European stocks continue advance

EUROPEAN STOCKS continued to advance after German chancellor Angela Merkel and French president François Hollande said they would do anything to protect the euro, the US economy grew more than forecast and companies posted earnings that topped estimates.

IRELAND

THE ISEQ continued to partake of the global rally, sparked by comments from European Central Bank chief Mario Draghi on Thursday, closing up just short of 1 per cent.

Packaging giant Smurfit Kappa gained over 3 per cent on the day. Strong quarter two results from US peer International Paper provided a boost to its share price which finished up 17 cent or at €5.85.

Shares in pharmaceutical and healthcare services firm United Drug were also up, following its acquisition on Thursday of Frankfurt-based group Pharmexx. Employing more than 2,300 people, Pharmexx operates in 18 countries across Europe, North and South America.

United Drug’s share price closed up 1.42 per cent or 3 cent yesterday at €2.14.

Builders merchanting group Grafton was also among the gainers, its shares closing up 2.37 per cent or 6 cent at €2.85.

Stock in drinks manufacturer CC was also up. It closed up 1.38 per cent or 4 cent positive at €3.38. Following its financial results last week, DCC was up slightly too, ending the day up 0.25 per cent or 5 cent at €19.85.

On the downside, Ryanair was sluggish yesterday, slipping 2.23 per cent or 8 cent to €3.90. The airline is due to report financial results on Monday.

Tullow Oil was down too, closing at €16.51, a drop of 1.13 per cent or 18 cent.

LONDON

UK STOCKS rose to a one-week high, led by a rally in banks, as European leaders pledged to protect the euro and US economic growth exceeded forecasts.

The FTSE 100 Index added 54.05 points, or 1 per cent, to 5,627.21 at the close in London, paring the weekly decline to 0.4 per cent.

Barclays rallied 8.7 per cent to 167 pence. The lender, which is searching for a new management team in the wake of the Libor scandal, reported a 13 per cent increase in first-half pre-tax profit excluding debt-valuation adjustments and other one-time items to 4.2 billion pounds ($6.6 billion).

RBS climbed 3.2 per cent to 214.5 pence, Lloyds increased 3.7 per cent to 30.21 pence and Standard Chartered rose 1.8 per cent to 1,493 pence. William Hill surged 7.1 per cent to 311.1 pence, the highest since January 2008. The UK bookmaker reported first-half pre tax profit and revenue that exceeded estimates.

Pearson declined 5 per cent to 1,230 pence after the owner of the Financial Times said first-half operating profit shrank 9.6 per cent to 188 million pounds.

EUROPE

EUROPEAN STOCKS too advanced for a second day in the echo of pledges by European leaders to protect the euro.

The Stoxx Europe 600 Index gained 1.3 per cent to 259.81 at the close of trade, after earlier dropping as much as 0.3 per cent. The measure advanced for an eighth week, adding 0.6 per cent, the longest winning streak since January 2006.

Germany’s DAX Index gained 1.6 per cent. France’s CAC 40 Index rallied 2.3 per cent and Italy’s FTSE MIB advanced 2.9 per cent.

PPR, the French owner of the Gucci luxury brand, added 6.6 per cent as recurring operating income increased 20 per cent.

European Aeronautic, Defence and Space rose 5.7 per cent as first-half profit jumped 89 per cent and it lifted its full-year earnings forecast.

Renault, France’s second-biggest carmaker, climbed 6.4 per cent to €35.94 as it reported earnings before interest, taxes and one-time items of €482 million, beating the €363 million average estimate of seven analysts surveyed by Bloomberg.

NEW YORK

WALL STREET rose on growing hopes of further stimulus from the Federal Reserve and the European Central Bank, as US economic growth slowed in the second quarter.

Merck gave the biggest boost to the Dow after the drug maker reported better-than-expected quarterly earnings, with strong sales growth of its vaccines and treatments for diabetes and HIV. The stock rose 3.4 per cent to $44.82.

Facebook shares tumbled 12 per cent after reporting slower sales growth and narrower profit margins. Operating margin, excluding certain costs, was 43 per cent in the second quarter, a drop from 53 per cent a year earlier, amid a fourfold surge in sales and marketing expenses, the company said.

Starbucks cut its outlook for the current quarter, citing global economic weakness and a recent slowdown in visits to its coffee shops in the United States, its biggest market for sales and profits. It plunged 9.4 per cent after forecasting fourth-quarter profit that missed estimates.

(Additional reporting: Bloomberg)