Europe gains from hopes of rates cut

THE CLOSURE of the London stock market for a second day due to the Queen Elizabeth diamond jubilee holiday meant that investors were offered no guidance on Irish shares, contributing to a 1.7 per cent decline in the Iseq.

This was in stark contrast with markets across Europe, where stocks rose or remained flat amid speculation that the European cent ral Bank may reduce interest rates today to breathe life into the flagging euro zone economy.

DUBLIN

THE ONLY stock affected by specific news on a day of light trading volumes was the Swiss-based food group Aryzta, which fell 4.5 per cent to €35.10 a share despite reporting a 15 per cent increase in third-quarter sales to €1.2 billion and results in line with guidance.

Drugs group Elan closed down 2.9 per cent to €10.65, while Ryanair fell by the same amount, to €3.93, after a shock profit warning at Australian carrier Qantas affected airline stocks.

Independent News and Media rose 12 per cent, or 3 cent s, to 28 cent s as 6.7 million shares changed hands ahead of the company’s annual meeting on Friday and the showdown between shareholder Denis O’Brien and the company.

Insurance group FBD finished the day 5.6 per cent higher, or 45 cent s, at €8.50, while building materials and DIY group Grafton rose 4.7 per cent, or 12 cent s, to €2.75.

CRH, the building materials group and the biggest stock on the Dublin market, fell below the €13 mark, closing down almost 2 per cent, or 25 cent s, to €12.99 a share. Packaging group Smurfit Kappa climbed 2.9 per cent, or 15 cent s, to €5.12.

Bank of Ireland rose 3.5 per cent, or a third of a cent, to 8.9 cent s, below the 10- cent price at which investors bought into the stock last year, after reports said that the bank would appoint former Lloyds director Archie Kane to replace Pat Molloy as chairman when he retires after three years in July.

EUROPE

EUROPEAN SHARES rose after a nervous session as investors tentatively bought into beaten-down shares on hopes for global cent ral bank policy action to revive economic recovery.

Investors were keenly awaiting the European cent ral Bank’s meeting today and a speech by US Federal Reserve chairman Ben Bernanke tomorrow for any further policy announcements.

The EuroStoxx 50 closed up 0.4 per cent, extending the previous session’s modest bounce off Friday’s eight-month closing low in the aftermath of a dismal US jobs report.

Volumes were lower due a second day of UK public holidays.

Germany’s DAX fell 0.15 per cent, while France’s CAC 40 advanced 1.07 per cent. The Swiss market was little changed.

The euro fell 0.5 per cent against the US dollar to $1.2439.

Spanish banks Bankinter and CaixaBank rose more than 2 per cent after Spain’s budget minister said that the European Union should provide financial aid to the banks and that the sums required by the banks would not be astronomical figures.

Banco Espirito Santo rose 12 per cent, climbing for a second day after the Portuguese government said it would give more than €6.6 billion to Banco Comercial Portugue, Banco BPI and Caixa Geral de Depositos to help them meet capital requirements.

Telekom Austria rose 4.3 per cent after an Austrian news magazine said that Mexican telecoms tycoon Carlos Slim now held 4.1 per cent of the company and would pool his stake to control almost a quarter of the company.

UNITED STATES

STOCKS ON Wall Street rose, while treasuries retreated, as an increase in US service-industry growth tempered concern the largest economy was slowing and a report said Europe’s bailout fund was preparing a credit line for Spain.

Treasury yields rose for a second day on speculation their slide to record lows last week would not be sustained. Cocoa, silver and natural gas led commodities higher while oil was little changed.

The SP 500 reversed losses as the lowest price-to-earnings multiple in six months overshadowed a drop in factory orders. Financial, commodity and technology shares, the groups that led the SP 500’s retreat since April, rose at least 0.6 per cent for the biggest gains among the 10 main groups.

JPMorgan Chase, Bank of America and Hewlett-Packard rallied at least 2.9 per cent for the best gains in the Dow Jones Industrial Average.

A gauge of homebuilders in SP indexes rallied 4 per cent, paced by gains of at least 6 per cent in Lennar and PulteGroup.

Facebook retreated 3.8 per cent, extending its tumble since going public to 32 per cent, following a Reuters/Ipsos poll that showed sagging interest in the site and a minority of users being influenced by adverts and comments when making purchasing decisions.

Ten-year US treasury note rates, which slid to a record below 1.44 per cent last week, rose five basis points to 1.57 per cent. – (Bloomberg/Reuters)