Investors unconvinced by ECB stimulus

Scepticism over the European Central Bank’s stimulus programme weighed on the region’s shares for a second day, taking their valuations to the lowest levels since July 2015 relative to global stocks.

Europe’s shares have been lagging behind in a rally that lifted the MSCI All-Country World Index to a six-month high and sent the S&P 500 close to a record. While the ECB began buying corporate bonds on Wednesday, investors remain unconvinced the central bank’s stimulus programme will succeed in reviving economic growth.

DUBLIN

The Irish market was dragged down with its peers, with the Iseq slipping close to 1 per cent. Among the losers were pillar banks

AIB

and

Bank of Ireland

, which gave up 6.84 per cent and 3.1 per cent respectively amid continuing volatility for the sector.

Permanent TSB

, however, was among the strongest performers, climbing 2.8 per cent to €2.27 after Government officials held out the prospect of it benefiting from increased M&A activity.

Index heavyweight CRH dipped 1.9 per cent to €26.82 while Paddy Power Betfair also shed 1.45 per cent to €119. On the upside, Ryanair advanced by just over half a percentage point after announcing plans to move into Airbnb's space by offering private rooms on its website.

Sentiment for Donegal Investment Group was good after it announced plans on Wednesday to offload the An Grianán farm business and a positive outcome to a legal action on its shareholding in a mushroom farming business.

Precision engineering business Mincon took a 4.1 per cent hit to 70 cents in high volumes.

LONDON

In London, the top flight index sank further into the red as a slump from housebuilders and commodity stocks weighed heavily on the market.

Antofagasta was the biggest faller, down more than 6 per cent, or 28.3p, to 423.4p and miner Glencore edged 7.8p lower to 137.9p.

Retailer Sainsbury's and Home Retail Group were both down despite strong trading from Argos. Telecoms giant Vodafone was heavily down after announcing a deal to merge its New Zealand business with media group Sky Network Television. Shares were off nearly 5 per cent, or 11.4p, to 219.7p.

Rolls-Royce lost 2 per cent after chief executive Warren East told employees the company needed to step up efforts to recover a waning delivery schedule.

EUROPE

Markets across Europe were also languishing after the German economy showed signs of stagnation, with the Federal Statistical Office pointing to flat exports and slowing imports in May. Germany’s Dax was 1.3 per cent lower and the Cac 40 in France dipped 0.9 per cent. The Stoxx Europe 600 Index fell 1 per cent at the close.

Seadrill sank 10 per cent after saying it would issue 7.5 million new shares in exchange for debt. Remy Cointreau slid 3.3 per cent as it said it would not give a sales forecast for the next fiscal year, citing volatility in all regions. Essentra tumbled 28 per cent after the supplier of plastic products said it probably would not be able to achieve the financial results it predicted in February.

Shares in Dong Energy jumped as much as 10 per cent after the Danish utility and wind farm developer sealed the biggest European stock market flotation this year.

NEW YORK

US stocks pared a decline as banks and energy producers trimmed losses, while the S&P 500 slipped from a 10-month high amid speculation equities may have run too far too fast, given the lacklustre prospects for global growth.

The market has to navigate some choppy waters between now and mid-July, with the Fed rates decision next week and the Brexit vote the following.

Word that billionaire investor George Soros recently oversaw a series of big, bearish investments is also contributing to the tempered mood. – Additional reporting Reuters/ Bloomberg /PA