Italian bank rescue helps drive Europe higher

Recovery for Aryzta boosts Ireland’s benchmark index to close up 1.59%

The European Commission and Italy have agreed on a rescue of Italian bank Monte dei Paschi di Siena, outlining a draft plan that involves significant cost cuts. Photograph: Getty Images

The European Commission and Italy have agreed on a rescue of Italian bank Monte dei Paschi di Siena, outlining a draft plan that involves significant cost cuts. Photograph: Getty Images

 

The Iseq rose on Thursday, driven largely by a recovery in troubled food group Aryzta, while London’s FTSE flirted with a record high and Wall Street advanced early in the day. In Europe, the news that the European Commission had backed a bailout for Italy’s oldest bank helped drive Italy’s index higher and allowed the Europe Stoxx 600 index to close up on the day.

DUBLIN

Ireland’s benchmark index closed up 1.59 per cent on the day, driven by Swiss-Irish bakery Aryzta, which recovered most of the ground conceded earlier in the week after quarterly figures that pointed to greater uncertainty about the stock’s subsequent relegation from the MSCI EMEA small cap index. The shares closed 7.58 per cent stronger at €29.435.

Hibernia Reit was unchanged on the day despite trading in relatively strong volumes after stockbroker Davy issued a report to clients describing the company as “one of the fastest growing Reits in the world” and upgrading its forecast.

Despite no move in Hibernia, Green Reit moved 1.94 per cent higher. According to analysts, it had been underperforming its peers of late.

After reporting strong earnings earlier in the week, Ryanair continues to trade higher. It climbed by just under 1.5 per cent in Dublin by the close of business.

Another stock that saw large volumes traded on Thursday was travel software business Datalex. It finished 2.9 per cent higher. Last week, the company said it expected to deliver earnings growth of up to 20 per cent.

LONDON

Britain’s major share index climbed on Thursday, flirting with its record high level but underperforming European peers, while Inmarsat rose on merger speculation.

The FTSE 100 was up 0.3 per cent, with consumer staples and industrial stocks providing the top boosts. Private equity firm 3I Group rose 3.2 per cent after Barclays raised its price target on the stock, saying a trading update from Action management was reassuring and the group was confident on cash generation.

Mediclinic, however, sank 3.4 per cent, the most dramatic FTSE faller, after both Credit Suisse and Bank of America Merrill Lynch cut their rating on the private healthcare provider.

Online car retailer Auto Trader hit a record high after Barclays upgraded the stock to “overweight”. Its shares were up 4.5 per cent.

EUROPE

European shares inched up on Thursday, with blue chips in Milan taking the lead after better than expected Italian economic growth helped markets shrug off political worries. Italy’s economy grew 0.4 per cent in the first quarter thanks to firm domestic demand, the statistics bureau said, sharply raising a preliminary estimate and improving prospects for the year.

Italian banks rose 1.2 per cent, having been among the hardest hit by this week’s drop. UniCredit rose 0.6 per cent after HSBC raised its target on the stock on optimism about the heavyweight lender’s restructuring plan.

This contrasted with the mood in Spain, where Banco Popular plunged 17.7 per cent after a European watchdog warned EU officials the Spanish bank may need to be wound down if it fails to find a buyer.

Praise heaped on Nokia by analysts boosted the phone company and helped push France’s CAC 40 up 0.8 per cent. Nokia shares rose 3.2 per cent, adding to their gains since last week’s resolution of a long-running patent dispute with Apple.

NEW YORK

US stocks trimmed gains but remained higher on Thursday as investors turned their focus to the monthly employment data on Friday, after better-than-expected private sector hiring pointed to strength in the labour market.

Deere’s shares were up after the farm and construction major said it would buy privately held German road construction company Wirtgen Group for $5.2 billion, including debt.

Hewlett Packard Enterprise fell after the company reported a steep fall in its quarterly revenue. Palo Alto Networks jumped to a more than four-month high after the cybersecurity company’s forecast topped expectations.

-(Additional reporting: Reuters)