Markets across Europe tumble

Markets across Europe tumbled yesterday, as Spanish and Italian banks retreated with the nations’ government bonds amid signs of returning political uncertainty in the region’s weakest economies.

DUBLIN

Despite declines elsewhere, the Irish market “hung in there quite well”, according to one broker, giving up 1 per cent, or 35 points, to fall back to 3,537.43, with good volumes behind the move.

Construction stock CRH was the big faller on the day, retreating by 52 cent, or 3.3 per cent, to finish the session down at €15.27. Following its fine for a breach of market abuse rules, drinks group CC gave up 10 cent, or 2 per cent, to close at €4.80. Standard Life also revealed that it increased its shareholding in the group to above 5 per cent.

Although Grafton Group and Glanbia had been decent performers of late, they both gave up some of those gains yesterday. Construction group Grafton slipped back by nine cent, or 2 per cent to close at €4.31, while Glanbia fell by 11 cent, or 1.4 per cent, to finish down at €8.11.

Aer Lingus held up better than most, ending the day down by just 0.1 per cent at €1.28.

LONDON

British stocks tumbled the most in almost three months as Vodafone retreated and concern mounted about political uncertainty in the Mediterranean countries of Italy and Spain.

The FTSE 100 lost 100.4 points, or 1.6 per cent, to close at 6,246.84, its biggest one-day drop since November 7th. The equity benchmark has still gained 5.9 per cent in 2013, its best start to a year since 1998.

Vodafone, which accounts for 5.3 per cent of the benchmark FTSE 100 Index, declined the most in more than two weeks as Citigroup downgraded the shares. It slid by 1.7 percent to 170.5 pence.

Meggitt slipped back by 11.4 pence to 430 pence as UBS analysts lowered their recommendation on the shares to neutral from buy, saying the world’s largest provider of wheels and brakes for combat aircraft has little room to expand margins in the next five years.

EUROPE

European stocks dropped the most in more than three months, also on the back of sovereign debt concerns. The Stoxx Europe 600 Index retreated 1.5 per cent to 283.88 as France’s Cac 40 plunged by 3 per cent for its biggest drop since April. In Germany, the Dax gave up 2.5 per cent.

“Spanish yields are up to their highest levels since December as concerns about the Spanish government mount,” said Ioan Smith, a strategist at Knight Capital Europe in London.

Banco Santander, Spain’s largest bank, lost the most in six months as prime minister Mariano Rajoy denied corruption allegations. It slid by 5.7 per cent to €5.69 in Madrid while Banco Bilbao Vizcaya Argentaria fell 3.7 per cent to €7.04. UniCredit, the biggest lender in Italy, sank the most since June as former premier Silvio Berlusconi gained in opinion polls before elections this month. It tumbled by 8.3 per cent to €4.25 as UBS downgraded the shares to neutral from buy. Intesa Sanpaolo, the nation’s second-biggest bank, retreated by 4.6 per cent to €1.39.

NEW YORK

Wall Street extended its losses in early trading yesterday, after a disappointing report on factory orders. It retreated from gains in the prior session that left the SP 500 at a five-year high and the Dow above 14,000. Chevron and Wal-Mart were among the biggest drags on the Dow after analyst downgrades.

Data from the Commerce Department showed overall factory orders rose by 1.8 per cent during the month, below economists’ expectations.

“SP technicals are at overbought levels, and risk off harbingers, such as Spanish 10-year yields, which are much more difficult for central bankers to tame, have bounced off recent lows,” said Peter Cecchini, managing director at New York-based Cantor Fitzgerald.

(Additional reporting: Bloomberg /Reuters)