European shares fall as the euro rises

European shares fell yesterday, giving up earlier gains as losses in Spain and a rise in the euro weighed on the region’s stock markets. The pan-European FTSEurofirst 300 index ended down 1.2 per cent, while the euro zone’s blue-chip Euro STOXX 50 also declined by 1.5 per cent. The Iseq Overall Index closed down 0.5 per cent at 6,712.73.

DUBLIN It was a quiet day of trading on the Irish market. Shares in Paddy Power declined 1.6 per cent to €121.10 on the day that shareholders in the Irish company and in rival Betfair paved the way for the creation of an €8 billion gambling giant. Just 28,000 shares traded in Dublin and traders said the move lower came late in the day after a seller of the stock emerged.

Bank of Ireland closed up 0.6 per cent at 33.2 cent but just 4,000 shares changed hands on the day. It was the first day of trading for AIB following its one-for-250 shares consolidation, which is part of its pre-flottion capital reorganisation. This has had the effect of reducing the number of shares in issue to 2.7 billion.

The stock closed at €8.50, having opened at €8.70. The bank remains wildly overvalued with a market cap of €23 billion, an anomaly that won’t be sorted out until the State presses the button on an IPO next year.

EUROPE

Shares in Spanish banks fell sharply, with Caixabank dropping 7.4 per cent while Santander shed 4.9 per cent.

Neither prime minister Mariano Rajoy’s conservatives nor left-wing parties won a clear mandate to govern in Sunday’s poll, casting further uncertainty over the outlook for Spain’s reform programme and broader economy. Talks on forming a coalition government are expected to take weeks.

Britain’s FTSE 100 fell 0.3 per cent and Germany’s DAX retreated 1 per cent. Spain’s IBEX equity index was the worst performer, falling 3.6 per cent after an inconclusive Spanish election result, while Spanish 10-year government bond yields hit one-month highs after the election.

A rise in the euro against the dollar also weighed on European shares, since a stronger euro can make it harder for European companies to export goods.

The dollar fell against the euro after data from the Chicago Federal Reserve suggested the US economy grew at a below average pace in November before the Federal Reserve raised interest rates last week.

LONDON

Britain‘s shares fell in the last half hour of trading to retreat for a second session. ITV jumped 2.9 per cent, the most since October, after the

Mail on Sunday

said Comcast is weighing an £11 billion (€15 billion) takeover bid for the media company.

Glencore rose 2.7 per cent after Citigroup raised its 2015, 2016 and 2017 earnings targets for the miner.

Associated British Foods fell 2.7 per cent after RBC Capital Markets downgraded the stock to underperform, the equivalent of a sell rating.

The FTSE 100 Index fell 0.3 per cent to 6,034.84, reversing an earlier gain of as much as 1 per cent. The benchmark is heading for an 8.1 per cent decline this year.

The volume of shares changing hands was 26 per cent lower than the 30-day average. The FTSE All-Share Index retreated 0.3 per cent.

NEW YORK

US stocks rose in early trading, following the biggest two-day rout in three months, as technology and healthcare companies pace a recovery from the lowest levels since October.

Apple rose 1.1 per cent, while Avago Technologies added 2.6 per cent to lead chipmakers. Raw-materials companies increased amid signs China may add to its stimulus efforts.

The Standard & Poor’s 500 Index rose 0.4 per cent to 2,014.32 at 1.23pm in New York, after rising as much as 0.9 per cent. The Dow Jones Industrial Average added 56.22 points, or 0.3 per cent, to 17,184.77. The Nasdaq Composite Index gained 0.6 per cent.

– (Additional reporting by Bloomberg and Reuters)