Fear of French downgrade triggers widespread slumps
IRISH shares resumed their downward trend yesterday, as the worries surrounding the world economy returned, with the focus moving to French banks.
By the close of trading the ISEQ Overall Index was off 2.29pc at 2,409.84 to record its 12th day of losses out of the past 13.
In points terms, the index was down 56.51.
In the morning the ISEQ looked like it would carry on the gains from Tuesday but those hopes were dashed by mid afternoon. Rumours that a French downgrade was imminent swept markets worldwide, leading to a massive sell off across the globe.
Ireland was no different.
CRH was the big loser on the day, slumping 8.14pc to €11.45. The construction giant was hit by the sell off, with its interests in the US telling against it.
Raw material producers struggled throughout the session, with Kenmare Resources slumping 12.86pc to 43c. Ormonde Mining dropped 5.88pc. Tullow Oil slipped 3.27pc.
Winning stocks were few and far between yesterday, but Dragon Oil bucked the trend, gaining 6.9pc to close at €5.13.
The company said first-half revenue increased 91pc year on year, with operating profit more than doubling to $407.3m (€286m). Dragon's chief executive Abdul Jaleel Al Khalifa said "there could be opportunities" to acquire assets. "We are sharpening our pencil. It is time."
Kerry Group (up 3.46pc) and Glanbia (up 2.8pc) were other gainers.
Elsewhere, European stocks fell to a two-year low amid speculation the region's debt crisis is spreading and as the Federal Reserve's plan to hold interest rates failed to ease concern that the economic recovery is stalling.
National benchmark indices fell in all of the 18 western European markets, except Iceland. The UK's FTSE 100 Index lost 3.1pc and Germany's DAX plunged 5.1pc. France's CAC 40 Index slid 5.5pc, the biggest drop since December 2008, while the composite Stoxx Europe 600 fell 3.8pc.
"I am not convinced that what the Fed said will help the market hugely in the medium-to-long term," said Markus Huber, head of German sales trading at ETX Capital in London. "More details would be needed on what exactly the Fed is planning to do in case growth continues to slow even more severely."
Banks on the Stoxx index retreated 6.7pc, the most since March 2009.
Societe Generale lost 15pc, the biggest drop since October 2008. BNP Paribas, France's largest lender, sank 9.5pc and Credit Agricole plummeted 12pc to a record low.
"Societe Generale issued a warning recently, which makes it very vulnerable to market rumours and that's why the stock is getting hit," said ETX Capital's Huber. The French bank said on August 3 it may miss its 2012 earnings target.