Greek bailout fears weigh on markets

Fri, Feb 17, 2012, 00:00

Eurostoxx 50: 2,489.35 (–0.18%) Frankfurt DAX: 6,751.96 (–0.09%) Paris CAC: 3,393.25 (+0.09%)EUROPEAN MARKETS were little changed at the end of a topsy turvy session, as positive US data offset Greek bailout fears.

Greek concerns weighed on markets in the early part of yesterday’s session, with credit spreads on European corporates and banks widening, and equities weakening. However, a slew of better-than-expected economic data out of the US appeased investors and markets recovered ground over the afternoon.

DUBLIN

THE ISEQ moved in line with its European counterparts yesterday and closed slightly ahead at 3,131.88.

There was continued strength in paper and packaging group Smurfit Kappa, which added about 2.5 per cent, or 17.5 cent, to close at €7.33.

Grafton Group continued its strong run of form, closing 2 per cent ahead at just under €2.91.

Paddy Power slipped 35 cent to €41.95.

LONDON

UK STOCKS fell, sending the benchmark FTSE 100 Index lower for a third day, as the euro area’s finance ministers delayed a bailout for Greece.

BAE Systems lost 2.3 per cent to 325.2p. The defence company earlier fell as much as 6 per cent after predicting that its domestic market will fail to grow this year. BAE also said that US defence budget cuts will create “uncertainty.”

African Barrick Gold sank 14 per cent to 448p as the miner of the precious metal in Tanzania said fourth-quarter profit slumped 33 per cent on lower output and higher costs. The company also forecast that it will produce the least metal this year since the company listed in London in 2010.

Talvivaara Mining tumbled 14 per cent to 281.9p after raising £68.8 million by selling about 24.6 million shares at 280p per share.

The FTSE 100 declined 6.93, or 0.1 per cent, to 5,885.23, after earlier sliding as much as 1.1 per cent. The FTSE All-Share Index dropped 0.2 per cent.

“There will be no winners or losers in this particular little saga as Europe gives the impression of gearing up to cut Greece loose, unless they subjugate to demands for new measures to sate various new concerns,” said Michael Hewson, a markets analyst at CMC Markets in London.

EUROPE

EUROPEAN STOCKS were little changed, paring earlier losses as better-than-estimated US eco-nomic data outweighed a delay in the bailout of Greece.

Banco Santander led Spanish lenders lower after the nation’s regulator removed a ban on short sales of financial shares. The stock lost 2.6 per cent to €6.29, while Banco Bilbao Vizcaya Argentaria SA slid 4.1 per cent to €6.80. ABB fell 3.6 per cent to 19.20 Swiss francs. The world’s largest maker of power-distribution equipment reported less-than-expected profit in the fourth quarter and said price pressure may weigh in on profitability in the first quarter.

The Euro Stoxx 50 Index dropped 0.2 per cent to 2,489.35 at the close of trading. Stocks pared earlier losses of 1.6 per cent after US housing, manufacturing and jobless claims data beat estimates.

The gauge has still rallied 7.5 per cent this year amid optimism that the euro area will contain its debt crisis and as the US economy continued its recovery.

“Greek concerns appear to be weighing down on markets,” said Peter Dixon, global equities economist at Commerzbank. “It’s beginning to look as though the end game may be a lot more messy than anticipated. A Greek exit is certainly no longer off the table,” he said, referring to the possibility of the nation leaving the currency union.

France’s CAC 40 gained 0.1 per cent, while Germany’s DAX lost 0.1 per cent.

US

WALL STREET stocks rose on the latest signs of an improving US economy and optimism a Greek bailout deal would be agreed next week.

US labour, manufacturing and housing data suggested sustained momentum in the key economic sectors and confirmed the recovery continues at steady pace.

“We’re getting this incredible flow of good data,” said Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis. “It’s hard not to want to step into the market.”

“People are increasingly of the opinion that although Europe will continue to have flare-ups, it’s not likely to become a calamity for the world economy,” Paulsen said.

In early trade, the Dow Jones industrial average added 123.08 points, or 0.96 per cent, to 12,904.08. The SP 500 Index gained 14.81 points, or 1.10 per cent, to 1,358.04.

Bank of America, Microsoft and Hewlett-Packard rose more than 2.7 per cent for the biggest gains in the Dow Jones Industrial Average.

General Motors rallied 6.7 per cent after posting full-year earnings of $9.19 billion, the largest profit in its 103-year history. – (Additional reporting Bloomberg/ Reuters)