Europe rallies as German ruling due
EUROPEAN STOCK markets rallied towards the end of the session yesterday as Germany’s top constitutional court said it would proceed with a ruling on the country’s role in the euro zone bailout fund and speculation grew that the Federal Reserve would boost stimulus.
The euro also hit a four-month high against the dollar amid widespread optimism that the German court would approve the ESM or euro zone bailout fund.
THE ISEQ index underperformed in comparison with its European peers, losing close to 1 per cent.
Bank of Ireland gained 3 per cent to €0.098, after it announced that institutional shareholder Harris Associates increased its stake in the bank to more than 7 per cent last Friday.
CRH was actively traded. The construction stock, which has a secondary listing in Dublin, slid more than 2 per cent during the session after Bank of America recommended investors sell the stock. However, it regained ground to finish the session flat at €15.10.
Paddy Power fell by 2.8 per cent to €56.23 after peer company Betfair said that the Olympics had affected on its soccer and horse-racing betting business, resulting in slower revenue growth in August.
Kingspan finished fractionally higher at €7.98 after the company announced the completion of its acquisition of ThyssenKrupp Construction Group and Rigidal Industries which had been announced in August.
UK STOCKS erased losses in the final half an hour of trading, led by a rally in banks. Royal Bank of Scotland and Barclays both advanced more than 2 per cent in London trading.
Burberry plummeted 20 per cent to 1,101 pence yesterday afternoon, the largest decline since its initial public offering in July 2002. Britain’s biggest maker of luxury goods said adjusted pretax profit in the year through March will be at the lower end of analyst estimates, which range from £407 million (€508.7million) to £454 million (€567.45 million).
Vedanta Resources and Antofagasta, producers of copper listed in London, retreated 2.5 per cent to 977.5 pence and 2.2 per cent to 1,222 pence, respectively.
Tullow fell 2.1 per cent to 1,357 pence in London, the stock’s biggest one-day decline since August 2nd, as the company said it would plug a Kenyan exploration well in which it was involved in Apache, after failing to find commercial quantities of crude or natural gas.
GERMAN STOCKS climbed to a 13-month high amid mounting optimism that the top constitutional court will rule today in favour of its participation in the European Stability Mechanism.
The benchmark Stoxx Europe 600 Index added 0.3 per cent to 272.37. National benchmark indexes rose in 15 of the 18 western European markets.
France’s CAC advanced 0.89 per cent and Germany’s DAX Index rallied 1.34 per cent.
Fiat, Italy’s largest car maker, advanced 1.7 per cent to €4.66 and Daimler gained 1.7 per cent to €39.45. A measure of motor-industry shares had the biggest advance of 19 industry groups in the Stoxx 600.
A gauge of mining companies dropped the second-most among the 19 industry groups in the Stoxx 600, falling 1.5 per cent.
Cie. de Saint-Gobain, Europe’s biggest supplier of building materials, declined 2.4 per cent to €28.37.
The fall in Burberry’s share price had an effect on rival luxury goods companies. Hugo Boss sank 7.7 per cent to €71.21 in Frankfurt and jewellery maker Richemont lost 5.1 per cent to 60.90 Swiss francs in Zurich. Christian Dior and LVMH dropped 4.7 per cent to €111.75 and 3.4 per cent to €127.70, respectively.
In Germany, stocks rose to a 13-month high. Deutsche Bank rose 3.1 per cent after unveiling a cost-saving plan.
Banco Santander added 1.8 per cent to €6.18 in Madrid, while France’s BNP Paribas climbed 2.2 per cent to €39.01.
HeidelbergCement slid 0.7 per cent after Bank of America said the cement maker would not reach its target for a €3 billion profit in the next three years.
US SHARES climbed with commodities while the dollar weakened as investors speculated the Federal Reserve will announce more stimulus plans.
Alcoa, Bank of America and Hewlett-Packard climbed at least 3 per cent to lead gains in the Dow Jones. Green Mountain Coffee Roasters jumped 5.9 per cent after Luigi Lavazza increased its stake in the company.
The S&P GSCI Index of commodities climbed for a fourth straight day, rising 0.5 per cent to the highest level since May.
Crude for October delivery gained 63 cents, or 0.7 per cent, to $97.17 a barrel on the New York Mercantile Exchange, the highest settlement since August 22nd.
The MSCI Emerging Markets Index added 0.3 per cent for a fourth straight gain, its longest rally in a month. – (Additional reporting: Bloomberg/Reuters