Economy worries send shares lower

Irish-founded Tullow Oil plunges 8.4% after a second well found no significant oil

Wed, Apr 17, 2013, 20:44

World equity markets and commodities fell yesterdayas global growth concerns continued to take a heavy toll on investor sentiment and disappointing earnings reports weighed on Wall Street stocks.

European shares fell more than 1 per cent after the report on European car sales added to fears about the region’s economy and after the IMF on Tuesday downgraded its global growth projections for this year and next.

While it was a “pretty choppy” day of trading across Europe yesterday, Ireland finished slightly better than its counterparts, closing 37 points or 0.9 per cent lower at 3,808.

Building materials company CRH closed down 2.48 per cent, in line with its peers, which were down between 1 per cent and 4 per cent. The index heavyweight was the most traded stock on the Irish Stock Exchange yesterday, finishing the day at €15.44.

Total Produce lost almost 4 per cent after the market reacted to news the fresh food distributor has agreed to sell its 25.3 per cent stake in Capespan Group. However, volumes were small with less than 180,000 shares traded.

Dragon Oil was another loser of the day, declining 1.8 per cent to finish at €6.86. A Dublin stockbroker attributed the loss to weak oil prices over the last few days, with brent prices off nearly 2 per cent today.

“The chief executive of Dragon Oil also exercised some options which generally isn’t perceived particularly well,” he added.

UK stocks fell to a two-month low as Tesco reported its first profit drop in almost two decades and as BHP Billiton led mining companies lower.

Tesco declined the most in 15 months after saying it will leave the US. BHP slid to a seven-month low as quarterly iron-ore output missed analysts’ estimates.

Luxury brand Burberry bucked the trend, rising 1.8 per cent after posting better-than-expected revenue, thanks to strong demand for its more expensive products in China.

Tullow Oil was the worst performer on the FTSE 350 Index, plunging to a 1½-year low in London trading after a second well off the Latin American territory found no “significant” oil. Tullow shares fell 8.4 per cent to 982.5 pence, the lowest closing price since at least August 2011.

Having topped 6,500 in mid-March, the FTSE 100 closed down 60.4 points at 6,244, a drop of almost 1 per cent. A gauge of miners in the FTSE 350 Index declined 3.1 per cent, extending a drop so far this week to 7.1 per cent.

European stocks declined for a fourth day, with the benchmark Stoxx Europe 600 Index falling to its lowest level this year, as automakers slid.

Volkswagen and B MW fell at least 2.8 per cent as data showed European car sales fell 10 per cent in March.

BASF slid 3.8 per cent to €65.55, its lowest price in almost five months, after Nomura Holdings cut its recommendation on the world’s biggest chemicals maker to neutral.

The Stoxx Europe 600 Index fell 1.5 per cent to 283.73 at the close of trading, its lowest level since December 31st. Germany’s DAX Index slid 2.3 per cent and France’s CAC 40 lost 2.4 per cent.

US stocks dropped 1 per cent in early trading yesterday, with materials and energy shares leading the way lower as commodity prices dropped, while a selloff in Apple shares pressured the Nasdaq.

Financial stocks also fell after Bank of America posted a drop in revenue and profits that were below Wall Street expectations. Markets have been volatile this week, with the S&P moving more than 1 per cent in each session, putting the VIX on track for its biggest weekly jump since May 2010. While the index is down on the week, it posted its second-best daily performance of the year on Tuesday. (Additional reporting: Bloomberg, Reuters)