Investor worries drag shares down
IRISH shares fell, dragged down by banks and industrial stocks, as investors worried about the prospects for the Irish economy. The ISEQ closed down 14.31 points, or 0.5pc, to 2864.36, although Kerry and Aryzta bucked the trend following news of acquisitions.
Irish Life fell 3.3pc to €1.75, while Allied Irish Banks closed down 1.3pc at 84c amid renewed concerns about the cost of borrowing for the State and institutions such as the banks, which will have to borrow on the bond markets next month, and rumours that it may postpone the August 20 deadline for potential buyers to place their bids to buy its Polish unit, Bank Zachodni.
Credit-default swaps on Irish bonds climbed to a 17-month high on speculation the bailout bill for Anglo Irish Bank will push the country's fiscal deficit to 25pc of GDP this year.
Default swaps on Anglo jumped 17.5 to 551.5 despite the bank's nationalisation, AIB rose 17.5 to 441 and Irish Life & Permanent jumped 14.5 to 337.
Smurfit Kappa fell for a third day, slipping 2.2pc to €7.48, while CRH fell 3.2pc to €15.01 as the slowdown in the US and European economies sparked fears that concrete and paper will no longer be much in demand. CRH failed to get any uplift despite buying Sax Sanitair, a small Belgian distributor of sanitary, heating and ventilation products.
It wasn't all doom and gloom in Dublin, however. Aryzta soared 5.2pc to €32.09 after saying it would buy its partner's 50pc stake in Canada-based Maidstone Bakeries for $454.2m in cash.
Another food company, Kerry Group, also gained on the back of a much smaller deal, jumping 2.2pc to €25.10 after it bid €33m to buy Cork-based Newmarket Co-operative Creameries for €33m. And Greencore also had a good day, rising 2pc to €1.30, after saying it is likely to "modestly" exceed its full-year earnings forecast of 16c per share as a result of "very positive" summer trading.
Stocks elsewhere in Europe showed similar patterns, with food and drink stocks doing well while industrial stocks stumbled.
The Stoxx Europe 600 Index rose 0.1pc, the first increase in three days, as a rally in food and beverage shares outweighed an unexpected increase in US jobless-benefit claims and an equally unexpected fall in European industrial production. Anheuser-Busch, the world's largest brewer, climbed the most in three months after profit rose more than analysts estimated.
Nestle, the world's biggest food company, climbed 2pc, while CSM, the world's largest maker of bakery ingredients, rallied 4.6pc.
And BMW and HeidelbergCement led declines in industrial companies whose earnings are most reliant on economic growth.