Negative sentiment drives down European markets

Garth Brooks was one of the few topics not mentioned by traders yesterday as they listed reasons for the negative sentiment that drove markets down. Interest rate trends, worries about a loss of momentum in Europe, a profit warning by Air France-KLM, the latest data on UK manufacturing and the contraction of German exports were among the issues cited as most markets fell.

It was tough days with few buyers around, with the view widespread that the recent, all-time highs on many markets, will be as far as matters will go for the short term.

Dublin

Irish airline stocks fell, as the sector was hit across Europe after an Air France-KLM profit warning even though the issues cited had to do with long-haul and freight. Aer Lingus fell 2.25 per cent to €1.34 and Ryanair fell 2.69 per cent, to €6.72.

Overall, the Iseq was down 1.78 per cent, to 4,667.10, a performance that was in line with most markets across Europe.

Bank of Ireland fell 3.94 per cent to €0.24 while CRH fell 1.88 per cent to €18.81.The few stocks to travel in the other direction included Dragon Oil, which rose 7.72 per cent to close at €4.32 and IN&M, which rose 2 per cent to €0.15.

London

UK stocks fell the most in more than four months, with airlines leading the losses. International Consolidated Airlines Group – the owner of British Airways – slumped 7 per cent to 335.9p after Air France-KLM‘s profit warning, making ICAG the worst-performing FTSE 100 stock in percentage terms.

EasyJet fell 5.8 per cent to 1248p after Air France-KLM warned its 2014 profits could be 12 per cent lower than previously predicted because of over-capacity and weak prices.

The FTSE 100 slid 85.06 points, or 1.3 per cent, to 6,738.45 at the close in London, the biggest drop since March 3rd. The equity gauge fell 0.6 per cent as miners followed metal prices lower amid speculation the Federal Reserve may raise rates sooner than expected. The broader FTSE All-Share Index lost 1.3 per cent.

Clothing and food retailer Marks & Spencer fell 1.3 per cent at 427.4p after the company reported that first-quarter sales had been held back by its transition to a new website. HSBC dropped 1.5 per cent to 594.5 pence as banks posted the second-biggest drop among industry groups in the Stoxx 600. Europe‘s biggest lender has a weighting of 6.7 per cent on the FTSE 100.

Europe

Stocks fell the most in almost three months, led by travel and leisure companies. Air France-KLM slumped the most since October 2011 after saying earnings will be hurt amid overcapacity on North American and Asian routes, poor demand for freight and the fallout from a dispute with Venezuela.

It slipped 8.7 per cent to €8.58. Europe’s largest airline predicted earnings before interest, taxes, depreciation and amortization will reach €2.2 billion to €2.3 billion this year, compared with a previous target of €2.5 billion.

The Stoxx 600 slipped 1.4 per cent to 339.99 at the close of trading, for its third day of declines.

National benchmark indexes fell in all of the 18 western European markets yesterday. France’s CAC 40 retreated 1.4 per cent, and Germany‘s DAX slipped 1.4 per cent.

New York

The sell-off in US shares accelerated as Raymond James and Associates said equities are vulnerable to losses and Citigroup cited investor concerns for a “severe” pullback. Twitter and Pandora Media, which trade at more than 150 times earnings, plunged to pace a Dow Jones gauge of internet shares to the biggest drop since April. Twitter sank 6.6 per cent to $37.56, while Pandora dropped 6.3 per cent to $26.09 to pace declines.

The Standard & Poor’s 500 Index lost 0.6 per cent to 1,965.45 at 1:26 p.m. in New York. The Dow Jones Industrial Average fell 105.19 points, or 0.6 per cent, to 16,919.02.

(Additional reporting, PA, Bloomberg)