Iraq air strikes spook markets in Europe

The first back-to-back weekly losses in European stocks since March sent markets tumbling across the continent yesterday. US president Barack Obama’s authorisation of air strikes against militants in Iraq is accelerating a retreat in European stocks that started weeks ago.

Concern over the crises in Ukraine and Israel, as well as shares from Europe’s periphery slumping after their rallies, sent the Euro Stoxx 50 Index of euro-area shares down as much as 10 per cent in yesterday’s trading from its high on June 19th. US stocks rose on Friday, however, with high dividend-paying utility stocks leading gains. The Iseq fell 0.3 per cent, sliding for an eighth day, its longest losing streak in three years.

Dublin

Datalex

, the travel technology company backed by investors including

Dermot Desmond

, was among the biggest fallers on the Iseq yesterday. It finished down 3.23 per cent at €1.50. The company, which sells its products to some of the biggest airlines in the world, was affected by general skittishness that hit the aviation sector.

Petroceltic fell almost 1.5 per cent to finish Friday at €1.98. It announced yesterday it has settled legal proceedings involving the company and two former consultants. The government of Egypt, where the company has extensive interests, is looking for solutions to pay off its debts to energy companies following recent unrest. Petroceltic is owed €81 million.

Glanbia slipped 0.13 per cent, mostly shrugging off poor results posted by one of its US nutrition sector peers. Post Holdings, which sells the Power Bar, said sales in its nutrition division were down 7.4 per cent in the third quarter.

Europe

Banca Monte dei Paschi di Siena lost 8.3 per cent to €1.05 for a seventh day of declines, the longest streak in a year. Italy’s third-biggest bank reported a net loss of €178.9 million in the second quarter, overshooting analysts’ estimates.

Nokian Renkaat, the Finnish tyre maker, slid 6.5 per cent to €23.44. Sales in Russia, its biggest market, decreased 31 per cent in the six months through June. Pretax profit was €78.6 million in the second quarter.

European airlines also fell, with Air France losing 3.9 per cent and Lufthansa down 3 per cent. Russian prime minister Dmitry Medvedev said on Thursday Moscow was considering banning European and US airlines from flying transit routes through Russian airspace in retaliation for tougher sanctions from Europe and the US.

London

The blue-chip FTSE 100 index closed 30.01 points lower, down 0.5 per cent. It was down 1.7 per cent for the week, matching its fall in the previous week.

Asset manager Schroders, down 2.7 per cent, led declines as investors worried that the market volatility would affect its performance and result in clients withdrawing money.

Mid-cap fund manager Henderson Group and hedge fund MAN Group fell 2.4 per cent and 2.2 per cent respectively.

New York

Gap rallied 5.8 per cent, the most in six months. The biggest apparel-focused retailer in the US reported preliminary second-quarter earnings and revenue that beat estimates. Coach added 3.8 per cent to lead a 1.1 per cent jump in apparel makers.

Monster Beverage advanced 5.7 per cent after reporting quarterly earnings of 81 cents a share.

Zynga dropped 7.2 per cent after the online game company posted second-quarter results at the low end of its forecast and cut its full-year outlook after deciding to delay new games.

News Corp, which split from billionaire Rupert Murdoch's entertainment business last year, retreated 4.5 per cent. The news division, which publishes the Wall Street Journal and the New York Post, continues to face difficulty at a time when advertising is fleeing print in favour of digital destinations.

(Additional reporting: Bloomberg/Reuters)