Downgrade by S&P weighs heavily on two big banks

DUBLIN REPORT: Iseq:2,951.06 (-65.47) Settlement date:February 1st

THE DOWNGRADING of Ireland’s banking sector by credit rating agency Standard & Poor (S&P) on Tuesday weighed heavily on the financials yesterday.

Banks were weak across the board in Europe, but the falls were amplified in Ireland. AIB plunged almost 10 per cent, or 13 cent, to just under €1.22. while Bank of Ireland lost 5 per cent, or seven cent, to €1.31. Irish Life Permanent was not immune either even though it was not downgraded by S&P, tumbling almost 6 per cent to €3.34.

“No one was really willing to step up to the plate and buy banks, and certainly not those getting rating downgrades from S&P,” said one trader.

Construction stocks were also weak. Index bellwether CRHcame under pressure following negative commentary for its peers Caterpillar and Cemex, and fell 3.5 per cent on the day to €17.25.

Ryanair, the second largest name in the index, was down more than 2 per cent at just under €3.35.

Elsewhere, exploration company Tullow Oil was off 4.6 per cent at £11.60 on the London Stock Exchange, having completed a successful stock placing yesterday morning in which it raised £925 million.

Packaging group Smurfit Kappa slid 15 cent to €6.30 after announcing it is in negotiations with rival paper group Mondi concerning a possible asset swap.

Defensive stocks such as food companies fared relatively well. Aryzta gained about 1.3 per cent, almost 37 cent, to €28.27, while Glanbia added 2.5 cent to just under €2.67.

Cider manufacturer C&Ctraded up by 1.42 per cent, or 4 cent, to €2.85.

Of the minnow stocks, recruitment firm CPL Resources was one of the stronger performers, closing about 2.4 per cent higher at €2.15 ahead of results today.