Monday 23 October 2017

Europe dives again on Greek fears

John Mulligan

John Mulligan

IT was another bloodbath on European markets yesterday as the Greek crisis, unsurprisingly, weighed heavily on investors. Ireland's ISEQ plunged nearly 2pc.

There was continued and profound unease as the European Central Bank said it has already stopped lending to some Greek banks in order to limit its exposure to them.

ECB boss Mario Draghi has already conceded that there's a chance Greece could be forced from the monetary union.

"A Greek exit was seen as an absurdity up to now," said Thomas Costerg, an economist at Standard Chartered Bank in London. "It is gradually becoming the main scenario."

Markets across Europe slumped, while in the US markets were also in the red in early trading there.

At home, the ISEQ Overall Index was firmly in negative territory by late morning and stayed that way for the rest of the day. It tanked further as the day progressed, shedding 57.15 points, or 1.85pc, to finish at 3,027.33.

Shares in Smurfit Kappa group collapsed nearly 7.4pc, or 45 cent, to €5.85. The company, whose products are used by consumer goods firms, could be impacted by lower demand for its products in Europe as the region struggles to contain the debt crisis.

Freefall

Ryanair shares also went into freefall, declining 5.1pc, or 22.6 cent to €4.16. Air traffic controllers in Portugal yesterday commenced a three-day strike. The price of Brent crude hit a six-month low this week, however.

Shares in Bank of Ireland fell 2.3pc to 8.4 cent -- their lowest level since January.

There was better news for shareholders in Paddy Power, as the company's stock rose 2.4pc, or €1.16, to €48.50. The company said revenue in the year to date was up 28pc.

National benchmark indices declined in all 10 western European markets open yesterday. The UK's FTSE-100 fell 1.2pc, Germany's DAX slid 1.2pc and France's CAC 40 also dropped 1.2pc. Greece's ASE Index lost 3.4pc to bring it to the lowest level since January 1990.

The Stoxx Europe 600 Index dropped 1pc to 241.90 for the longest losing streak since March 22, after the US Federal Reserve signaled further monetary easing remains an option.

Spanish lender Bankia tumbled 14pc to €1.43. The stock has dropped for 10 consecutive days, losing 42pc in all. Spanish newspaper El Mundo reported that customers have withdrawn €1bn since May 9, when the government said it will take over the bank.

Aviva slid 4.3pc to 268.7p after the UK's second-biggest insurer by market value reported a 7pc decline in first-quarter sales of life insurance and pensions to £6.52bn (€7.78bn). That missed some analysts' estimates.

Irish Independent

Also in Business