European stocks fall after Draghi stalls on stimulus

Iseq rises to highest level since June 2008 as Ryanair surges 8.4 per cent

European Central Bank president Mario Draghi said it will assess the need for further stimulus early next year. Photograph: Markku Ojala/EPA

European Central Bank president Mario Draghi said it will assess the need for further stimulus early next year. Photograph: Markku Ojala/EPA


European stocks fell after European Central Bank president Mario Draghi said it will assess the need for further stimulus early next year, putting an end to speculation that it would take more immediate action.

Hopes that the central bank would embark on a government bond-buying scheme have been fuelling a strong rally in European shares in the past few weeks. The ECB also lowered its forecasts for euro zone inflation and gross domestic product through 2016. Banks, mining stocks and energy companies all declined.

The Dublin market went against the general trend, as Ryanair’s share price soared and sent the Iseq index to its highest level since June 2008.
The Iseq index gained more than 1 per cent, lifted by a surge for Ryanair, which closed up 8.4 per cent at €9.45 after it raised its full-year profit forecast for the third time this year.

Insulation-maker Kingspan also had a good day, advancing 4.2 per cent to €13.76, while there were also gains for paper and packaging group Smurfit Kappa and Aer Lingus, which finished up 2.5 per cent at €1.79 on a good day for travel stocks across Europe.

Building materials group CRH, the largest stock on the index, was relatively flat at €19.69. C&C fell 1.75 per cent to €3.67. Investec, the specialist bank and asset manager, has won the joint mandate to be broker to C&C, along with Davy Stockbrokers. This mandate had been previously held by Davy with Goldman Sachs, the international investment bank.

Independent News & Media closed flat at 14 cent. Analysts at Davy Research raised forecasts for the stock on the back of a recent trading statement it described as “encouraging on a number of fronts”.

The FTSE 100 lost 0.6 per cent after Draghi’s statement. Separately, the Bank of England kept its key interest rate unchanged at a record-low 0.5 per cent, as forecast by economists.

As Ryanair led a rally for travel companies, EasyJet gained 2.9 per cent to 1,716 pence after saying the number of passengers increased in November from a year earlier, while TUI Travel added 3.6 per cent to 444 pence after reporting that full-year underlying operating profit rose.

Miners and energy companies fell as Brent crude oil prices stayed below $70 per barrel. Anglo American declined 2.8 per cent to 1,283.5 pence after Bank of America recommended selling shares of the iron-ore producer. Rio Tinto Group dropped 2.6 per cent to 2,933.5 pence. Royal Dutch Shell was also lower at 2,229 pence.

Stocks sank across most of the major markets, with France’s Cac 40 index losing 1.6 per cent and Germany’s Dax dropping 1.2 per cent. Of the 18 western- European markets, Italy’s FTSE MIB Index and Spain’s IBEX 35 Index declined most, falling more than 2 per cent.

Spain’s Banco Santander lost 3.2 per cent and France’s BNP Paribas dropped 2.3 per cent, as market-watchers concluded investors had expected more than the ECB was able to deliver. Airlines had a good day, with Air France-KLM rising 1.6 per cent and Deutsche Lufthansa up 1.1 per cent. The sector has been one of the winners of the recent drop in oil prices.

US stocks were little changed at the midway point of the session, bouncing from initial losses after the ECB brushed off pressure for more immediate monetary policy action.

Chevron slid 1.2 per cent as energy shares tumbled the most among S&P 500 groups. Crude oil prices fell 18 per cent last month as the Organisation of Petroleum Exporting Countries maintained its output target, letting prices fall to a level that may slow US production growth. Microsoft rose 1.6 per cent as bookseller Barnes and Noble said it will buy back the company’s stake in its Nook business, which posted a loss that pulled down the US chain’s second-quarter results. Barnes and Noble fell 5 per cent.

– (Additional reporting: Bloomberg / Reuters)