Markets across Europe enjoy rebound

EUROPEAN STOCK markets rebounded yesterday, as Greece moved closer to forming a government and a Spanish debt sale met targets despite a higher cost of borrowing.

The rally also came despite a bigger-than-forecast decline in German investor confidence.

DUBLIN

THE IRISH stock exchange slightly underperformed in relation to its European peers, finishing just over a half a per cent higher.

It was a relatively average day in volume terms.

CRH gained 1.4 per cent as data showed that US highway contracts spiked in May.

Ryanair advanced by 1.7 per cent to finish at €3.98.

Paddy Power rose half a per cent to €52.20 after announcing senior management changes.

Food companies had a weak day, with Kerry Group, one of the most important stocks on the Iseq in terms of weighting, declining by 1.4 per cent to €35.25. Aryzta also lost ground, shedding 0.8 per cent to €37.20.

Irish Continental Group closed up 0.8 per cent at €15.04 after it announced a 700,000-share buyback programme and 12.5 per cent stakeholder One51 sold its investment.

Smurfit Kappa was one of the best performers, adding 2.5 per cent to finish at €5.28, boosted by an upbeat report on the packaging sector by Davy stockbrokers.

LONDON

UK STOCKS advanced for a third day as Greece’s political parties continued talks to form a government and as the leaders of the Group of 20 countries debated the euro area’s debt crisis.

Whitbread rallied 6.4 per cent as first-quarter sales rose.

Home Retail rallied 24 per cent to 91.85 pence, the biggest gain since the company split off from GUS in 2006. Revenue at Argos stores open at least a year fell 0.2 per cent in the 13 weeks to June 2nd, the Milton Keynes, England-based retailer said.

Eurasian Natural Resources led mining shares higher.

Kingfisher, Britain’s largest home-improvement retailer, rose 3.9 per cent to 284 pence.

Hammerson added 2.5 per cent to 428 pence. Brookfield Office Properties, lower Manhattan’s biggest office landlord, agreed to buy buildings and a development site in London from Hammerson for £518 million (€641 million).

The FTSE 100, which rose 1.7 per cent yesterday, had increased by 0.2 per cent on Tuesday as investor optimism following Greece’s election at the weekend outweighed a surge in Spain’s borrowing costs.

The broader FTSE All-Share index also climbed 1.7 per cent yesterday.

EUROPE

EUROPEAN STOCKS gained for a third day yesterday.

SAP rose 2 per cent after US peer Oracle reported fourth-quarter profit that beat estimates.

Danone tumbled 6.1 per cent after the world’s biggest yogurt maker cut its profitability forecast.

The Stoxx Europe 600 index added 1.6 per cent to 248.26 in London, the highest since May 11th. The benchmark gauge has still dropped 8.9 per cent from its peak on March 16th amid concern that the euro area’s debt crisis has triggered a slowdown in global economic growth.

Spain sold €3.04 billion of debt yesterday, just more than the €3 billion maximum set for the auction. Demand for the 12-month bills was 2.16 times the amount offered, compared with 1.84 times last month. The bid-to-cover ratio on the 18-month securities rose to 4.42 from 3.23.

National benchmark indices rose in all the 18 western European markets, except Iceland. Germany’s DAX increased 1.84 per cent and France’s CAC 40 advanced 1.69 per cent.

US

US STOCKS rose yesterday on hopes that the US Federal Reserve will agree to extend stimulus measures as the economy struggles to recover and the euro zone’s debt crisis gets worse.

The SP 500 has gained 7.2 per cent from a five-month intraday low on June 4th. Yesterday, the benchmark index closed above its 50-day moving average of 1,346.90 for the first time in seven weeks. But the sharp gains leave the market vulnerable if the outcome of today’s Fed meeting does not meet expectations.

Growth-related stocks led the rally, with the SP materials sector index up 2 per cent and the financial sector index up 1.7 per cent. US Steel jumped 9.5 per cent to $20.15. Bank of America added 4.5 per cent to $8.11.

Oracle rose 3.1 per cent to $27.96 a day after it reported stronger-than-expected quarterly profit. Walgreen tumbled 5.9 per cent to $30.09 after the pharmacy chain reported quarterly earnings and said it would buy a 45 per cent stake in Alliance Boots for $6.7 billion (€5.3 billion) in a cash-and-stock deal.

FedEx rose 2.8 per cent to $91.01 after the package delivery company reported fourth-quarter earnings and provided an outlook for the first quarter and 2013. – (Additional reporting: Bloomberg, Reuters)