ECB rate cut sparks share slide
Published 08/11/2013 | 02:00
MOST European stocks fell yesterday after the interest rate cut by the European Central Bank (ECB) signalled concerns over Europe's growth.
By the close in Dublin, the ISEQ Overall Index was little changed, slipping just 0.01pc, or 0.29 points, to end the trading day at 4428.10.
It rose on news of the interest rate cut before retreating again. The ECB lowered its benchmark interest rate to 0.25pc from 0.5pc.
The ECB expects key interest rates to remain at the current level or lower for an extended period of time, President Mario Draghi said.
The euro slid as much as 1pc to hit a seven-week low of $1.34.
The leaders in Dublin included Aer Lingus, which increased 1.4pc to €1.42, while listed home builder Abbey was up 1.5pc to €10.30.
Independent News & Media climbed 13.5pc to 11 cents as the publisher approached its deadline to slash its debt.
On the other side of the board, the laggards included packaging giant Smurfit Kappa, which slipped 1.6pc to €17.91, and insulation firm Kingspan, which closed down 1.4pc to €12.74.
Speciality baker Aryzta lost 0.4pc to end the trading day at €54.80. In Europe, the Stoxx Europe 600 Index lost less than 0.1pc to 323.23 at the close of trading, paring earlier gains of as much as 1.5pc.
About three stocks fell for every two that rose.
The Euro Stoxx 50 Index surged as much as 1.6pc to an intraday level of 3,106.64, the highest since October 2008, before closing 0.4pc down yesterday.
National benchmark indexes dropped in 12 of the 18 western European markets.
Germany's DAX gained 0.4pc, France's CAC 40 slipped 0.1pc and the UK's FTSE 100 fell 0.7pc.
"We passed the initial euphoria to begin to think why the ECB chose to cut rates now when very few of us saw it coming," said Michael Woischneck, Lampe Asset Management in Dusseldorf, Germany.
"A prolonged period of low interest rates also means a prolonged period of very weak growth in the euro area. I do think Europe will recover, but it will take longer than expected."