AN INTERVENTION by ratings agency Moody’s prompted the third consecutive retreat by European stocks yesterday.
National benchmark indexes in 15 of the 18 western European markets finished lower, with Italy’s FTSE MIB index closing at its lowest level since the launch of the euro.
Moody’s placed the triple-A credit ratings of Germany, Netherlands and Luxembourg on a negative watch, citing the risk that Greece will leave the euro zone and pointing to the “increasing likelihood” of a bailout of Spain and Italy.
Meanwhile, German manufacturing and services output contracted in July more than economists had forecast
In the US, a US report showed manufacturing in the region covered by the Federal Bank of Richmond slumped in July to the lowest level since 2009.
DUBLIN
PHARMACEUTICAL GROUP Elan plunged 12 per cent after the results of the first of four pivotal studies of its experimental Alzheimer’s treatment with Pfizer and Johnson and Johnson found it had not improved patients’ symptoms.
The stock, which has its primary listing in New York, closed at €9.79 in Dublin, taking the dubious honour of being the Iseq’s most traded stock on the day.
Most Irish stocks followed the pattern of decline across Europe, with industrial holdings group DCC dropping 1.6 per cent to €19.01 and Ryanair falling 0.9 per cent to €3.89. Food stocks Glanbia, Kerry and Origin and drinks group CC all finished lower.
There were some climbers, however, with paper and packaging group Smurfit Kappa advancing 2.75 per cent at €5.60, Paddy Power nudging up 0.9 per cent to €53.49 and Independent News Media rising 2.27 per cent to 23 cent. Building materials group CRH, the largest stock on the market, finished flat at €14.69.
LONDON
THE FTSE 100 slid 0.6 per cent, compounding Monday’s 2.1 per cent slump, with the index of blue-chip companies closing below the 5,500 mark for the first time this month. Financial stocks were among the worst off, as a result of fears that they may be exposed to euro zone debt problems.
Merged airline group IAG fell 2.2 per cent on concerns that Spanish banks will need to sell their big holdings in the firm created by the takeover of Iberia by British Airways.
Commodities trader Glencore was the top faller, down 2.3 per cent, as Qatar Holding, the second-largest shareholder in the firm’s takeover target Xstrata, again added to its stake in the miner.
Chemicals firm Croda International was the top FTSE 100 gainer, jumping 6.1 per cent as it posted a 6 per cent rise in first-half profit, as strong demand in North America offset softness in Europe.
Semiconductor firm ARM Holdings was also in demand, adding 0.7 per cent ahead of its second- quarter results due on Wednesday, and with earnings from its key customer Apple expected after the New York close.
Meanwhile, defence contractor Rolls-Royce, which rose 0.7 per cent, was one of 15 pan-European stocks shortlisted by Deutsche Bank for the equity basket of an alternative safe haven portfolio to sovereign debt. Other British stocks in the basket included Diageo, Reckitt Benckiser, Royal Dutch Shell, Tesco and WM Morrison.
Provident Financial jumped 11 per cent to 1,297 pence. The UK’s biggest subprime lender said first-half net income jumped 20 per cent from a year earlier after the number of customers taking out high-interest credit cards rose.
EUROPE
FALLERS ABOUNDED on both weak corporate news and the fragile macro-economic backdrop.
Royal KPN fell 7.3 per cent to €6.79, as the company cut its dividend forecast by 61 per cent after quarterly profit missed analysts’ estimates. The Dutch phone company, which is partially controlled by Carlos Slim’s America Movil telecoms group, saw its net income fall 24 per cent from a year earlier.
STMicroelectronics dropped 4.3 per cent to €3.77, after earlier declining 7 per cent. Europe’s largest chipmaker forecast third-quarter revenue will grow by about 2.5 per cent, indicating sales will miss analysts’ estimates amid weaker demand for its products.
Among the gainers, Swatch Group added 2.3 per cent to 369.90 Swiss francs after posting higher sales and profit, as sales of Omega and Longines watches to Chinese consumers increased.
US
WALL STREET stocks fell yesterday, hit by signs the euro zone crisis is worsening and evidence that Europe’s slowdown is hurting US companies The decline was the third straight for the SP 500.
Bellwether United Parcel Service fell 4.6 per cent to $74.34 after reporting quarterly results that missed forecasts. UPS cut its 2012 outlook, citing uncertain global economic condition.
Whirlpool tumbled 7.5 per cent to $62.25 after the world’s largest appliance-maker missed expectations for quarterly earnings and sales, hurt by weak European demand and a strong dollar – (Additional reporting: Bloomberg / Reuters)
