Equities fall on China growth fears
A gauge of global equities fell yesterday, weighed down by sharp drops in Chinese shares. But stocks in Europe and the US held near multi-year or historic highs as slight declines attracted buyers.
The euro retreated after last week’s soft manufacturing data increased expectations the European Central Bank could cut interest rates to boost the region’s economy.
Ireland’s Iseq index closed up 48 points or 1.3 per cent at 3,810, with building materials company CRH leading the gains. The index heavyweight rose 1.4 per cent to close at €16.98.
Bank of Ireland stock also gained, despite mounting pre-tax losses. The bank yesterday reported a loss before tax of €2.16 billion for 2012.
Shares in Elan were up 2.5 per cent at €8.81. The pharmaceutical company yesterday said it will give shareholders 20 per cent of the royalty rights for the multiple sclerosis drug Tysabri. Shares in food group Glanbia fell 0.8 per cent to end the day at €8.84, while drinks group CC closed down 0.7 per cent at €4.82.
Britain’s top shares fell yesterday on concern about prospects for global growth, with a murky outlook for metal demand from top consumer China shunting miners to the top of the fallers’ list. The FTSE 100 closed down 32.97 points, or 0.5 per cent, at 6,345.63.
Copper mining company Kazakhmys led the market lower, continuing a slide seen since last Thursday when it warned of higher costs.
Anglo American, meanwhile, shed 2.7 per cent as Nomura cut its rating on the firm to “reduce” citing valuation grounds and viewing consensus earnings as too high for 2013.
Banks suffered too, with heavyweight HSBC off 2.5 per cent, alone accounting for 13.1 points of the FTSE 100’s drop.
European equities finished a volatile session broadly flat yesterday after investors balanced fresh assurances of global central bank stimulus against some disappointing earnings and political uncertainty in Italy.
The pan-European FTSEurofirst 300 index closed flat at 1,168.36 points, recovering some poise in afternoon trade after Janet Yellen became the latest US Federal Reserve official to reaffirm a commitment to its monetary easing policy for some time yet.
Italy’s FTSE MIB, however, was a clear laggard, posting close to a three-month intra-day low and finishing 0.9 per cent lower on signs that the country could be edging towards another election within months after polls ended in a stalemate last week.
France Telecom surged 5.7 per cent to €7.72, its biggest rally in seven months. France’s largest phone company was raised to overweight, meaning that investors should buy the shares, from underweight at Morgan Stanley, which said the stock could rally 50 per cent.
Metro retreated 6.2 per cent to €21.14 as Citigroup cut its price forecast for Germany’s largest retailer to €15 from €19 and repeated a sell recommendation.
France’s CAC 40 rose 0.3 per cent, while Germany’s DAX retreated 0.2 per cent.
US stocks fell as concern over China’s economy and federal spending cuts overshadowed speculation the Federal Reserve will continue stimulus measures.
Industrial stocks and commodity producers led losses out of 10 groups in the Standard Poor’s 500 Index.
Celgene slumped 1.2 per cent after it presented test results for its experimental psoriasis medicine.
Hess rallied 3.7 per cent after saying it will exit energy trading, marketing and retail businesses to focus on exploration and production.
The S&P 500 slipped 0.3 per cent to 1,514.02 at 12.26pm in New York. The Dow Jones Industrial Average dropped 46.14 points, or 0.3 per cent, to 14,043.52. – (Additional reporting: Bloomberg, Reuters)