Markets close down after new year rally

After a successful first week of the new year, markets yesterday paused for air and profits, with Dublin falling in with the pattern evident in counterparts elsewhere.

The Iseq index of Irish shares closed 0.17 per cent up, which compared well with a 0.3 per cent slide in the FTSE All-Share Index in London, and a 0.7 per cent fall in the Dax in Frankfurt.

Traders said US investors have become more interested in European shares of late, and are positively disposed towards Ireland.

The news that the Basel Committee on Banking Supervision is to give banks more time to build up their cash buffers gave a boost to banking stocks, not least in Dublin where the Bank of Ireland closed the day up 7.56 per cent, at €0.128. Breaking through the 12 cent barrier contributed to the price rise, traders said.

DUBLIN

Bank of Ireland was the main news story of the day but there was a positive attitude internationally yesterday towards airlines which was reflected more in the price of Ryanair than in Aer Lingus.

Ryanair rose by 2.72 per cent, to close at €5.09, while Aer Lingus closed unchanged at €1.16. A number of stocks saw their share price fall. These included Glanbia, which dropped 1.56 per cent to €8.34, and Kenmare Resources, which fell 2.84 per cent to €0.41.

LONDON

British stocks declined from a 23-month high amid concern recent gains overshot the outlook for company earnings.

The FTSE 100 Index slipped 25.26 points, or 0.4 per cent, to 6,064.58. The benchmark gauge last week climbed to the highest level since February 2011 as the US Congress reached a budget compromise to avoid automatic deficit-reduction measures.

Rolls-Royce declined 1.5 per cent to 904.5 pence after media reports that the maker of aircraft engines is facing allegations that it bribed an executive at Air China Ltd and China Eastern Airlines Corp. to secure orders worth $2 billion.

Fresnillo, the world’s biggest primary producer of silver, slid 1.9 per cent to 1,775 pence as the precious metal’s price dropped 0.4 per cent.

Rio Tinto Group, the second-biggest mining company, lost 1.1 per cent to 3,574.5 pence and Antofagasta slipped 1.6 per cent to 1,322 pence.

EUROPE

European stocks retreated, after the Stoxx Europe 600 Index reached its highest valuation in almost three years, offsetting gains by lenders as central-bank governors diluted a proposed liquidity rule.

National benchmark indexes fell in 11 of the 18 western- European markets. France’s CAC 40 Index and Germany’s DAX both lost 0.7 per cent.

Infineon Technologies declined 2.5 per cent to €6.41, its biggest drop in a month, as Bank of America downgraded the shares to underperform, the equivalent of a sell recommendation, from neutral.

BNP Paribas climbed 2 per cent to €45.29. Deutsche Bank, Germany’s largest lender, jumped 3.1 per cent to €35.87 and Société Générale, France’s second-biggest bank, added 2.6 per cent to €30.10.

Peugeot gained 3.4 per cent to €6.38. More than 17 per cent of the French carmaker’s shares are out on loan, according to data compiled by Markit. Some investors borrow shares and then sell them, betting that the securities will drop before they have to be repurchased.

NEW YORK

US stocks fell, after the Standard & Poor’s 500 Index climbed to a five-year high, as investors awaited today’s start of the corporate earnings season. Alcoa will unofficially kick off the reporting season after the market closes.

Boeing slumped 2.1 per cent as a 787 Dreamliner operated by Japan Airlines caught fire on the ground at Boston's Logan International Airport. Amazon.comrallied 2.6 per cent to a record high after Morgan Stanley upgraded the world's largest online retailer. (Additional reporting, Bloomberg)