Divisions at EU summit hit markets

 

THE EURO hit a three-week low and most European stock markets retreated yesterday after divisions among European leaders at a meeting in Brussels further diminished hopes of urgent measures to tackle the region’s debt crisis.

US stocks fell but pared back sharp losses late in the session on talk of some progress by European leaders in easing the debt crisis

DUBLIN

THE ISEQ slightly outperformed its European peers, closing fractionally higher. The index was driven by the strong performance of building materials stock CRH, which was an outperformer in its sector.

The stock was boosted by positive news around the proposed new Hire Bill in the US, which will boost job creation and looks like it may be nearing resolution.

There was a mixed performance from other stocks, although the mood of the market was generally weak.

There was some follow-on activity in CC following its interim management statement on Wednesday which said the company expected to deliver earnings growth this year despite dampened cider sales in the first quarter.

News from the two main banks yesterday – AIB held its AGM while Bank of Ireland announced it had reduced the level of its international loans by €10 billion – had minimal impact on the stocks, which are now traded very little on the exchange.

Some 400,000 AIB shares were traded, while around 17 million Bank of Ireland shares were traded in Dublin yesterday, though the stock closed lower in line with the general market weakness.

Smurfit Kappa and Kenmare Resources were among the few gainers, advancing 2.5 per cent and 6 per cent respectively.

LONDON

UK STOCKS fell for the fifth day in six as bank shares declined after British lawmakers criticised Barclays over its manipulation of inter-bank lending rates.

Barclays contributed the most to the drop in the FTSE 100 Index as fines levied by the Financial Services Authority sparked concern that the lender will face lawsuits.

Ladbrokes plunged the most since October 2008 after predicting a decrease in online profit.

The FTSE 100 Index slid 30.86 points, or 0.6 per cent, to 5,493.06 at the close in London.

The leading gauge has still added 4.4 per cent since the 2012 low on June 1st as Greece formed a coalition government after its second election in six weeks, easing concern the nation would leave the euro.

HSBC Holdings retreated 2.6 per cent to 558.2 pence. Debenhams gained 2 per cent to close at 84.95 pence after dropping as much as 2.9 per cent in intraday trading.

The company lowered its profit forecast because wet weather deterred purchases on higher-margin women’s clothing lines.

EUROPE

EUROPEAN STOCKS retreated after Spain’s bond yields surged and Germany’s unemployment rate rose more than forecast, as a two-day summit of the region’s leaders started in Brussels.

Barclays plunged 16 per cent while Commerzbank sank 7.2 per cent as the lender issued new shares. The Stoxx Europe 600 Index slid 0.5 per cent to 244.67 at the close in London, after earlier dropping as much as 1.3 per cent.

The benchmark measure has fallen 10 per cent from its high in March, paring its gain for the year to 0.1 per cent, as the euro area’s sovereign debt crisis threatened a slowdown in global growth.

The volume of shares traded on the gauge was 9.1 per cent higher than the average of the last 30 days, according to Bloomberg.

France’s CAC 40 Index slid 0.4 per cent, and Germany’s DAX Index retreated 1.3 per cent.

US

STOCKS FELL yesterday, as the supreme court’s ruling upholding a landmark healthcare law hit large health insurers.

Markets are especially skittish about any shift in expectations for the euro zone as EU leaders began a two-day summit in Brussels.

Stocks began lower and losses accelerated after a divided supreme court backed the centrepiece of President Barack Obamas healthcare overhaul law.

The decision surprised many investors who see the law, which requires most Americans to obtain insurance by 2014 or face a penalty, as a hallmark of a business unfriendly administration. Shares later pared losses, though major insurers such as Aetna, which face more regulation, ended lower.

Other companies reliant on Medicaid, such as Wellcare Health Plans rose as their patient rolls are expected to increase.The

Shares of JPMorgan Chase dropped 2.5 per cent to $35.88 after a New York Times report projecting losses from a recent botched trade could reach $9 billion, more than four times the original estimate.

US-traded shares of Barclays slumped 12.1 per cent to $10.84 after Britain said it had brought in the fraud squad to investigate possible crimes over attempts to manipulate lending rates – (Additional reporting: Bloomberg/ Reuters)