Treaty boost to markets across Europe

Dow Jones: 12,632.91 (-0.16%) SP 500: 1,312.40 (-0.05%) Nasdaq: 2,813.84 (+0.07%):EUROPEAN STOCK markets ended January on a high as agreement on a euro zone fiscal treaty and talks on Greek debt swap indicated that the end may be in sight for the EU's sovereign debt crisis.

The agreement by EU leaders on a regime that includes sanctions for running high deficits and provides for individual members to pass laws limiting budget shortfalls, was one of the causes for optimism. There was also some good news on the earnings front from BSkyB and ARM Holdings among others.

However, data from the US showing consumer confidence and business activity to be lower than generally expected dampened activity later on yesterday.

Nevertheless, further modest advances for most bourses meant that at least the first month of 2012 was a strong one, with investors making gains on most key indices.

DUBLIN

THE DUBLIN market echoed trends elsewhere in Europe as there was no real Irish corporate news of note yesterday.

Dealers said that trade was strong early in the day as optimism grew once again that the EU may yet deal with its sovereign debt crisis. However, the weaker than expected data from the US slowed activity in the second half of the day.

International packaging group Smurfit Kappa was one of the star performers yesterday as statistics indicated that prices for its main product, container-board, are improving. The stock added 3.23 per cent to close at €6.40 yesterday, as more than 550,000 shares changed hands in Dublin.

The partly State-owned Aer Lingus was the subject of a number of strong buy orders yesterday, dealers said. The interest was largely put down to reports that it is close to resolving its €400 million pension deficit. Its stock gained added 2.23 per cent to end the day at 87.3 cents.

Volumes were strong with investors buying 2.3 million Aer Lingus shares in Dublin yesterday, which was the second consecutive day in which its shares record a significant rise.

In the same sector, Ryanair, which earlier this week predicted that full-year 2011 profits could be €480 million, was flat. The company, which is Aer Lingus’s biggest shareholder, shed 0.17 per cent to close at €4.18.

Notes issued by analysts working for a number of institutional investors, including Credit Suisse and Barclays, recommended the stock as a buy yesterday and set target prices as high as €5.20.

LONDON

STRONG CORPORATE results, higher oil prices and improved risk appetite boosted London’s FTSE 100 yesterday, enabling it to post its best performance in three months in January.

The benchmark index closed up 0.2 per cent, taking its gains for January to January to 2 per cent. That was its its best showing since a strong rally in October.

Strong corporate earnings boosted the index.

ARM Holdings added 2 per cent. The British chip designer, whose processors run devices such as the iPhone and iPad, reported a 45 per cent rise in quarterly profit and said its growth would continue to outstrip the industry.

Solid results also helped to boost pay-TV group BSkyB and miner Vedanta Resources, which added 3.7 and 1.6 per cent respectively. National Grid gained 3 per cent as Britain’s biggest energy distributor said the outlook for the year remained positive and announced plans to increase its dividend.

Energy companies led the advance among the sectors. North Sea Brent crude jumped as much as $3 a barrel at one point, pushing shares in FTSE heavyweight oil major BP 2.7 per cent higher.

EUROPE

THE STOXX Europe 600 Index rose 0.8 per cent to 254.41 at the close, rebounding from two days of declines. The benchmark gauge rallied 4 per cent this month, the biggest January gain since 1998.

EADS, which makes Airbus and Eurofighter jets, advanced 1.2 per cent to €25.68 after UBS raised its recommendation on the shares to “buy” from “neutral.”

ThyssenKrupp, Germany’s largest steelmaker, rose 2.7 per cent to €21.67 in Frankfurt after agreeing to sell its Inoxum stainless steel unit to Outokumpu Oyj. The deal valued the German company’s unit at about €2.7 billion.

ThyssenKrupp will retain a 29.9 per cent stake in the business, receive €1 billion in cash and transfer liabilities of €422 million for Inoxum to Outokumpu.

US

WALL STREET closed its best month since October on a flat note as weaker-than-expected economic reports surprised investors after a stream of positive data in recent months.

The Dow Jones industrial average ended the session down 0.16 per cent, the Standard & Poors 500 was down 0.07 per cent while the Nasdaq Composite was up 0.05 per cent.

For the month, the Dow ended up 3.4 per cent, the S&P 500 ended up 4.4 per cent and the Nasdaq ended up 8 per cent. – (Additional reporting Reuters/ Bloomberg)