Friday 24 February 2017

CRH steadies ISEQ as banks fall

Thomas Molloy

Thomas Molloy

IRISH shares were unchanged as gains by the benchmark heavyweight CRH offset further losses by banks and exploration stocks.

The ISEQ ended a five-day losing streak by rising half a point yesterday to close at 3016.53, after trading in a narrow range all day.

Elsewhere, shares rose in half of the 18 western European markets. France's CAC 40 and Germany's DAX advanced 0.7pc, while the UK's FTSE 100 added 0.3pc.

The two Irish banks fell again yesterday, with Bank of Ireland sliding 2.8pc to €1.38 and Allied Irish Banks falling 1.3pc to €1.35 after rating agency Standard & Poor's had downgraded its risk assessment on Ireland's banks, saying continued economic weakness would lead to "high credit losses" for the industry.

The agency reduced its rating on Bank of Ireland to A- with a stable outlook and cut Allied Irish Banks to A- with a negative outlook.

While the banks' share prices showed little reaction, credit-default swaps on large Irish banks widened sharply, while the wider credit market rallied on the successful syndication of a Greek government bond.

Bank of Ireland's five-year senior CDS widened 20 basis points to 220 bps on the rating action. Five-year subordinated CDS on AIB widened by about 70 bps to 630 bps at one stage after the S&P move.

Back on the stock market, Kingspan slipped 1.6pc to €6.05 as workers voted to strike at a factory in Cavan that accounts for 3pc of sales. The building-materials group said it would put "contingency plans" in place to "absorb" production, should the strike go ahead next month.

The biggest fallers on the leaderboard were tiny Conroy Diamonds, which closed down 12.5pc for no obvious reason, and Petroceltic International, which fell 9.7pc after it sent a circular to investors about its annual general meeting and the issue of 392m new shares.

Elsewhere, the Dow Jones Stoxx 600 Index added 0.5pc to 249.41, the first gain in five days, as US consumer sentiment and German business confidence topped forecasts.

Siemens, Europe's largest engineering company, surged the most in three months after reporting the highest quarterly profit in more than two years.

Novartis led healthcare companies higher after the Swiss drug maker named a new chief executive officer and posted increased earnings.

European stocks had opened lower after sources said the Bank of China and China Construction Bank were told to restrict new loans and Standard & Poor's cut Japan's sovereign credit-rating outlook to "negative".

Banco Popular Espanol surged 5.5pc, the largest increase in the Stoxx 600. Spain's third-biggest bank said its fourth-quarter net income rose to €115m, beating the €101.5m estimate of eight analysts surveyed by Bloomberg.

Irish Independent

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