Merkel to consider Greek debt write-off

After early gains gave way to losses in the afternoon, major stock market indices across Europe finished only marginally up yesterday, on a day most notable for German chancellor Angela Merkel’s signal that her government is willing to consider a write-off of Greek debt.

Also feeding into an upbeat market mood was China’s official manufacturing purchasing managers’ index, which increased to 50.6 in November, according to a report released over the weekend – the highest in seven months.

In Europe, the positive sentiment that ensued from Merkel and the Chinese data managed to outweigh nerves prompted by figures from the US that revealed its manufacturing sector shrank last month to a three-year low.

DUBLIN

Most of the activity was concentrated in the larger stocks on a flat day for the Iseq, with cement-maker CRH finishing the day down fractionally to €14.01. The company is poised to benefit from any disposals in a deal between US gravel-maker Martin Marietta and Vulcan Materials, Davy Research wrote in a note to investors.

Ryanair enjoyed better fortune yesterday, climbing 1.65 per cent to €4.82, while bookmaker Paddy Power closed up 0.9 per cent at €58.52.

Paper and packaging group Smurfit Kappa, which has completed the acquisition of Orange County Container Group, rose 1 per cent to a closing price to €9.10.

However, food company Aryzta, which has its primary listing in Zurich, fell 2.45 per cent on the Iseq to €38.20, on a day when it published a quarterly trading update showing a more pronounced slowdown in growth in its North American business than expected.

There were also falls for CC, Independent News Media, Kingspan and Bank of Ireland.

LONDON

The FTSE 100 Index added 4.42 points, less than 0.1 per cent, at the close, erasing an earlier increase of as much as 0.6 per cent.

Cable Wireless Communications (CWC) added 1.2 per cent to 35.1 pence after agreeing to sell its Monaco and Islands unit to Bahrain Telecommunications for $680 million.

Lamprell lost 2.3 per cent to 86.25 pence after JPMorgan Chase advised investors to avoid the stock.

Lonmin, the third-biggest platinum producer, climbed 0.6 per cent to 259.7 pence. Rio Tinto, the second-largest mining company, gained 0.9 per cent to 3,120 pence.

ITV climbed 1.5 per cent to 100.4 pence. The stock is “attractively valued”, analysts Panmure Gordon said in a report.

EUROPE

European shares hit a 17-month high but gave up most of those gains in a late sell-off yesterday after the disappointing US manufacturing data emerged. National benchmark indexes gained in 12 of the 18 western European markets. The Dax Index climbed 0.4 per cent at the close of trading in Frankfurt, while in Paris, the Cac 40 closed up just shy of 0.3 per cent.

Banco Espirito Santo climbed 4 per cent to 79.8 cent. JPMorgan Chase raised the Portuguese bank to overweight, recommending that investors buy the shares to benefit from European Central Bank intervention in Portugal.

Alcatel-Lucent advanced 3.3 per cent to 87 cent. The unprofitable network-equipment supplier has short-term upside because of its potential for asset sales and refinancing, according to Deutsche Bank.

NEW YORK

Stocks in New York fell and commodities erased early gains as contraction in manufacturing and concern about the budget debate overshadowed optimism on China’s economy. Treasuries and the dollar fell.

DuPont, the most-valuable US chemical maker, and Coca-Cola fell more than 1 per cent to pace declines among the largest companies. However, Dell rallied 4.4 per cent after Goldman Sachs recommended buying the shares.

(Additional reporting: Bloomberg/Reuters)