European stocks slump on Spain woes

Wed, Apr 4, 2012, 01:00

EUROPEAN STOCK markets fell yesterday after a recent strong run, as Spanish bond yields rose and US factory orders rebounded less than economists had estimated. Volumes were below average as markets head into the Easter break.

US stocks also retreated a day after the Standard and Poor’s 500 Index had risen to the highest level since 2008 on Monday.

DUBLIN

With the stock market closed on Friday and Monday, trading was unsurprisingly light in Dublin.

The Iseq finished down about a half a per cent at 3,274 in line with the London market, and ahead of slightly steeper percentage falls in France and Germany.

The Irish index took its lead from the global trends, falling back after lunch on the back of the US factory order figures.

DCC was the subject of some activity after it announced it is to sell its enterprise distribution business, Altimate Group, to Arrow Electronics for €48.1 million of which €41 million will be paid in cash on completion. Analysts welcomed the news, noting that DCC SerCom could now focus on its retail and reseller businesses. The stock closed up a half a per cent at €18.89.

Food group Kerry had a good day, adding almost 2 per cent to €35.40, as did Origin Enterprises, which rose by close to 2 per cent to €3.82.

Shares in Providence Resources rose by 4 per cent to €6.25, following news of its successful $100 million share placing on Monday.

EUROPE

European stocks dropped, paring the benchmark Stoxx Europe 600 Index’s biggest two-day rally since February, as Spanish bond yields rose and US factory orders rebounded less than economists had estimated.

National benchmark indexes fell in every western-European market apart from Denmark and Iceland. France’s CAC lost 1.6 per cent and the UK’s FTSE 100 slipped 0.6 per cent.

Germanys DAX Index slid 1.1 per cent.

Spain’s IBEX posted the largest decline, falling 2.7 per cent. Spanish stocks tumbled to a four- month low, led by banks and construction companies, as concern grew that the government’s efforts to rein in the budget deficit will choke off growth.

Banco Santander and Banco Bilbao Vizcaya Argentaria, the nation’s largest lenders, fell at least 4 per cent.

Ferrovial, a Madrid-based builder and airport operator, sank the most since May 2010 as government changes to corporate taxes capped deductions on financial costs.

Cairn Energy gained 4 per cent after agreeing to buy Agora Oil and Gas AS, which is owned by RIT Capital Partners and Jacob Rothschild. Lonza Group AG advanced 1.6 per cent after it named Richard Ridinger as chief executive officer.

UK

Stocks declined following the biggest two-day rally for the FTSE 100 Index since January, after factory orders data in the world’s largest economy missed economists’ forecasts.

The FTSE 100 slid 0.6 per cent at 5,838.34 after recording its biggest daily rise in two months on Monday

Royal Bank of Scotland, Lloyds and Man Group, the worlds largest publicly traded hedge fund manager, led financial shares lower.

Compass Group lost 1.6 per cent after Morgan Stanley downgraded the caterer.

Cairn Energy paced advancing shares after agreeing to buy Agora Oil and Gas AS to expand in the North Sea. Old Mutual also retreated as Credit Suisse lowered its recommendation for the insurer to neutral from outperform, citing limited restructuring opportunities in 2012.

The gauge had climbed 2.3 per cent over the previous two days after US manufacturing data expanded at a faster- than-forecast pace.

US

Stock markets fell amid concern the rally that sent the Standardand Poor’s 500 Index to an almost four-year high has outpaced prospects for economic growth.

Oil retreated yesterday on forecasts that US supplies climbed to a seven-month high as US factory orders climbed less than expected in February. Crude dropped as much as 1 per cent after the Commerce Department reported factory bookings rose 1.3 per cent.

Goldman Sachs and Morgan Stanley each retreated, pacing losses among financial shares.

Transocean and Newmont Mining declined more than 1.6 per cent, after commodity producers slid with oil prices. Netflix, the online movie service, fell 1.8 per cent as Barclays downgraded the shares from overweight to equalweight, citing competitive threats. The rating means the stock is expected to perform in line with its sector over a 12-month period. – Additional Reporting: Reuters/Bloomberg