Bank shares up on bailout speculation

Markets posted slight gains as speculation swirled again that a Spanish bailout was imminent, pushing up bank shares. Share had fallen earlier after international lenders clashed over how best to help Greece face off another risk of default.

DUBLIN

The Iseq index climbed 0.7 per cent, outperforming other stock markets across Europe.

Bank of Ireland rose by just 1 per cent, or a tenth of a cent, to 9.3 cents by the close, just before the bank said it had publicly raised €1 billion in unguaranteed debt, the first by an Irish bank in two years.

Investors had plenty of time to absorb the bank’s trading update in which it said that deposits had risen, European Central Bank borrowings had fallen and that the bank’s net interest margin was starting to recover.

Building materials group CRH, the biggest stock on the index, remained flat after it said third-quarter growth in its operations in the Americans reported much lower growth and there was a higher decline rate in the European businesses.

The company rose by half a per cent to €14.27 a share.

One trader described the share performance on the news from Bank of Ireland and CRH as “surprising”, particularly given the stronger performance of other stock markets in afternoon trading.

Volumes were stronger than usual in both shares with trading in CRH five times the average levels and 2½ times Bank of Ireland’s average.

Trading in Paddy Power was three times average levels, although the company’s shares remained largely unchanged, rising just 0.14 per cent, or eight cents, to €56.23 a share.

Ryanair rose 1.52 per cent, or 7 cents, to €5 as the company went ex-dividend. Any shareholders who bought into the stock will receive a special dividend of 34 cents a share on November 30th.

LONDON

Vodafone preoccupied the minds of investors in London as the world’s second-largest phone company posted its first drop in revenues for 10 quarters and said its UK business was being squeezed as rivals fight for smartphone customers with new unlimited tariffs.

The company fell more than 2 per cent as it reported a half-year loss of £492 million and a £6 billion write-down on its operations in Spain and Italy.

UK stocks, however, advanced for the first time in five days as the FTSE 100 Index wiped out losses earlier in the day in the final hour of trading.

The FTSE 100 Index rose 0.3 per cent, although it has retreated 1.7 per cent since President Barack Obama’s re-election last week, stirring investor fears on the so-called fiscal cliff of US tax increases and spending cuts coming on January 1st.

The FTSE 100 staged a late session turnaround after early gains on Wall Street helped to offset uncertainty over a deal to rescue the Greek economy.

EUROPE

European stocks rose ending a four-day decline for the benchmark Stoxx Europe 600 Index, as yields on benchmark Spanish bonds declined amid speculation that Madrid will soon request that bailout.

Italian and Spanish banks rallied as Intesa Sanpaolo rose 5.2 per cent after disclosing that operating profit surged in the third quarter of the year.

Eon fell 12 per cent after Germany’s biggest utility reduced its earnings forecast for 2013. France’s CAC 40 rose 0.6 per cent and Germany’s DAX climbed less than 0.1 per cent.

US

Retail stocks, led by a jump in Home Depot shares of 3.6 per cent as it raised its full year outlook, curbed Wall Street’s decline yesterday as concerns about the looming “fiscal cliff” weighed on sentiment.

TJX Cos beat analysts’ forecasts and its shares added 2.8 per cent. Microsoft shares fell 3.1 per cent after the surprising departure of a key executive, which analysts said marked the loss of the driving force behind the company’s biggest product.

AK Steel Holding fell 16.5 per cent after the company forecast a fourth-quarter loss. – (Additional reporting: Reuters/ Bloomberg)