Markets fall on S&P ratings alert

Eurostoxx 50: 2,356.71 (-0.53%) Frankfurt DAX: 6,028.82 (-1.27%) Paris CAC: 3,179.63 (-0.68%)

MARKETS FELL across Europe yesterday, on the back of Standard Poor’s pronouncement on Monday evening that it has put 15 euro zone countries on watch for potential rating downgrades. In turn, it then put the European Financial Stability Facility on watch.

DUBLIN

In Dublin, the Iseq fell in early trading on light volumes yesterday, and while it tried to recover it drifted off again in the afternoon.

It closed slightly down by 17.99 points, or 0.6 per cent, at 2,745.89.

Following the collapse of its takeover deal on Monday, food group Greencore reported a reasonably solid set of full-year results yesterday. However, this failed to make up its Monday losses.

While there was a bit of volume in the stock, it only edged up slightly, adding almost 1 cent, or 1.2 per cent, to close at €0.65.

“It didn’t really convince anyone that things were getting better,” according to one Dublin broker.

Despite a strong set of results from its UK peer Wolesley yesterday, CRH also failed to get a boost, and it fell back by 26 cent, or 1.8 per cent, to € 14.05.

Ryanair was off a little bit, giving up 2 cent, or 0.5 per cent, to finish down at € 3.81.

Kenmare Resources was one of the strongest on the day, adding 1 cent, or 2.8 per cent, to close up at €0.43.

Pharmaceutical firm Elan was also in the black. It continued its good run yesterday as it added 13 cent or 1.5 per cent to advance to €8.59.

Glanbia was one of the weakest stocks on the day, giving up 20 cent, or 4.4 per cent, to fall back to €4.35.

LONDON

In London the FTSE 100 climbed by 0.1 per cent.

Wolseley Plc, the world’s largest supplier of heating and plumbing products, gained 3.7 per cent to 1,974 pence after reporting a 5 per cent increase in first-quarter revenue.

The company reduced its debt by 41 per cent to £587 million (€683.3 million) over the 12 months through October 31st.

Banking stocks were on track for a strong session until SP’s announcement on the bailout fund limited the rise at taxpayer-backed Lloyds Banking Group to 0.1p to 27.1p. Royal Bank of Scotland was 0.2p lower at 22.6p.

Retailers suffered after a British Retail consortium survey said the sector saw its biggest annual fall in underlying sales since May last month after widespread discounts failed to lure pre-Christmas shoppers.

Marks & Spencer, Next and mid cap Home Retail shed 4.3 per cent, 3.2 per cent and 8.6 per cent respectively.

EUROPE

Markets across Europe gave up some of their gains yesterday on the back of uncertainty over whether or not SP will follow through with downgrades of the core AAA European countries following a European summit later this week.

However, many analysts deemed the downgrades to be already factored in.

S&P’s statement “is for the most part already priced in the markets; it just confirms the deterioration of the finances of the countries in the region and the political dissensions”, said John Plassard, director at Louis Capital Markets in Geneva.

“The downgrade warning can perhaps accelerate the implementation of measures and reforms, but it might already be too late,” he added.

The Stoxx Europe 600 Index slipped back by 0.3 per cent to 241.92.

In Paris the CAC 40 gave up 0.7 per cent.

In Frankfurt the DAX lost 1.3 per cent.

RWE, Germany’s second largest utility company, tumbled by 7.2 per cent.

Meanwhile Metro, Germany’s biggest retailer, plunged by 14 per cent as it forecast falling sales and earnings this year.

US

Markets were choppy in the US early yesterday on the back of ongoing uncertainty in the euro zone.

“There’s an idea the S&P warning is likely to push the EU to work harder at solving its debt crisis,” Rick Meckler, president of investment firm LibertyView Capital Management in New York, said. “It may have the impact of pushing forward the solution without having to be an actual problem to the market.”

The Dow Jones industrial average closed up 52.30 points, or 0.43 per cent, at 12,150.13 yesterday.

The S&P 500 Index closed up 1.39 or 0.11 per cent at 1,258.47.

General Electric was the top performer on the Dow, climbing by 2.1 per cent to $16.68 after broker Bernstein upgraded the stock to “outperform”, citing strong financial fundamentals and expected dividend increases.

Bank stocks, recent outperformers in the US market, kept a lid on gains yesterday.

(Additional reporting: PA; Reuters)