Stocks tumble on poor investor confidence

Irish market underperforms European peers as heavyweights see brunt of the fall

CRH, which accounts for over 25 per cent of the Iseq, slid 1.76 per cent to €15.375 in Dublin yesterday

European stocks tumbled as new figures showed German investor confidence unexpectedly dropped this month. Market watchers blamed increasing risks in the euro zone for the investors’ pessimism.

Other figures showed US industrial production rose in June by the most in four months. Output at factories, mines and utilities climbed 0.3 per cent, the biggest jump since February.

The Irish market underperformed its European peers largely because the most heavily weighted stocks bore the brunt of the fall.

International building materials giant CRH, which accounts for over 25 per cent of the index, slid 1.76 per cent to €15.375. Dealers said that the Irish heavyweight was hit by generally poor sentiment against the sector; rivals such as Heidelberg, Holcim and Lafarge all fell.

Ryanair ended the day 1.8 per cent down at €6.95. A number of other players in its sector, including International Airlines Group, were also down, although German player Lufthansa gained ground.


Cider maker C&C retreated after enjoying a strong performance recently on the back of good weather in Ireland and Britain. It closed almost 4 per cent off at €4.03.

Dealers said that a large sell order just ahead of the close took most of the fizz out of the stock, which otherwise traded in the €4.16 to €4.19 range for most of the day.

Invensys fell 1.5 per cent to 502 pence, its biggest decline since June 24th. Makor Capital said it does not expect a competing bid for the company following Schneider Electric's £3.3 billion offer on July 11th.

Makor was responding to Sunday Times speculation that General Electric may bid for Invensys.

Rio Tinto rose 2.7 per cent to 2,883 pence, leading a gauge of mining companies to the best performance as a group on the Europe-wide Stoxx 600. The world's second largest mining company said second-quarter iron ore production increased to 51.8 million metric tons in the three months to June 30th, beating analysts' predictions. The company raised its forecast for full-year production.

Telecom Italia retreated 3.4 per cent to 48.64 cents after saying a regulatory decision to cut access fees to the carrier's network affected the feasibility of a network separation.

This is the second setback in recent times for chief executive officer Franco Bernabe’s plans to revive the company after a proposed merger with Hutchison Whampoa’s 3 Italia fell through.

Swedbank slid 3.9 per cent to 154 kronor after saying second-quarter net income fell to 1.59 billion kronor, missing analysts' projections of 1.87 billion kronor.

SES, the world's largest publicly-traded satellite operator, dropped 4.4 per cent to €21.60. Morgan Stanley downgraded the stock to underweight.

Aurubis, the second biggest producer of refined copper, advanced 4.8 per cent to €42.12.

Deutsche Lufthansa gained 0.8 per cent to €15.54, rising for a fourth day. Goldman Sachs Group raised its recommendation for the shares to neutral from sell.

Wall Street sagged in early trade as investors remained cautious ahead of Fed chairman Ben Bernanke's testimony to Congress today. Energy and commodity shares suffered in particular, with Marathon Petroleum falling 5.2 per cent to $69.32 and miner Alcoa down 1.1 per cent to $8.08.

Goldman Sachs reported quarterly profit doubled as the bank made more money trading bonds before an interest-rate spike hit markets in June, but its stock slid 1.9 per cent to $159.90 as investors fretted that the results could not be easily repeated.

Coca-Cola was the Dow's worst performer and dragged on the S&P 500 after it reported weaker-than-expected second-quarter sales. – Additional reporting: Bloomberg, Reuters

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas