German criticism of ECB hits markets

EUROPEAN STOCKS fell as Germany’s Bundesbank criticised a European Central Bank plan to lower the region’s sovereign yields through bond purchases, highlighting the rift among policymakers over ways to end the debt crisis.

The FTSE 100 index eased further from four-month highs hit last week, weighed by a slide in banks and commodity stocks as expectations for stimulus measures in China and Europe took a slight knock.

DUBLIN

IT WAS a quiet day of trading, with many stocks not budging either way. United Drug rose by 0.82 per cent to €2.47 yesterday after announcing a $61 million acquisition of the UK and US clinical services businesses of Bilcare Ltd. “It’s a chunky enough deal for the company,” said one trader.

Cavan-based building materials group Kingspan was up 0.98 per cent to €7.321 following the publication of positive half-year results.

Builders merchanting and DIY group Grafton was up 2.15 per cent but on low volumes.

Among the fallers, building materials group CRH was 1.23 per cent lower while diversified company DCC fell by 0.87 per cent.

LONDON

COMMODITY STOCKS were weak, tracking falls in Brent crude and copper prices after a rise in Chinese home prices dented investor expectations for further interest rate cuts by China, the world’s largest consumer of commodities.

Among the miners, Xstrata shed 3.4 per cent, with investors cautious ahead of results due today from the miner’s predator, commodities trader Glencore.

Weeks from a key shareholder vote on its bid for Xstrata, Glencore is expected to stick to its $30 billion offer today when it reports first-half profits dented by falling prices, quashing any hopes of an improved offer for now.

Glencore shares added 0.5 per cent.

Xstrata also suffered from its exposure to Lonmin after a week of violence at the mid-cap platinum miner’s Marikana mine in which 44 people died. Xstrata owns a 24.6 per cent stake in Lonmin after an aborted bid back in 2008.

Lonmin slid for a sixth day, losing another 4.6 per cent, as investors fretted over the prospect of a possible $1 billion cash call to shore up the group’s balance sheet and about the potential dismissal of 3,000 striking workers in South Africa.

Broker downgrades also weighed on two other blue chip firms. Drinks can manufacturer Rexam fell 1.8 per cent after Credit Suisse also downgraded its rating to “neutral”, while IMI shed 1.6 per cent as Jefferies cut its stance to “hold” ahead of first-half results from the engineer due tomorrow.

EUROPE

THE STOXX Europe 600 dropped 0.5 per cent to 271.50 at the close of trading.

European stocks advanced to their highest level since July 2011 last week, rallying for an 11th week, amid optimism that policymakers will take steps to protect the region’s banks and as US consumer sentiment and leading economic indicators beat forecasts.

National benchmark indexes fell in 16 of the 18 western European markets.

Eurasian Natural Resources, a producer of metals in Kazakhstan, fell 3.4 per cent. The stock was cut to neutral from outperform at Credit Suisse Group.

A gauge of commodity producers was the second-worst performer of the 19 industry groups on the Stoxx Europe 600 Index.

Bankia tumbled 4.6 per cent to €1.40, snapping four days of gains. Credit Agricole dropped 4.9 per cent to €4.10 as a gauge of bank shares led declines on the Stoxx 600.

Heineken gained 1.6 per cent to €43.84. The world’s third-largest brewer raised its offer for a controlling stake in Asia Pacific Breweries to S$5.6 billion to prevent a company linked to a Thai billionaire from disrupting its takeover plans.

US

US STOCKS were flat yesterday on signs of fatigue after a six-week run of gains. Despite the lethargic trading, Apple shares hit a new high, becoming the most valuable public company of all time, with the combined value of its shares exceeding a previous record set by Microsoft. Shares closed up 2.6 per cent to $665.15.

Facebook shares briefly fell more than 50 per cent from its issue price to hit a new low of $18.75.

The healthcare sector was a bright spot after Aetna said it would buy Coventry Health Care for $5.6 billion. Coventry shares jumped more than 20.3 per cent to $42.04 after Aetna said it would pay $41.10 a share for the company, putting the deal at about a 20 per cent premium to the stock’s Friday closing price. Aetna shares rose 5.6 per cent to $40.18.

Lowe’s slumped 5.8 per cent to $26.26 after the company reported weaker-than-expected quarterly results and cut its profit outlook for the fiscal year as the world’s second-largest home improvement chain lost market share to larger rival Home Depot. – (Additional reporting by Bloomberg)