European stocks fall after Draghi warning
Iseq posts gain after CRH advances to highest price since June 2010
ECB president Mario Draghi: refused to say the fight against Europe’s debt crisis was over, even as stocks and bonds rally and countries including Ireland and Portugal return to the debt market. Photograph: Alex Domanski/Reuters
European stocks declined after Mario Draghi, president of the European Central Bank, reiterated its pledge to keep interest rates low but warned that it’s too soon to say the euro zone economy is out of danger.
Mr Draghi refused to say the fight against Europe’s debt crisis was over, even as stocks and bonds rally and countries including Ireland and Portugal return to the debt market.
The ECB’s governing council, convening in Frankfurt yesterday for the first policy-setting meeting of 2014, left its main interest rate at 0.25 per cent, in line with market expectations. The Bank of England also kept its benchmark rate at a record-low 0.5 per cent.
The Iseq index rose 0.9 per cent, extending its highest level since July 2008 as its largest stock attracted investor interest. CRH advanced 2.2 per cent to €19.63, its highest price since June 2010, after analysts at UBS upgraded the building materials manufacturer to “buy” from “neutral”. A continued recovery in its US business and improvement in Europe may help CRH post its first annual earnings growth in eight years.
There were also gains for Aer Lingus, which climbed 3 per cent to €1.40, and Kingspan, which rose 3.4 per cent to €14. Bank of Ireland also posted a rise, closing at 30 cents, up 2.4 per cent. However, food group Glanbia dropped 3.1 per cent to €10.66.
Recruitment company CPL Resources finished up 4 per cent at €7.70 after British recruitment giant Hays released a trading update that was seen as encouraging for the sector.
The FTSE 100 lost 0.5 per cent, sliding to its lowest level since before Christmas as retailers weighed on the market. Tesco fell 1.2 per cent to 324.35 pence, after holiday sales missed projections. UK same- store sales, excluding fuel and VAT, fell 2.4 per cent in the six weeks that ended January 4th.
Wm Morrison retreated 7.8 per cent to 234.5 pence, a 4½- year low, as the smallest of the UK’s four main grocery chains said underlying operating profit for the year would be at the lower end of a cited range of £783 million to £853 million after a challenging Christmas.
However, Marks & Spencer gained 3.6 per cent to 460.9 pence, for its highest price in almost a month. The retailer said its womenswear unit gained market share in the 12 weeks through to November 24th, for the first time in three years.
National benchmark indexes slipped in 10 of the 18 western European markets.
Arkema slipped 3.1 per cent to €79.50 after lowering its forecast for 2013 earnings. The French chemical company attributed the cut to lower-than- expected fluorogas volumes in the fourth quarter.
TGS soared 17 per cent to 172.50 kroner after Norway’s biggest surveyor of underwater oil and gas fields forecast 2013 revenue of about $882 million, compared with previous guidance of $810-$870 million.
Waertsilae jumped 11 per cent to €37.86 after Rolls- Royce confirmed it had been in talks to acquire the Finnish maker of engines for tankers, cruise ships and navy vessels.
US stocks fell as retailers slumped and investors awaited a jobs report due today, amid concern the Federal Reserve may accelerate the pace of stimulus cuts. Bed Bath and Beyond fell 13 per cent after it projected fourth-quarter earnings that were lower than analysts’ forecasts, while Family Dollar Stores slid more than 5 per cent in early trading after cutting profit forecasts, as evidence emerged that December price promotions had failed to lure shoppers. However, Macy’s and JC Penney rallied at least 4 per cent.
Ford rose 2.1 per cent after the auto company raised its quarterly dividend to 12.5 cents, up from 10 cents, and topping a 12-cent estimate by Bloomberg analysts.
AT&T fell 1.9 per cent and Verizon Communications slid 1.9 per cent for the steepest losses in the Dow. – (Additional reporting: Bloomberg.)