European stocks retreat from highs

Bond yields drop after sources indicate ECB rate cut next month very likely

Wall Street saw stocks fall in early trading amid profit-taking by investors. Photograph: Bloomberg

European stocks fell back from the six-year high reached on Tuesday as investors weighed earnings and equity valuations and media stocks ITV and Italy's Mediaset both published disappointing trading updates. US stocks also retreated from recent record highs.

In Britain, unemployment fell to 6.8 per cent in March, the lowest in five years, matching economists’ estimates.

Bond yields in the US and Germany dropped after sources told Reuters a European Central Bank rate cut next month is "more or less a done deal".

UK yields fell also after the Bank of England said it was in no hurry to raise rates. Irish yields reached a new low.


The Iseq slipped 1.2 per cent in a session where trading volumes were described as sketchy by dealers. Bank of Ireland continued its weak run, but picked itself up towards the close and finished just below 26 cent, down 4.8 per cent.

Ryanair fell 1.75 per cent to €6.73, as investors began to anticipate that chief executive Michael O’Leary will be more cautious than he usually is at this time of year when he delivers Ryanair’s full-year results next Tuesday.

Food group Kerry was also under pressure, falling 0.7 per cent to €54.10, while Paddy Power declined 4 per cent to €54.39, as the market digested the consequences of Tuesday's announcement that chief executive Patrick Kennedy will step down next year.

Fyffes published a first-quarter update indicating a "positive start" to the year as it prepares for its merger with Chiquita. The stock closed down 1.3 per cent at €1.15 in Dublin, on light volume, but there was a single trade of 1 million shares on its London listing towards the end of the day.

UK stocks were little changed, erasing earlier losses, as Bank of England governor Mark Carney said officials may wait until next year to raise rates, even as the economy moves closer to needing a tighter monetary policy. The FTSE 100 index advanced just 0.1 per cent.

ITV slipped the most since September 2011 after saying share of viewing for its network of channels was lower in the first quarter than expected. The broadcaster dropped 6.2 per cent to 179.1 pence after it said revenue from ITV Studios fell 4 per cent in the first quarter.

Compass Group added 1.6 per cent to 996 pence, its highest price since at least 2001, after posting an increase in first-half sales and saying it will return £1 billion to shareholders.

National benchmark indexes fell in nine of the 18 western European markets today, with Germany's DAX and France's CAC 40 flat on the day.

Mediaset lost 6.6 per cent to €3.47, as the company posted a net loss of €12.5 million in the first quarter compared with a €9.3 million profit a year earlier. Mediaset, which is controlled by former Italian prime minister Silvio Berlusconi, did not give full-year forecasts, citing "poor visibility".

Portugal's Banco Comercial retreated 11 per cent to 18.1 cents, while Banco Espirito Santo lost 8.2 per cent to €1.12 after newspaper Diario Economico reported that both lenders plan capital increases.

Profit for the members of the Stoxx 600 will increase 8.4 per cent this year on average, according to analysts estimates compiled by Bloomberg.

Stocks fell in early trading, amid profit-taking by investors and renewed selling in small-cap shares.

Fossil Group fell 10.27 per cent to $100 after the maker of watches and accessories forecast earnings that trailed analysts’ estimates.

Deere and Co slid 2.04 per cent after the large maker of agricultural equipment cut its full-year revenue projection.

IBM lost 1.6 per cent to $189.04 for the steepest slide in the Dow Jones in early trading and ended the day at $188.72, a fall of 1.81%.

(Additional reporting: Bloomberg, Reuters)