European interest rate cuts bring some relief

The co-ordinated round of interest rate cuts provided some temporary relief for European stock markets, but renewed weakness in New York, a weaker dollar and a move by many funds to lock in end-year profits may cap markets between now and the end of the year.

But the cuts in rates, which sent continental markets ahead by 1 or 2 per cent and which sent the FTSE 100 more than 50 points higher, failed to provide much stimulus for trading in Dublin where the market drifted lower in thin trading.

The only corporate news came from Greencore which dipped 10p to 290p as the market displayed some caution over what is seen as a cautious earnings target over the next five years. Dealers said the 50 per cent over five years earnings target - a cumulative 8.5 per cent a year - is on the low side compared to the targets from other food companies.

The view in the market seems to be that 8.5 per cent annual earnings growth does not justify a forward price/earnings ratio of over 10 and that Greencore shares may have to weaken to a rating more comparable to its growth target - implying a share price below 270p. The shares were left offered at the closing price of 290p.

Elsewhere, the only trading in any real size was in AIB which bounced back from an early fall to £10 to close up 5p on the day on £10.30. Bank of Ireland was also 5p higher on £13.40, while First Active was unchanged on 315p.

Prospective marriage partners Irish Life and Irish Permanent continued to dance a pre-marital two-step and Irish Life was 13p higher on 588p, while Permanent gained 15p to 925p.

Among the industrials, CRH was unchanged on £10.35, but Smurfit - suffering from a weaker Smurfit Stone share price on Nasdaq - was down 5p on 128p. Avonmore Waterford lost 8p to 200p, Kerry gave up some of its recent gains and dropped 20p to 925p, while DCC was 18p lower on 555p as it disclosed a £6 million spend for 50 per cent of Kylemore. Elsewhere, Adare was 30p lower on 620p in a late deal, Independent lost 5p to 235p, while Ryanair gained 15p to 380p.

Among the explorers, Ovoca continued to be the focus of incredibly volatile trading and, from its overnight 52p, fell to a low of 36p before eventually closing down 7p on the day on 45p. Ovoca is the archetypal punting stock and certainly some investors have made a killing on the shares in the past month when it more than doubled in value. Not for widows and orphans and a share to be avoided unless you can afford to lose your money!

Ivernia was 2p lower on 48p, while Tullow remains out of favour although it closed 1 1/2p firmer on 61 1/2p.

Nasdaq trading in Irish stocks was thin with only Elan and CBT seeing any reasonable level of activity. Esat was trading $1/2 higher at the Irish close. The planned listing in Dublin is unlikely to have any major impact although it might tempt in some investors who are put off by the exchange rate risk of dollar-denominated Nasdaq stocks.