Shares hit by Japanese trade deficit

EUROPEAN STOCKS went on the slide again yesterday as Japan reported a wider-than-expected trade deficit and investors awaited the outcome of more crunch meetings between the political leaders of the euro zone as Greek prime minister Antonis Samaras bid for more time to implement budget cuts.

National benchmark indexes declined in every western European market, with cyclical stocks in sectors such as mining, oil and banking bearing the brunt of the sell-off.

DUBLIN

BUILDING MATERIALS group CRH, the largest stock on the index, shed a heavy 3.7 per cent to finish at €14.26. This dragged the Dublin market down, with the Iseq finishing 1.2 per cent lower.

There was a fall too for exploration group Dragon Oil, which declined 3.2 per cent to €7.40, in tandem with losses for oil stocks across Europe.

Food group Aryzta fell 2.4 per cent to €38.80, while Kerry also slipped 1.6 per cent to €37.30.

Economic fretting did not help paper and packaging group Smurfit Kappa either, and it closed down 2 per cent at €6.75.

Insulation makers Kingspan was one of the few stocks to make gains, climbing 1 per cent to €7.70, while drinks group CC advanced 1.4 per cent to €3.55.

DIY chain-owner and builders’ merchants Grafton also edged up 0.9 per cent to €3.23.

LONDON

THE BLUE-CHIP FTSE 100 index fell 1.4 per cent as mining shares pulled the market lower. Stocks in this sector sold off after BHP Billiton’s results offered a bleak outlook, while other cyclical stocks took a hit as macro-economic worries in Europe lingered.

BHP Billiton fell 1.7 per cent to 1,947 pence after announcing no major projects would be approved up to June 2013 as it battles rising costs and an economic slowdown in China, hastened by Europe’s debt crisis.

Kazakh miner Kazakhmys was the top faller, down 4.2 per cent ahead of first-half results due today, and along with Anglo American had its recommendation cut by JP Morgan to “underweight” from “neutral”. Anglo American was down 3.7 per cent.

Drugmaker GlaxoSmithKline fell 1.6 per cent, while DIY retailer Kingfisher shed 3 per cent as both stocks had their ratings cut by analysts.

Royal Bank of Scotland shed 0.8 per cent after US authorities said they are investigating RBS and Germany’s Commerzbank over possible breaches of sanctions on Iran.

Man Group declined 4.4 per cent to 76.8 pence, extending its decline so far this week to 5.4 per cent. The world’s largest publicly traded hedge fund manager said late on Tuesday that the net asset value of its Man AHL Diversified fund fell 1.4 per cent last week.

The main riser on the FTSE index was a stock of a defensive persuasion. Utility company SSE was up 1.2 per cent as it said it would raise household gas and electricity prices.

The gain, albeit minor, helped to keep the FTSE around near-term support levels.

EUROPE

THE STOXX Europe 600 index declined 1.2 per cent to 269.27 at the close, its biggest retreat since August 2nd, with trading volumes coming in below average. The equity benchmark has still rallied 15 per cent from this year’s low on June 4th on foot of expectation the European Central Bank will intervene to bolster the troubled euro.

France’s CAC 40 index lost 1.5 per cent, and Germany’s DAX index slid 1 per cent.

Heineken slipped 1.1 per cent to €44 after the world’s third largest brewer said costs to produce its beer would climb 8 per cent this year, rather than the 6 per cent increase that it had forecast. The company also posted earnings before interest and taxes, excluding some items, of €1.27 billion – shy of the €1.31 billion average estimate on that basis in a Bloomberg survey of 10 analysts.

Vestas Wind Systems A/S slumped 6.4 per cent to 31.77 kroner after the Aarhus, Denmark-based wind-turbine maker said it would cut another 1,400 jobs to lower costs by more than €250 million.

US

STOCKS IN New York reversed early losses as minutes from the Federal Reserve’s last meeting showed many policymakers favoured more monetary easing soon. Bank of America rose 1 per cent, leading a recovery among financial shares.

PulteGroup jumped 5.8 per cent as a report showed sales of existing homes climbed in July from an eight-month low.

However, Dell fell 6.1 per cent to $11.59, as the world’s third largest maker of PCs forecast third-quarter revenue that missed analysts’ estimates and cut its profit outlook by 20 per cent. Competition from Apple’s iPad and an anaemic global economic recovery is dragging down PC demand.

Hewlett-Packard lost 3.4 per cent to $19.25. The world's biggest computer maker was due to report third-quarter sales figures after the close of markets. – ((Additional reporting: Bloomberg / Reuters.)