Global conerns dominate grim day
Published 11/03/2011 | 05:00
IRISH shares fell along with most other markets yesterday, after concerns about the state of the global economy returned to dominate a frenetic day's trading.
By the time stumps were drawn in Dublin the ISEQ Overall Index was down 0.7pc, or 20.38 points, at 2,874.50 points.
It was a grim day, with the index falling as far as 2,854 at one point before recovering slightly in late trading.
Moody's cut their rating on Spanish debt and warned the country's banks may need more than double the €20bn the government says they do, while China reported an unexpected trade deficit. Exports rose at the slowest rate since November 2009.
Those two data points sparked a sell-off across Europe, and Ireland was no exception. Construction and financial stocks were the big losers.
Allied Irish Banks dropped 7.2pc to 23c after circulating its restructuring plan to staff, while Bank of Ireland fell 2.27pc to 30c.
Construction giant CRH slipped 0.94pc to €15.31 amid fears the US economy would slow down while, inevitably, other builders were caught up in the sell-off as well. Grafton group fell 1.31pc to €3.45, while Kingspan slumped €6.30.
Despite the heavy selling, there were winners on the day, with the oil and gas explorers all benefiting from the higher oil price.
Providence Resources jumped 6.47pc to €3.38 a day before the company holds an egm, while Petroneft added 2.01pc after providing a positive update to the market. Petroceltic closed up 7.69pc at 14c.
Elsewhere, national benchmark indexes fell in 17 of the 18 western European markets as European stocks slumped to their lowest close this year. The UK's FTSE 100 Index lost 1.6pc, Germany's DAX Index declined 1pc and France's CAC 40 Index retreated 0.8pc. The Stoxx 600 dropped 1.2pc.
"After horrific trade numbers out of China overnight, which show that the engine of world growth might be slowing down dramatically and another downgrade of a sovereign European nation, the 'buy the dip' attitude which has reigned over the last two years has started to look wobbly," said Lex van Dam, London-based fund manager at Hampstead Capital.
Commerzbank lost 2.6pc. The lender will test the market's appetite for a possible capital increase of as much as €7bn in May or June to help repay government aid.
BHP Billiton, the world's biggest mining company, declined 3.5pc. Rio Tinto sank 3.8pc. Copper, lead and nickel prices retreated on the London Metal Exchange.
"It makes sense to be nervous," said Nick Nelson, a London-based equity strategist at UBS AG. "We have seen lead indicators peak, oil prices rise and we await the outcome of EU meetings that will lead -- or not -- to a comprehensive solution for the sovereign-debt crisis."