Bond markets pressure lowers shares

EUROPEAN STOCKS faltered for a fourth day as sustained pressure on the bond markets fed through to lower equity volumes and investors awaited fresh reports from the imminent second-quarter earnings reporting season in the US.

The yield on Spain’s 10-year bonds once again climbed above the 7 per cent level seen as unsustainable. The yield on Spain’s benchmark 10-year bond rose to 7.06 per cent – above the level that prompted full bailouts of Greece, Ireland and Portugal.

The biggest tumble in Japanese machinery orders in a decade did not help sentiment, while Germany’s biggest retailer, Metro, sank to a three-year low as the chief executive said restrained spending by consumers would have a “significant impact” on business.

DUBLIN

THE ISEQ index finished more or less flat after a day of light trading volumes.

Building materials group CRH, the largest stock on the index, recovered slightly after selling off on Friday, finishing yesterday’s session up 1.6 per cent at €14.81 as dealers reported some buyer interest.

There was also some buyer support for Ryanair, which closed up 0.3 per cent at €4.05, while Aer Lingus fell 0.9 per cent to €1.06.

Titanium miner Kenmare had a weak day, dropping almost 10 per cent to 43 cents, after Australia’s Iluka Resources, the world’s biggest producer of zircon, tumbled 24 per cent when it cut its sales forecast for the mineral by as much as 50 per cent.

LONDON

THE BENCHMARK FTSE 100 lost 0.6 per cent as investors remained nervous of contagion from the euro zone and there was evidence that consumers’ disposable incomes are waning.

JJB Sports plunged 25 per cent to 7.38 pence after saying sales fell “materially short of expectations”, as this year’s European soccer championships did not provide the same stimulus to revenue as previous tournaments.

Michael Page International fell 3.8 per cent to 350.9p. The UK recruitment company said gross profit declined 6.6 per cent in the second quarter from a year earlier and forecast that the third quarter would be “challenging”.

Rival Hays fell 2.7 per cent to 70.9p. BAE Systems, the biggest British arms company, rose 1.4 per cent to 296.9 pence as defence equipment minister Peter Luff said Britain planned to make spending announcements on military equipment in the coming year, ruling out further cuts.

EUROPE

WITH EUROPE’S sovereign debt crisis not yet fixed, markets remained volatile and nervous, with the Stoxx Europe 600 Index slipping 0.4 per cent to 253.46 at the close of trading as the yield on Spain’s 10-year bonds climbed to more than 7 per cent.

Policymakers eased repayment rules for Spanish banks and relaxed conditions for possible aid to Italy.

The Stoxx 600 briefly erased losses after European central bank president Mario Draghi said the central bank would do what was needed and was open to “all ideas” to help tackle the crisis, as long as it did not breach its mandate to keep prices stable.

However, national benchmark indexes fell in 14 of the 18 western- European markets.

Bankia, the third-biggest Spanish lender, dropped 1.8 per cent to 83.4 cent to lead declines among Iberian banks. Banco Santander and Banco Bilbao Vizcaya Argentaria fell 1.7 per cent to €4.82 and 1.4 per cent to €5.11, respectively.

Germany’s Metro fell 6.3 per cent to €20.43, the lowest since March 2009. The owner of Cash and Carry outlets, Kaufhof department stores and the Saturn electronics chain sees a “small increase at best” in German consumption this year, according to its chief executive.

Vestas Wind Systems slid 2.4 per cent to 27.85 kroner in Copenhagen. The wind-turbine maker needs to sell stock to raise capital for its “expensive” restructuring, newspaper Jyllands-Posten reported, citing Michael Friis Jorgensen, an analyst from Alm Brand.

THE US

US STOCKS fell, giving benchmark indexes the longest slump in more than a month. The Morgan Stanley cyclical index of companies most- dependent on economic growth dropped 0.8 per cent.

US chemicals producer DuPont slumped 2.9 per cent to $47.47. Exxon Mobil fell 1.4 per cent to $83.65. Visa retreated 1.3 per cent to $123.65, while MasterCard declined 2.4 per cent to $431.27.

Patriot Coal tumbled 72 per cent to 61 cents. The US fuel producer has lined up financing ahead of a bankruptcy filing that may come as soon as today.

Navistar International sank 3.1 per cent to $23.67 after Bloomberg Industries said truckmakers would need to reduce production in the second half of the year.

Bridgepoint Education slid 34 per cent to $14.25. The for-profit college company that owns Ashford University tumbled after Ashford’s accreditation application was denied by a regional accreditor.

A measure of healthcare stocks had the biggest gain among 10 SP 500 groups, rising 0.6 percent, amid takeover optimism. – (Additional reporting Bloomberg)