Markets fall on poor economic data

Fri, Jun 22, 2012, 01:00

EUROPEAN MARKETS rallied in opening trade yesterday as hopes grew that the crisis-stricken euro area is moving towards a “greater resolution”, a Dublin broker said. However, disappointing economic data from China, Europe and the US took the gloss off burgeoning investor optimism and bourses gave up early gains.

Market chatter suggesting the ECB may review the ratings of sovereign debt – which could mean the agency would accept lesser collateral in return for funding – combined with softening tones from Germany and the removal of an immediate “Grexit” threat boosted sentiment in early trade.

However the latest US Philadelphia Fed index showed that factory activity weakened for a second month in a row in June and sent markets lower. By the end of yesterday’s session, European equities were about half a per cent down.

Volumes were relatively light as investors are “very much scratching their heads at the moment” and waiting to see what happens in Europe, one trader said.

Markets are still very much driven by “macro headlines”, he added.

DUBLIN

THE ISEQ market moved in line with its European counterparts, closing the day about half a per cent lower.

CRH put downward pressure on the index, as the bellwether stock shed 1.5 per cent, or 23 cent, over the course of the session to finish just below €14.16.

Ryanair was pretty much flat at €4.02, with brokers noting that there was very little fall-out yesterday from the airline’s announcement on Wednesday that it is renewing its bid for rival carrier Aer Lingus.

Aer Lingus gave up some of Wednesday’s gains, slipping more than 3 per cent to €1.05.

LONDON

STOCKS DROPPED by the most in almost three weeks, led by a sell-off in mining companies, as manufacturing reports in Europe and China added to concern that global economic growth is weakening.

Anglo American and Vedanta Resources both tumbled more than 4.5 per cent as base metals dropped in London.

Banks declined after Moody’s Investors Service was said to have told lenders it may announce credit-rating downgrades.

The FTSE 100 Index fell 1 per cent to 5,566.36 in London, trimming its gain over the last five days to 1.8 per cent. The gauge has lost 6.7 per cent from its 2012 high amid concern the euro area’s sovereign-debt crisis is derailing global growth. The broader FTSE All-Share Index slid 1 per cent.

EUROPE

EUROPEAN STOCKS fell from their highest level in five weeks.

The Stoxx Europe 600 Index declined 0.5 per cent to 248.4 at the close, after earlier climbing as much as 0.3 per cent and dropping as much as 0.8 per cent.

The benchmark measure has fallen 8.8 per cent from its high on March 16th amid concerns that Greece will have to leave the euro currency union.

Spain sold more debt than planned just three days after the countrys 10-year bond yields hit a euro-era record.

National benchmark indexes dropped in 16 of the 18 western- European markets.

France’s CAC 40 decreased 0.4 per cent. Germany’s DAX sank 0.8 per cent, while the UK’s FTSE 100 slid 1 per cent.

A gauge of European mining companies dropped for the first time in a week as a global commodity benchmark declined to its lowest level since 2010. BHP Billiton, the world’s biggest mining company, fell 3 per cent to 1,819 pence.

Royal KPN slid 5.3 per cent to €7.48 after abandoning talks over a combination of its German business with a rival, increasing the likelihood that Carlos Slim’s America Movil SAB will succeed with an unsolicited €2.6 billion bid for a stake in the Dutch phone operator.

US

US STOCKS declined in early trade, sending the Standard and Poor’s 500 Index down for a second straight day, after a gauge of Philadelphia-area manufacturing unexpectedly fell while housing and jobless claims reports disappointed.

Commodity shares in the SP 500 slid as data showed that China’s manufacturing may shrink.

Bed Bath and Beyond tumbled 15 per cent as its earnings forecast trailed estimates.

Red Hat, the largest seller of the open-source Linux operating system, slumped 5.9 per cent as billings missed some projections.

Facebook added 1 per cent to $31.93. The social-network operator’s 22 per cent rally in two weeks through yesterday has helped the company avoid posting the biggest slump among the largest US initial public offerings since the start of 2011. – (Additional reporting: Bloomberg, Reuters)