Global markets extend equities slump

European stocks sank in huge volumes yesterday, while Irish shares also ended down

Shares in Banco Espirito Santo sank 40 per cent, adding to its 42 per cent plunge on Thursday when the bank posted a €3.6 billion loss and higher-than-expected provisions to cover its exposure to companies owned by its founding Espirito Santo family. Photograph:  Reuters

Shares in Banco Espirito Santo sank 40 per cent, adding to its 42 per cent plunge on Thursday when the bank posted a €3.6 billion loss and higher-than-expected provisions to cover its exposure to companies owned by its founding Espirito Santo family. Photograph: Reuters

Sat, Aug 2, 2014, 01:00

European stocks fell to their lowest levels in more than three months as companies posted worse-than-expected earnings.

US stocks followed European shares lower, extending the worst weekly loss for the Standard and Poor’s 500 Index in two years, amid growing concern about international credit markets.

Dublin

Few shares climbed on the Dublin market yesterday, with the Iseq index of Irish shares ending the day 33 points (0.7 per cent) lower at 4,615.

Bank of Ireland yesterday announced it is once again profitable and generating capital, after posting pre-tax profits of €399 million in the six months to June 30th, 2014. Bank of Ireland shares finished the day unchanged at 26 cent.

Kerry Group, which reports interim results next Thursday, was also near flat at €55.49.

Aryzta was among the big losers of the day, however, slumping 2.25 per cent to €66.47. Irish Continental Group also declined, falling 4.5 per cent to reach €2.53.

London

British stocks slid the most in more than three weeks, led by commodity producers, as a private report showed that Chinese manufacturing expanded at a slower than expected pace last month.

BHP Billiton, Rio Tinto and Glencore each dropped by about 1 per cent.

Schroders fell 2.6 per cent after its assets under management missed some analysts’ forecasts. IAG added 2.2 per cent as profit beat estimates.

Healthcare group Smith & Nephew managed to rise above the broader market weakness to finish 3.8 per cent higher after posting higher profits and sales that beat the consensus forecast.

The FTSE 100 Index lost 50.93 points, or 0.8 per cent, to 6,679.18 at the close in London, extending its decline this week to 1.8 per cent.

Europe

European stocks sank in huge volumes for the third straight session, with a broad index hitting a 3-1/2 month low, hurt by concerns over losses at Banco Espirito Santo as well as tension between Russia and the West.

Shares in Banco Espirito Santo sank 40 per cent, adding to its 42 per cent plunge on Thursday when the bank posted a €3.6 billion loss and higher-than-expected provisions to cover its exposure to companies owned by its founding Espirito Santo family.

The massive loss at the Portuguese lender has dragged Europe’s banking sector index down 3.5 per cent this week.

Arcelor Mittal retreated 6.1 per cent, the most since October 2012 after also lowering its full-year profit forecast.

Vinci slipped 6.3 per cent to €48.36, the most in almost three years. Europe’s biggest builder reported first-half earnings before interest and taxes of €1.54 billion, missing the median analyst prediction of €1.63 billion.

The Stoxx Europe 600 Index fell 1.2 per cent to 331.91 at the close of trading. France’s CAC 40 slid 1 per cent and Germany’s DAX tumbled 2.1 per cent.

US

American stocks tumbled in early trading yesterday, with the latest economic data providing little clarity as to when the Federal Reserve might raise interest rates.

Stocks rose as much as 0.3 per cent before turning decisively lower, putting the S&P 500 on track for its biggest weekly decline since May 2012.

Procter & Gamble, the world’s largest maker of household products, rose 3.5 per cent to $80, boosting consumer staples, while Chevron fell 1.2 per cent to $127.65.

Scientific Games rose 4.3 per cent to $8.91 after it said it would buy Bally Technologies for $3.27 billion. Bally, which makes slot machines, jumped 30 per cent to $77.95.

Electric car maker Tesla Motors posted second-quarter revenue that nearly doubled from the prior year, while its adjusted earnings topped expectations. Shares rose 2.9 per cent to $229.91 in early trading.

– (Additional reporting: Bloomberg, Reuters)