European shares drop on growth and trade concerns

Dalata and Ryanair both lost ground, while Irish banking stocks were in favour

European shares dropped on Tuesday as investors baulked at the European Commission pulling back its euro-zone growth forecasts and as mounting concerns over US-China trade talks weighed.

The pan-European Stoxx 600 index fell 1.4 per cent on its worst day in three months, while the volatility gauge on euro zone blue-chip stocks hit its highest in more than six weeks

The European Commission now expects euro zone growth of 1.2 per cent in 2019 and halved this year’s growth forecast for Italy to 0.1 per cent. Meanwhile, a spokesman for China’s foreign ministry said mutual respect was the basis for reaching a trade deal and adding tariffs could not solve any problem.


Dalata Hotel Group was among the worst performers in Dublin, falling 3.9 per cent to €5.95, to hand back some of its recent gains, while Ryanair dipped 3.4 per cent to €11.27.


However, Kerry Group added 1.5 per cent to €102 as industry followers cheered better-than-expected six-month figures and an upbeat outlook for Dutch nutrition group DSM.

Banking stocks were in favour, with Bank of Ireland up 1.2 per cent at €5.61, Permanent TSB closing 0.7 per cent higher at €1.40 and AIB managing to edge 0.5 per cent ahead to €4.07.


Shares in cash-strapped travel firm Thomas Cook jumped 6.1 per cent to 23.01p after Lufthansa confirmed it had bid for Condor, the UK group's German airline arm.

Domino's Pizza warned that it saw a "disappointing" performance in its international business, with "weak" system sales across all its overseas markets. Its shares dipped 1.5 per cent to £2.57.

Shares in G4S tumbled after Canadian security firm Garda World Security walked away from a potential £3 billion (€3.5 billion) bid for the British firm. Garda revealed last month that it was in the preliminary stages of considering an approach to the board of G4S regarding a possible cash offer for all or part of the company. Shares in G4S dropped 2.8 per cent to £2.10.


Germany’s trade-exposed Dax also slid 1.6 per cent. German industrial orders rose less than expected in March, data showed.

Milan-listed FinecoBank fell the most on the banking sector index, down 7.5 per cent, as top Italian lender UniCredit said it was considering cutting its stake in the online broker.

“The timing is a little surprising and may reignite concerns that UniCredit are still facing upwards pressure of capital requirements. However, this decision does seem more strategic than forced,” said Russell Quelch, financials analyst at Redburn.

Oil and gas stocks dived 2.5 per cent, against a backdrop of a 1.6 per cent slide in Brent futures on renewed doubts over US-China trade talks.

Tariff-sensitive stocks of auto-makers and their suppliers fell 1.4 per cent. BMW dropped 2.3 per cent on reporting a sharp slide fall in quarterly operating profit, on a hit from higher investment spending and a legal provision.

Defensive real estate stocks, which generally move in the opposite direction to interest rates, gained 1.1 percent. Germany's Vonovia tacked on 5.2 per cent after boosting its full-year profit guidance.

New York

Wall Street’s main indexes were lower in early afternoon trading, as renewed worries over trade negotiations with China stoked global growth worries and kept investors away from risky assets.

Beijing said on Tuesday that Chinese vice premier Liu He will visit the United States this week for trade talks, playing down US president Donald Trump’s unexpected threat on Sunday that he would raise tariffs on $200 billion (€179 million) worth of Chinese goods to 25 per cent from 10 per cent.

Declines across tech giants including Microsoft, Apple, Amazon and Facebook weighed on markets.

Still, American International Group (AIG) jumped after the insurer reported a quarterly profit that blew past expectations.

Among decliners, Mylan tumbled after the drugmaker missed Wall Street estimates for quarterly revenue, hurt partly by manufacturing problems at its Morgantown plant in West Virginia. – Additional reporting, Reuters, Press Association

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times