Europe slips over economic warning

EUROPEAN STOCKS declined for a second day after a choppy, bearish session in which investors were turned off by a warning from a European Central Bank governing council member that boosting the euro zone’s rescue fund won’t solve the debt crisis.

The comments from the ECB’s Jens Weidmann, made days before finance ministers meet to discuss expanding the limit, sent a bearish signal on a day when there was little bullish support from the US.

A warning from Federal Reserve chairman Ben Bernanke that the US economic recovery isn’t assured set the tone for the day, while US durable-goods orders also trailed forecasts, prompting a sell-off.

DUBLIN

The Iseq index outperformed the major European indices, just managing to finish in positive territory yesterday as the FTSE, the Dax and the Cac all declined.

It was a strong day for food group Kerry, which climbed 1.3 per cent to €35.12, while Paddy Power climbed 2.5 per cent to €47.89.

Building materials group CRH fell 1.9 per cent to €15.39 in sympathy with the US economic news, and there were mixed fortunes for the airlines, with Ryanair closing flat at €4.47 and Aer Lingus rising 2 per cent to 99 cent.

There was decent trading volume in paper and packaging group Smurfit Kappa, which finished the session flat at €6.90.

Irish Life and Permanent closed down 6.7 per cent at 4 cent on a day when the Government purchased its life assurance arm for €1.3 billion.

LONDON

UK stocks retreated, led by mining companies. Cyclical stocks weighed on the FTSE as the weaker-than-expected durable goods orders data from the US provided investors with a good reason to cash in on a strong first quarter.

Metals and mining stocks fell 4.3 per cent and 2.9 per cent respectively, tracking copper prices into the red as the weak US data dented the demand outlook.

Steelmaker Evraz dropped 5.5 per cent after it said the outlook for the global steel industry would remain tough this year as its 2011 net profit missed market expectations. Russia’s largest steelmaker, which is London-listed, said net income dropped to $461 million last year from $486 million in 2010. That missed analysts’ estimate of $910 million.

The FTSE 100 Index declined 60.56, or 1 per cent, to 5,808.99 at the close in London as seven companies including Anglo American and Prudential all traded without the right to the latest dividend.

Antofagasta and Vedanta Resources dropped more than 5 per cent as copper tumbled amid signs of slowing demand in China.

GKN slid for a second day after the company was said to be nearing a deal to buy Volvo’s aircraft-engine unit. ICAP lost 3.5 per cent as the company said full-year results would be in line with analyst estimates.

The FTSE All-Share Index also fell 1 per cent as investors wondered where the next catalyst to push up markets would come from.

EUROPE

The Stoxx Europe 600 Index declined 1.1 per cent to 264.10 at the close on a day of below-average trading volumes.

In Italy, Banca Popolare di Milano fell 5.4 per cent to 44.53 euro cents as the lender posted a net loss of 614 million euros for 2011, compared with a profit a year earlier, after a goodwill writedown of 336 million euros in the fourth quarter.

Nokia rose 3.5 per cent to 4.14 euros after Swedbank AB upgraded the stock to buy from neutral, saying the mobile phone maker will ship “decent” volumes this year.

US

Stocks fell, led by commodity producers, after oil plunged on an increase in crude supplies and figures from the US Commerce Department showed orders for durable goods rose less than economists had estimated in February.

Oil retreated for the first time in four days, losing 2.1 per cent to $105.09 a barrel, after US Energy Department data showed supplies of oil rose by 7.1 million barrels last week, more than twice the increase forecast by analysts.

Bernanke told ABC News late on Tuesday that the US economic recovery isn’t assured and policymakers are not ruling out any further options to boost growth.

He said unemployment remains too high and it’s “too early to declare victory” for the economy, according to a transcript of the interview with ABC News anchor Diane Sawyer.

Chevron, Exxon Mobil and Occidental Petroleum paced losses in all 43 energy companies in the SP 500, sending the group down 1.8 per cent and contributing the most to the index’s decline among 10 industries.

Copper declined 2.1 per cent to $3.7970 a pound. Goldman Sachs Group cut its three-month outlook on commodities to neutral from overweight. – (Additional reporting: Bloomberg/Reuters.)