ECB interest rate plan buoys market

Bank president Mario Draghi says indications are euro area economy is stabilising

European Central Bank president Mario Draghi  said indications are that the euro area economy is stabilising and the central bank’s rates will remain low for an extended period. Photograph: Krisztian Bocsi/Bloomberg

European Central Bank president Mario Draghi said indications are that the euro area economy is stabilising and the central bank’s rates will remain low for an extended period. Photograph: Krisztian Bocsi/Bloomberg

 


Markets continued to perform well yesterday following comments from European Central Bank president Mario Draghi that interest rates are likely to remain unchanged.

The European Central Bank and the Bank of England both left their benchmark rates unchanged. Mr Draghi said indications are that the euro area economy is stabilising and the central bank’s rates will remain low for an extended period.

DUBLIN
The Iseq closed up 1.6 per cent, broadly in line with European markets and to its highest level since September 2008.

Risk assets, in particular, fared well from the interest rate announcements with CRH gaining almost 2 per cent and Ryanair finishing with 3 per cent gains.

Kenmare Resources’ issuing of an update on plans to reschedule debt repayments was met very positively: stocks in Ireland closing up 10.5 per cent and in the UK by 11 per cent.

Smurfit Kappa was slightly off, down 0.7 per cent at the close and failing to see a continuation of positive trading on Wednesday.

The Grafton Group on the other hand continued its good run, finishing up almost 2 per cent with volumes three times the average of last week, and at levels not seen since 2008.

LONDON
UK stocks advanced for a fourth day, pushing the FTSE 100 Index to a two-month high, as commodity producers climbed.

The 100 index climbed 60.92 points, or 0.9 per cent, to 6,681.98 at the close in London, the highest since May 28th.

London-listed lenders rose, with state-owned Royal Bank of Scotland Group adding 5 per cent to 333.5 pence, its largest increase in two weeks. RBS will post half-year financial results tomorrow. Shell slid 4.7 per cent to 2,133 pence, its biggest decline since August 2011.

Aggreko slumped 7.7 per cent to 1,643 pence, the largest decline in seven months. The provider of mobile power generators said the pace of orders at its power projects unit may not pick up in the near future.

EUROPE
European stocks rose to a nine-week high with the Stoxx Europe 600 Index gaining 1.2 per cent to 303.29 at the close, its highest level since May 30th.

National benchmark indexes advanced in all the 17 western European markets open today. Switzerland was closed for the National Day holiday but in France the CAC 40 gained 1.3 per cent and Germany’s DAX climbed 1.6 per cent.

Société Générale rallied 10 per cent to €33.35, the biggest gain since January 2012, after posting second-quarter profits that more than doubled and beat analysts’ estimates.

Metro AG climbed 8.5 per cent to €28.11 as Germany’s largest retailer reported second-quarter earnings before interest, taxes and some items of €276 million ($366 million).

Société Bic jumped 6.8 per cent to €89.04, its biggest increase since April 2012. The maker of Bic Cristal pens posted first-half revenue of €937.5 million.

Sanofi tumbled 4.1 per cent to €76.85: France’s biggest drug maker said full-year earnings per share excluding some costs and currency fluctuations may fall as much as 10 per cent.

BMW dropped 0.8 per cent to €73.01. The luxury car maker said second quarter earnings before interest and taxes slid 8.8 per cent to €2.07 billion.

NEW YORK
In the US stocks rallied sending the Standard and Poor’s 500 Index above 1,700 for the first time, after central banks vowed to maintain stimulus and data on global manufacturing beat forecasts. MetLife rose 5.3 per cent on better-than-estimated operating earnings.

Procter and Gamble gained 1.4 per cent after posting profits that topped analysts’ estimates. DreamWorks Animation jumped 6.7 per cent as earnings surged while Exxon Mobil slid 1.9 per cent as profit trailed estimates by the most in more than a decade.

In all, the S&P 500 rose 1 per cent to 1,702.98 by lunchtime in New York. – (Additional reporting, Bloomberg)