Oil stocks lead retreat in European equities

Iseq sinks in middle of session but recovers in afternoon to close down just 0.1 per cent

Low-cost airline Ryanair slipped 0.3 per cent to €6.61 in Dublin yesterday. Photograph: Alan Betson/The Irish Times

Low-cost airline Ryanair slipped 0.3 per cent to €6.61 in Dublin yesterday. Photograph: Alan Betson/The Irish Times

Sat, Aug 31, 2013, 01:00

European equities fell, extending their weekly losses, as a drop in oil and gas stocks following the UK parliament’s rejection of a motion for military action against Syria outweighed better-than-expected euro-area economic confidence data.

Crude oil prices fell, as the likelihood of a large-scale action against Syria faded, while the dollar hit four-week highs against a basket of major currencies as geopolitical uncertainty continued.

The Iseq sank in the middle of the session, but recovered in the afternoon to close down 0.1 per cent.

Building materials group CRH, the largest stock on the Dublin market, declined 0.9 per cent to €16.01, despite a trading update from UK landscape products business Marshalls that pointed to an improvement in the British market.

DIY chain owner and builders’ merchants Grafton was one of the biggest fallers, ending the day down 2.6 per cent at €6.40, while insulation-makers Kingspan dropped 1.8 per cent to €11.71.

Ryanair slipped 0.3 per cent to €6.61, while there were declines of 0.45 per cent for both Bank of Ireland, which closed at 22 cent, and drinks group C&C, which finished at €4.20.

Some positive momentum in European containerboard prices was reflected in a 0.5 per cent gain in Smurfit Kappa’s share price and it finished the week at €15.37. However, bookmaker Paddy Power fell 1.1 per cent to €60.85.

The FTSE 100 retreated 1.1 per cent as oil stocks went into reverse and led a broader sell-off. BP fell 1 per cent to 446.2 pence and Shell lost 1.4 per cent to 2,087.5 pence as a gauge of oil and gas companies posted the fourth-worst performance of the 19 industry groups on the Stoxx 600.

Bwin.Party plunged 14 per cent to 110 pence, the biggest drop since April 2011, after the online gaming company said 2013 sales will be 14 per cent to 17 per cent lower than last year’s figures. Analysts on average had forecast a sales drop of 9.2 per cent.

IAG, the owner of British Airways, lost 2.1 per cent to 286.3 pence, while EasyJet, Europe’s second-largest discount carrier, retreated 2.1 per cent to 1,233 pence.

Vodafone Group advanced 0.7 per cent to 206.3 pence, extending yesterday’s 8.2 per cent jump. Bank of America analysts wrote that Europe’s largest mobile-phone operator may spend about $35 billion on a share buyback if it sells its stake in Verizon Wireless.

National benchmark indexes fell in all western European markets except Greece, with France’s CAC 40 retreating 1.3 per cent and Germany’s DAX falling 1.1 per cent.

The Stoxx Europe 600 Index dropped 0.9 per cent to 297.32 at the close of trading, its lowest level since July 17th. The gauge fell 2.4 per cent this week, its second weekly decline, for a 0.8 per cent monthly loss, amid concern that the US and its allies will take military action against Syria.

Royal KPN slid 3.4 per cent to €2.21. after America Movil said it may withdraw its takeover bid if opposed by the company’s independent foundation. It pared earlier losses of as much as 8.4 per cent.

L’Oreal advanced 3.2 per cent to €126.25, the biggest gain in more than four months, after saying first-half operating profit rose to €2.04 billion, or 17.4 percent of sales.

Danone declined 1.6 per cent to €56.34 after saying baby-nutrition sales will fall in Asia in the third quarter.

The company said it had to recall infant-formula products after milk-powder supplier Fonterra warned of a contaminated ingredient.

US stocks fell in light volume on Friday, setting the S&P 500 index on track for the biggest monthly drop in over a year, as investors positioned themselves before a long holiday weekend with an uncertain Syrian situation.

– (Additional reporting: Bloomberg / Reuters.)