European gains boost Irish shares
IRISH shares were buoyed yesterday as European stock exchanges enjoyed their longest winning streak in three months.
The ISEQ closed up 25.36 points, or 0.8pc, to 3081.92 points, led higher by Irish Life & Permanent, which gained 5.6pc to close at €1.73 on hopes that last week's declines were overdone.
Shares in Allied Irish Banks closed up 3.2pc at 97c amid talk that several banks are considering a bid for AIB's stake in Bank Zachodni WBK SA, valued at $3bn. Aer Lingus closed up 3.7pc at 73c on optimism that it will be able to cut costs following a decision to scrap losing winter flights from Shannon to the US.
Shares in Independent News & Media fell 3.2pc to 85c after a proposed one-for-seven share consolidation became effective yesterday, boosting the average cost of a share sevenfold.
European stocks advanced for a fifth day, with national benchmark indexes closing higher in 16 of the 18 western European markets. The UK's FTSE 100 rose 0.3pc, Germany's DAX climbed 0.8pc and France's CAC 40 increased 1pc.
One of the drivers of positive sentiment was News Corp's offer to buy British Sky Broadcasting. BSkyB, the UK and Ireland's biggest pay-TV provider, led a rally among media stocks, surging 17pc after Rupert Murdoch's News Corp offered to buy the rest of the company for £7.8bn.
"The state of the economy is a massive consideration as to whether you look at spending money or whether for the time being you are going to play safe," said Keith Bowman, an analyst at Hargreaves Lansdown in London.
"BSkyB may be a bit more of a special situation given the relationship with Murdoch, but should we see a noticeable pick-up in mergers it would suggest an improvement in confidence."
Weighing on sentiment was a plunge in German investor confidence as analysts worried the sovereign debt crisis will undermine export prospects and crimp growth in Europe's largest economy. Germany's ZEW think-tank said yesterday its index of expectations, which aims to predict developments six months ahead, slumped to 28.7 from 45.8 in May. Economists forecast a drop to 42.
Societe Generale gained 3.9pc after France's second-biggest bank by market value said it was aiming for profit of about €6bn in 2012, driven by growth at the corporate and investment bank and in Russia. Rival UBS gained 2pc after Swiss lawmakers backed the treaty with the US over suspected tax evasion and asked for the possibility to put the proposal to a nationwide vote.
BP slipped 3.8pc to its lowest level since 2008 after adjusting for dividend payments. The company's credit rating was cut to two levels above non-investment grade, or junk, by Fitch Ratings on concern over the potential cost of cleaning up its Gulf of Mexico spill.