European shares down as oil price rally fizzles out

European shares fell yesterday as Spanish and Italian banks led a decline by banking shares and oil and gas companies lost ground when an oil price rally fizzled out.

The pan-European FTSEurofirst 300 index, which rose 3 per cent on Friday to mark its first weekly gain for 2016, ended down 0.7 percent. The index is now down around 8 per cent since the start of 2016.

The euro zone’s blue-chip Euro STOXX 50 index and Germany’s DAX were down 0.7 and 0.3 per cent respectively. The DAX is more than 20 per cent below the record high it reached last April.

In Ireland, the Iseq Overall Index declined by 0.46 per cent to 6,327.06.

DUBLIN

Traders reported a quiet day of trading with volumes at low levels. But there were substantial swings in some of the big names on the market.

Bank of Ireland closed down 3.6 per cent at 29.6 cent on a day when bank shares across Europe were in retreat. Ryanair finished the session 2.2 per cent lower at €14.08 with traders putting it down to there being a couple of sellers in the market ahead of the publication of full-year results next week.

The main gainer was Paddy Power, which is in the final stages of closing a merger deal with UK rival Betfair, closed up 3.6 per cent at €128.

LONDON

UK stocks slid, after their biggest two-day rally in five months, as banks retreated.

Lloyds Banking Group and Barclays paced losses among European lenders, down at least 4.7 per cent, after a report said UK banks will set aside more money to cover wrongly-sold loan insurance.

Kingfisher slid 6.1 per cent after the retailer said a plan to boost profits will result in cash costs.

The FTSE 100 Index slipped 0.4 per cent at the close, after earlier dropping as much as 0.8 per cent. The broader FTSE All-Share Index lost 0.3 per cent.

EUROPE

European bank shares declined the most, falling 3 per cent. Italian banks were hit by continued uncertainty over their bad loans. Spanish banks were under pressure as Spain struggled to form a new government after inconclusive elections last year.

Oil prices slid after rallying by 10 per cent on Friday. That led to losses by companies such as BP, Total and Eni.

However, Greek shares managed to outperform. The benchmark ATG equity index, which fell around 30 per cent in 2015 amid concern over Greece’s debt problems, edged up 0.07 per cent after Standard & Poor’s upgraded its rating on Greece late on Friday.

Jyske Bank also rose 2.6 percent after the Danish bank forecast making an annual profit.

NEW YORK

US stocks pared declines in afternoon trading, seeking to weaken a heightened correlation with crude, as oil renewed its slump to below $31 a barrel.

Gold and Treasuries advanced. The Standard and Poor’s 500 Index trimmed a loss of more than 0.9 per cent by two-thirds, while the Nasdaq 100 Index turned positive.

Yields on 10-year Treasury notes fell three basis points. The Russian ruble slid against all of its 31 major counterparts, while gold futures jumped 1 percent. Even after last week’s recovery, crude has fallen about 16 per cent this year amid brimming US stockpiles and the prospect of additional Iranian exports.

The SandP 500 fell 0.3 percent after a 2 per cent rally on Friday. Equities are on track for their worst January since 2009 amid worries about China’s slowdown and plunging oil prices.

Halliburton declined after posting a quarterly loss, and Exxon Mobil Corp slide following crude's biggest two-day rally in more than seven years.

McDonald's Corp gained after the fast-food giant's earnings beat forecasts. Tyco International surged 8.6 per cent after Johnson Controls agreed to merge with the company. Additional reporting by Bloomberg and Reuters