Concerns grow on US return to recession

European markets finished the week on a low, as investor concerns mounted that the US will slip back into recession if it fails to resolve the fiscal cliff and as the European Commission said the euro-zone economy will stagnate in 2013.

Dublin

There was little movement on the Dublin market yesterday, which finished pretty much flat on the day at 3,294.57, up 3.80 or 0.12 per cent.

After its stellar results earlier in the week, airline Ryanair finished the week up at €4.94, up 0.1 per cent on the previous day. According to brokers, there was “generally good volume” in the stock.

Drinks group CC held on to its gains in trading around €3.90, although it closed down marginally on the day by 0.12 per cent, or 1 cent.

Glanbia was one of the better performers of the week. It continued its advance yesterday, adding 9 cents, or 1.2 per cent, to push past the €8 level and close at €8.04. As one broker noted, “it’s not so long ago that it was at €7”.

Smurfit Kappa, on the other hand, continued its drift since its quarterly results on Wednesday. Despite posting results that were 10 per cent ahead of forecast, the stock continues to retreat, albeit on not much volume. It gave up 9 cents, or 1 per cent, to finish down at €8.27.

Weak also was Paddy Power, which one broker noted had “run out of steam”. It closed down by 70 cents, or 1.2 per cent, at €55.45.

London

The FTSE 100 pared back earlier losses to close down 6.4 points at 5769.7.

Balfour Beatty, the UK’s largest construction company, plunged by 21 per cent after saying the outlook for profit margins has faded. It was the firm’s biggest decline in 14 years, after saying that the margin outlook faded because of a lack of building work in Britain. Balfour’s order book decreased by 4 per cent to £14.4 billion in the three months through September.

Balfour had been hurt by “the shelving of construction plans” at Heathrow airport in London and its failure to get a contract for services at the Sellafield nuclear site that was won by Morgan Sindall Group.

Europe

Economic fears on both sides of the Atlantic saw markets across Europe fall. In Paris, the CAC 40 dropped by 2 per cent, while in Frankfurt, the DAX gave up 2.7 per cent. The Stoxx 600 dropped by 1.7 per cent to 270.27 this week.

Alcatel-Lucent surged by 16 per cent for the best performance in the Stoxx 600, but elsewhere stocks were down. PostNL sank by 20 per cent after saying full-year underlying cash operating income would be in the bottom half of its forecast. TNT Express, which is 30 per cent owned by PostNL, declined by 9.1 per cent.

Key to concerns are fears about a resolution of the US budget compromise. “The market is worried about the fiscal cliff,” said Jacques Porta of Ofi Patrimoine in Paris. “We have the feeling the Republicans won’t make it easy on Obama.”

US

US stocks rose, trimming the biggest weekly drop since June in the Standard and Poors 500 Index, as data showing consumer confidence climbed to a five- year high offset concern about fiscal cliff negotiations.

Boeing, Caterpillar and ATT advanced at least 1 per cent to pace gains among the largest companies. Apple, the world’s most valuable company, increased 1.7 per cent after an 8 per cent plunge over the previous three days.

JC Penney dropped 4.8 per cent after reporting a third-quarter loss that was larger than analysts had estimated.

Lions Gate Entertainment rose 14 per cent after video sales of The Hunger Games helped quarterly profit beat analysts’ estimates and bolstered outlook for the rest of the year.

Groupon sank 30 per cent. The largest daily-deal website reported third-quarter revenue that missed estimates as sales of coupons overseas declined. – Additional reporting Reuters/ Bloomberg