Markets down on slowdown fears

INVESTORS WERE unnerved by signs the global economic slowdown is deepening yesterday, with markets down across the board amidst fears that Europe’s response to its debt crisis may face political hurdles.

DUBLIN

“A VERY dull day” is how one broker described activity on the Irish market yesterday, as the Iseq closed down by 19 points at 3,224.41.

Elan’s announcement that it is to spin off its biosciences unit was the main news on the day, sending the stock soaring. It closed up by 4.9 per cent or 45 cent at € 9.50. The stock was also helped by the company securing additional patent protection on its Alzheimer’s drug Tysabri, which will take exclusivity out to 2020.

Bank of Ireland “went a little bit better”, for no particular reason, as it added 1.1 per cent, despite its disappointing set of results on Friday. It closed up at €0.096. “At the moment there’s good interest there,” noted one broker.

Ahead of its interim results today, CRH came off a little, giving up 38 cent or 2.4 per cent, to close down at € 15.51, with a few buyers around in the stock.

Kingspan enjoyed another strong day as it advanced by 17 cent, or 2.3 per cent to finish up at € 7.25. It has performed well since its recent acquisitions of ThyssenKrupp Construction Group and Rigidal Industries.

CC Group saw a little bit of interest into the close, adding 5 cent or 1.5 per cent to advance to €3.40.

It was another quiet day for Ryanair, which closed down by 1 cent, or 0.22 per cent at € 4.03.

Elsewhere, financial services group IFG gave up 2 cent, or 1.4 per cent, to finish down at € 1.43, while food group Kerry was also in the red, retreating by 55 cent, or 1.4 per cent to close down at €38.46.

LONDON

UK STOCKS declined for a second day as Japan’s gross domestic product expanded less than estimated, while Bank of England Governor Mervyn King said that the euro area’s debt crisis will persist.

The FTSE 100 Index declined by 0.3 per cent to 5,831.88. Petrofac, an oil and gas engineer focusing on the Middle East, slumped by 5.2 per cent to 1,486p, as the company said that profit will grow at a slower pace in the second half of this year because of delays to projects in Iraq and Saudi Arabia.

Vedanta, a copper producer, slid 2 per cent to 977p as metal prices declined in London, while Kazakhmys, the biggest copper producer in Kazakhstan, retreated 1 per cent to 738.5 p. Whitbread, the owner of Premier Inn budget hotels, lost 1.9 per cent to 2,110p, as Deutsche Bank analysts cut the shares to hold from buy.

However, volumes were down in London.

“Price action remains firmly subdued with a lack of volumes given that we are at the height of the summer season,” Ishaq Siddiqi, a market strategist at ETX Capital in London, wrote in a note.

EUROPE

EUROPEAN SHARES extended their losses into the close yesterday, falling to new intra-day lows and mirroring weakness in the US market.

In Paris, the CAC 40 retreated by 0.3 per cent, while in Frankfurt, the DAX was down by 0.5 per cent.

The Stoxx 600 fell 0.4 per cent to 268.72 at the close of trade after climbing as much as 0.1 per cent earlier.

Julius Baer Group lost 7.4 per cent after agreeing to buy Bank of America Merrill Lynch’s wealth management business outside the US.

Nokia Oyj declined by 6 per cent to €2.18, paring some of last week’s 18 per cent advance.

“We remain cautious on European equities in the short term,” Yu-chieh Chiang and Edmund Shing, strategists at Barclays in London, wrote in a report to clients. “The rally needs something more to extend. Macro lead indicators have not turned around decisively.”

Unicredit, Italy’s largest bank, rose by 1 per cent to €2.94, as Intesa, the countrys second-biggest, gained 0.8 per cent to €1.10.

US

THE STANDARD and Poor’s 500 Index fell for the first time in seven days, ending the longest streak of gains in 20 months, as Japan’s economy expanded at a slower pace than forecast, adding to investor concern of a global slowdown.

Alcoa and Cisco Systems dropped the most in the Dow Jones Industrial Average as investors sold stocks most tied to economic growth.

Alcoa, the largest US aluminum producer, fell 2 per cent to $8.81 for the biggest drop in the Dow, followed by Cisco, which lost 1.3 per cent to $17.32.

“There are some worries that while we’re all focused on Europe, China could actually be one of the reasons why GDP disappoints and that is a negative,” Jeffrey Kleintop, chief market strategist at LPL Financial Corp said. –

(Additional reporting: Bloomberg/Reuters)