Rebound in shares of European banks

European shares ended little changed on Wednesday as a rebound by the region’s struggling banks and a rally in Italian carmaker Fiat Chrysler helped offset losses among companies that reported poor earnings updates.

In London the FTSE 100 index closed at its lowest level in three weeks, with weaker commodities and property-related stocks offsetting an HSBC-led rally in banking stocks.

Markit’s monthly Purchasing Managers’ Index found that Britain’s economy was shrinking at its fastest rate since the 2008-09 financial crisis, suggesting that a Bank of England rate cut on Thursday is “a foregone conclusion”.

DUBLIN

The Iseq index finished flat as its biggest stocks,

CRH

and

Ryanair

, made little advance. Building materials group CRH closed at €26.57, up 1 cent, while Ryanair declined to €11.72, down 2 cent.

Bank of Ireland gained 5.1 per cent, recovering some of its heavy losses from earlier in the week following the results of the European Banking Authority stress tests, as banking stocks rallied across Europe. It closed at 16.6 cent.

Drinks group C&C rose 1.6 per cent to €3.75, but there were losses for a number of other stocks, including insurer FBD, food group Glanbia, insulation-maker Kingspan and agri-food company Origin Enterprises. Paddy Power slipped closer to the €100 mark, closing at €100.25, down 1.1 per cent. Paper and packaging group Smurfit Kappa fell 2 per cent to €20.05.

LONDON

The blue-chip FTSE 100 index finished down 0.2 per cent at its lowest closing level in three weeks, as selling pressure took the steam out of a recent rally.

Banks were the top performers, with HSBC helping the UK banking index to gain more than 3 per cent. HSBC shares rose 4.5 per cent after Europe's biggest bank cheered investors by announcing plans to buy back up to $2.5 billion of its shares, despite reporting a 29 per cent slump in its first-half profits.

Royal Bank of Scotland rose 2.6 per cent and Standard Chartered jumped 4.2 per cent after reporting a return to profit in its own results.

Commodities-related stocks lost ground again. Shares in Rio Tinto were down 0.8 per cent after the global miner reported a 47 per cent slump in first-half profit to its weakest in 12 years. However, losses were limited as it surprised the market with a higher-than-expected dividend.

Property-related stocks also fell on lingering concerns about the pace of economic growth in Britain. Shares in Persimmon, Berkeley Group, Taylor Wimpey and Intu Properties fell between 1.8 per cent to 2.7 per cent. Among other movers, retailer Next rose 4.1 per cent after reporting a pick-up in sales in its fiscal second-quarter from the first.

EUROPE

The pan-European Stoxx 600 index, which had fallen in the last two sessions, ended flat.

Fiat Chrysler, the worst-performing car manufacturing stock so far this year, rose 8.2 per cent, making it the biggest Stoxx gainer after a report said it could sell its parts-making unit Magneti Marelli to Samsung for over $3 billion.

Dutch banking group ING jumped 8.2 per cent after its second-quarter profits beat forecasts, while Societe Generale shares also climbed 3.2 per cent after the French bank reported higher net profits.

However UniCredit underperformed banks to fall 2.3 per cent after posting a surprise fall in its core capital in the second quarter.

Among the top fallers were Swiss money manager GAM, which fell 13.3 per cent after posting lower profits, and temporary power provider Aggreko, which fell 12.9 per cent after first-half profits missed some forecasts.

NEW YORK

Wall Street stocks fluctuated near an all-time high as a rebound in crude oil lifted energy producers, offsetting declines in defensive industries. The S&P 500 Index was little changed after European shares ended flat, while emerging-market shares tumbled.

American International Group was on track for its biggest jump in four years after its profit beat estimates, while Biogen lost 4.1 per cent amid doubts it could be a takeover target. Pfizer and Merck slid at least 1.6 per cent. – (Additional reporting: Bloomberg/ Reuters.)