Improved European sentiment lifts Iseq up 2%

Iseq: 2,467.51 (+49.81) Settlement date: September 19th

EUROPEAN MARKETS rose yesterday as scepticism about the funding position of French banks deflated and investors absorbed signals from the European Commission that it will propose the introduction of eurobonds.

Indications from China that it will consider buying Italian government bonds also lifted the mood.

The Iseq rose 2.06 per cent, the FTSE closed up 1 per cent, the French CAC advanced 1.9 per cent and the German DAX outperformed with a 3.4 per cent gain.

Trading volumes were low enough to prompt traders to note that the rally lacked long-term conviction – some of the gains across Europe are the result of investors unwinding hedges taken on the German DAX rather than genuine relaxation about the state of the euro zone following yesterday’s political manoeuvres.

On the Dublin market, Bank of Ireland benefited from the talk of eurobonds and confirmation that Ireland has secured a lower interest rate on its borrowings from the European Financial Stability Mechanism. The stock closed up 2.6 per cent at 8 cents.

Recruitment group CPL climbed 10 per cent to €2.75 – a gain of 25 cents – as it announced a tender buyback offer.

Paper and packaging group Smurfit Kappa made a 10.7 per cent surge on top of gains made during Tuesday’s session. It closed at €4.78, up 46 cents.

Elsewhere, Ryanair issued a statement to the stock exchange that doubled as an open letter to the chairman of Aer Lingus.

It called on Aer Lingus to pay a 20-cent dividend to shareholders, seek shareholder approval before making cash payments to its pension scheme and publish a report into its “leave and rehire” scheme.

The letter was not particularly influential on the share price of either stock, with Ryanair closing up ½ per cent and Aer Lingus gaining 4 per cent.