The bank said Ladbrokes has addressed operational issues including inadequate sports trading capabilities and weak client risk management.

Deutsche forecast medium-term gains from its internet operations, strong cash generation and a recovery in group earnings.

TJX, the owner of the discount chain TK Maxx, which has 16 stores in Ireland, reported better-than-expected quarterly sales, bucking a trend of weak results at a host of retailers. Its shares gained 5.7 per cent to $53.65.

Home Depot shares rose 0.2 per cent to $75.33 after the world’s largest home improvement chain raised its yearly outlook.– (Additional reporting: Reuters/Bloomberg)

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