European shares retreat from 11-month highs as US stocks rise
Monte dei Paschi and Danone fall, and Bank of Ireland and PTSB follow Euro stocks down
French food group Danone fell by 1.4 per cent after the world’s biggest yoghurt maker warned about sales growth. Photograph: Vincent Kessler/Reuters
US stocks opened higher, pushing up a gauge of global market indexes on Monday, as investors continued to be bullish on equities ahead of a speech from Federal Reserve chairwoman Janet Yellen, with oil prices and the dollar both little moved.
European shares retreated from 11-month highs with Italy’s Monte dei Paschi leading banks lower on worries over a cash call, and Danone hit after the world’s biggest yoghurt maker warned about sales growth.
Bank of Ireland followed other European banking stocks down, losing 3 per cent to end the day at 23.6 cents. Permanent TSB ended 4.87 per cent lower at €2.60.
Insurer FBD closed at €6.76, down 2 per cent, having recovered losses somewhat last week.
The European food sector performed strongly on Monday with the likes of Tate & Lyle gaining. Kerry was up over 3 per cent to €67.75 and Glanbia shares jumped 2 per cent to €15.67.
Hibernia Reit was also strong on the day, rising 2 per cent to €1.21. Other movers including drinks group C&C, up 1.8 per cent to €3.81, and Ryanair, down 1.8 per cent to €14.62.
The blue-chip FTSE 100 index was up 0.1 per cent at 7,017.16 points at its close after a choppy session.
The index was led higher by a rise among more defensive stocks, including pharma firms Hikma and Mediclinic, as well as Reckitt Benckiser and Unilever as investors took profits in banking stock.
Ashtead Group dropped 4.8 per cent, the top FTSE 100 faller, after UBS downgraded the equipment rental firm to a “sell”. UBS analysts said that pricing pressure was rising for Ashtead, and that they saw a limited benefit from any increase in US infrastructure spending.
Drax Group, Britain’s largest coal power producer, jumped more than 8 per cent after an upgrade from SocGen to “buy” and the European Commission approved its conversion of a third power plant unit to biomass from coal.
Italy’s Monte dei Paschi fell more than 11 per cent as it made a last-ditch attempt to raise €5 billion by year-end and avoid a state bailout.
Elsewhere in the banking sector, Deutsche Bank fell 4.5 per cent and UniCredit was down 4.5 per cent.
Danone lost around 1.4 per cent. The French food group said it expected its 2016 sales growth to be slightly below its original targets due to a weaker-than-expected performance at its European dairy business.
United Technologies rose 2.1 per cent, helping lift the Dow, after Credit Suisse upgraded the stock to “outperform” and increased its price target. Walt Disney was up 1.6 per cent at $105.60 after Bank of America Merrill Lynch added the stock to its US 1 list and said the company’s shares were well positioned to outperform.
– Additional reporting: Reuters