Financial shares sell-off ends week's winning streak
Published 11/12/2010 | 05:00
IRISH shares snapped a four day winning streak yesterday after the banks were downgraded by Fitch, prompting heavy selling of financial stocks.
On the day, the ISEQ Overall Index lost 0.48pc, or 13.60 points, to close at 2831.83. Despite yesterday's loss, the index was still well up on the week, having opened on Monday at 2741.27. The banks all led the market down, after ratings agency Fitch cut its rating of debt from five of Ireland's banks.
Fitch said it downgraded Allied Irish Banks' and Bank of Ireland's long and short-term issuer default ratings to "BBB" from "A-" and "F2" from "F1", following Thursday's downgrade of the Irish sovereign.
Those cuts prompted an immediate sell off. By the 4.30pm close the three big players had all been hit hard.
Bank of Ireland slumped nearly a fifth to 39c -- an 18.53pc fall -- while AIB dropped 12.2pc to 44c. Irish Life & Permanent was not involved in the downgrade but was caught up in the sell off, losing 7.78pc to close at €1.16.
The losses in the financial sector overwhelmed the rest of the market, despite gains more or less across the board.
Commodity companies had a strong day's trading, with Tullow Oil adding 4.29pc to close at €14.60, while the miners Ovoca Gold and Kenmare Resources both ended in the black.
Away from Dublin, European stocks climbed for a fifth day as investors speculated that profits will overcome the sovereign-debt crisis and consumer sentiment rose more than expected this month.
National benchmark indexes advanced in half of the 18 western European markets. Germany's DAX Index climbed 0.6pc. The UK's FTSE 100 Index rose 0.1pc, while France's CAC 40 Index slid less than 0.1pc. The composite Stoxx Europe 600 added 0.1pc.
"Whilst concerns about nations on the periphery still exist, they have not been able to dent the trend of improving economic data from Europe's larger nations, in particular Germany," said Jonathan Sudaria, a trader at London Capital Group.
In London, Burberry Group dropped 2.6pc as JPMorgan Chase said the UK's largest luxury retailer is too big for Gucci and Puma owner PPR.
Miners were also solid, Vedanta climbing 3.2pc after copper imports to China gained. Xstrata increased 1.5pc and Anglo American also advanced, gaining 1.1pc.