Late rally by most European markets

STOCKS ON world markets edged higher on low volumes yesterday, with most European markets rallying into the close. However, peripheral bond yields remained under pressure. Spanish bond yields rose to a euro-era high as scepticism about a €100 billion bailout for that country’s banks scared investors ahead of elections in Greece on Sunday.

DUBLIN

TRADING IN Dublin was choppy from early morning, and the Iseq index closed down a half a per cent, mainly as a result of Ryanair, which ended the session a relatively hefty 2.5 per cent lower. The sell-off was in line with airline stocks across the board, with international airline names such as Easyjet and IAG also finishing lower.

Brokers reported some interest in Bank of Ireland, although the stock ended down 4 per cent at €0.093 cent.

CRH ended the day more or less flat at €13.86. Its trading range swung from €13.74 to a daily high of €14.02, epitomising the volatility that was a feature of yesterday’s session.

Food stocks performed well, reflecting investor interest in defensive stocks. Food company Kerry Group advanced 2.6 per cent at €34.95, while Aryzta gained 1.7 per cent to close at €36.75.

LONDON

UK STOCKS advanced, snapping two days of declines, as speculation that the Federal Reserve will opt for more stimulus outweighed Fitch Ratings’ decision to downgrade 18 Spanish lenders.

Vodafone climbed 2.1 per cent, making the biggest contribution to the benchmark FTSE 100 Index’s advance. ICAP rose 2.7 per cent. Man Group and Evraz declined. The FTSE 100 Index added 0.76 per cent to 5,473.74 at the close of trading in London after fluctuating between gains and losses at least 11 times. The gauge has fallen 8.2 per cent from this year’s high on March 16th.

The broader FTSE All-Share Index rose 0.5 per cent.

EUROPE

EUROPEAN STOCKS rose for the first time in three days on speculation that the Federal Reserve will opt for more stimulus, outweighing a surge in Spanish borrowing costs to a euro-era record.

TomTom rallied 16 per cent after Apple agreed to use its digital maps. Lafarge rose more than 2 per cent after announcing plans to increase earnings by 54 per cent by 2015.

Lagardere retreated 2.4 per cent after the company lowered its advertising-revenue target.

The Stoxx Europe 600 Index gained 0.6 per cent to 243.44 at the close in London, after earlier sliding as much as 0.4 per cent. The index yesterday erased gains in the final hour of trading as optimism faded that the €100 billion bank bailout for Spain would contain the debt crisis. The gauge has retreated 11 per cent from its high this year on March 16th.

The euro fell against most major currencies. The 17-nation currency fluctuated against the dollar after weakening for a fourth day as Spain’s 10-year bond yields reached a euro-era record.

The yield on Spain’s 10-year bonds rose 20 basis points to 6.71 per cent, after earlier breaching the euro-era record of 6.78 per cent reached on November 17th.

National benchmark indexes advanced in 11 of the 18 western European markets. France’s CAC 40 climbed 0.1 per cent and the UK’s FTSE 100 added 0.8 per cent. Germany’s DAX increased 0.3 per cent but Italy’s FTSE MIB slid 0.7 per cent.

Basilea Pharmaceutica added 4 per cent to 46 Swiss francs after GlaxoSmithKline bought the marketing rights to the company’s only approved drug for £146 million. The British drugmaker will pay an additional £50 million if the treatment reaches agreed goals.

Julius Baer Group, a Swiss wealth manager, climbed 2.7 per cent to 32.54 francs after UBS upgraded the shares to buy from neutral, saying the “current environment poses only an earnings risk for Julius Baer, not a balance-sheet risk”.

US

US STOCKS rose in morning trade, rebounding from yesterday’s slump, as speculation that policy-makers will stimulate the economy overshadowed concern about Europe’s debt crisis compounded by the Fitch downgrade of 18 Spanish banks.

Handbag-maker Michael Kors Holdings climbed 5.8 per cent during the first half of the session as the luxury retailer forecast earnings and sales that beat estimates.Sales in North America surged 37 per cent in the quarter ended March 31st as Michael Kors opened retail locations and converted displays inside department stores into so-called shop-in-shops.

Textron rallied, as did the US shares of Bombardier as Warren Buffett’s Berkshire Hathaway agreed to buy planes from the companies. Aircraft-maker Boeing was also trading higher yesterday after Sanford C Bernstein and Co raised its rating for the company.

(Additional Reporting: Bloomberg)