Shares fall on Greek euro exit fears

WITH CONCERNS that Greece is moving closer to leaving the euro, markets across Europe were down yesterday, including in Ireland, where the Iseq fell by 2.2 per cent.

DUBLIN

JUST THREE stocks on the main market in Dublin finished the day higher.

Diversified conglomerate DCC was up 1.63 per cent at €19.90. The company will publish its full-year results today, with Goodbody Stockbrokers predicting a 22 per cent decline in operating profits and a 23 per cent fall in earnings per share.

DCC’s energy division is the key reason behind the declines reflecting milder weather at the start of the year, a poor economic backdrop and competitive pressure on margins.

Cider maker CC was up just under 1 per cent at €3.60 on a weekend newspaper report that it could be subject to a takeover approach. Food group Glanbia also ended in positive territory, up 1.4 per cent at €5.80.

Bank of Ireland led the fallers, down 9.28 per cent as concerns gathered over the euro.

Dragon Oil finished more than 5 per cent lower while Independent News Media closed 6.25 per cent lower at 27 per cent.

LONDON

BRITISH STOCKS tumbled to their lowest level this year, extending a two-week selloff for the FTSE 100 index, amid the concerns over Greece.

Barclays led banks lower, retreating more than 6 per cent in London as the cost of insuring against a sovereign default in Europe surged.

Vedanta Resources and BP led a selloff by commodity producers as oil and metal prices fell.

The benchmark FTSE 100 sank 2 per cent to 5,465.52 at the close in London, its lowest level since December 22nd, as only four companies advanced. The FTSE All-Share Index lost 1.9 per cent.

“I can’t see even after the next Greek election [that] a government appearing that will be able to do anything else than perhaps manage the Greek exit,” said Simon Sole, chief executive of Exclusive Analysis Ltd, in an interview on Bloomberg Television. “And now the European Central Bank today is postulating that that might be how this ends up. That’s the best they can hope for I think.”

The FTSE 100 has fallen 8.4 per cent from its 2012 high on March 16th, erasing all of its gains this year, amid renewed concern that the euro area has yet to contain its sovereign-debt crisis.

The gauge sank 1.4 per cent last week as investors waited to see whether Greece would form a government and as Spanish credit risk surged.

Barclays paced a selloff in European lenders, falling 6.4 per cent to 189.8 pence. Royal Bank of Scotland Group slid 4.8 per cent to 21.85 pence, Lloyds Banking Group declined 5.5 per cent to 29.38 pence and HSBC Holdings, Europe’s largest bank, slid 1.5 per cent to 545.8 pence.

Vedanta fell with copper, sliding 3.3 per cent to 1,053 pence. BHP Billiton, the world’s largest mining company, declined 3.5 per cent to 1,798 pence and Anglo American slipped 3.1 per cent to 2,119 pence.

EUROPE

EUROPEAN STOCKS also retreated, snapping two days of gains, on worries about Greece and German chancellor Angela Merkel’s election loss.

Infineon Technologies, Europe’s second-largest semiconductor maker, retreated after chief executive Peter Bauer decided to step down.

ING Groep tumbled 6 per cent as European Union regulators will re-examine its rescue by the Dutch government.

The Stoxx Europe 600 Index lost 1.8 per cent to 247.43 at the close of trading. All 19 industry groups on the gauge fell. The Stoxx 600 has pared this year’s gains to 1.2 per cent as an inconclusive election in Greece left political parties struggling to form a government, risking the collapse of proposed austerity measures.

“With no new Greek government in sight, I think that we will see continued insecurity and volatility in financial markets this week,” said Alessandro Fezzi, senior market analyst at LGT Capital Management in Switzerland.

The impasse will lead us to new elections in June, which will prolong investors insecurity as they worry about possible contagion risks, especially regarding Spain.

NEW YORK

STOCKS ON Wall Street touched a three-month low in early trading before recovering some losses. The yield on US Treasuries, which moves inversely to price, fell to the lowest level since early October, breaking decisively below 1.8 per cent, a key resistance point.

The benchmark 10-year US Treasury note was up 15/32 in price to yield 1.78 per cent.

“Treasuries are higher as fears about new political realities in Germany and Greece, global growth and Spanish banks drive investors into safe-haven debt markets,” said William O’Donnell, managing director and head of US Treasury strategy at RBS Securities in Stamford, Connecticut.– Additional reporting by Bloomberg and Reuters