Irish shares soar on debt-deal hopes
Published 29/11/2011 | 05:00
IRISH shares soared yesterday, as renewed hope that some sort of solution to the European debt crisis may be found boosted sentiment across the continent.
By the close, the ISEQ Overall Index had surged some 3.55pc, or 89.54 points, to 2,611.51. The index picked up from the gains of last week, opening higher and continued to climb for the rest of the session.
There was little corporate data on the day but investors were boosted by the news that Bank of Ireland (BoI) had earned nearly €500m on a sale of loans to Japanese bank Sumitumo. BoI had a strong day, closing up 6.41pc.
Most stocks gained on the day but two major shares stood out. Construction giant CRH added 6.98pc to close at €13.18.
The record 'Black Friday' in the US last week helped push a "risk on" trade involving CRH. The record dollar sales helped convince traders that, for one day at least, CRH's key US market was on the road to recovery.
It was not alone among the heavyweights on the ISEQ, however. Smurfit Kappa Group rose 7.14pc to reach €4.35. The packaging firm was another "risk on" trade on strong import numbers from China.
Speciality baker Aryzta added 2.41pc to €34 after a decent first-quarter trading statement.
Despite the broad-based buying yesterday, there were a few stocks that closed lower.
Glanbia slid 3.23pc to €4.50, while United Drug slipped 1.59pc to €1.86.
Elsewhere, national benchmark indices climbed in every western-European market except Iceland. France's CAC 40 Index gained 5.5pc, the UK's FTSE 100 Index rose 2.9pc and Germany's DAX Index increased 4.6pc. The benchmark Stoxx Europe 600 jumped 3.8pc.
"European leaders have been pushed into a position that they have to do something," said Mike Lenhoff, London-based chief strategist at Brewin Dolphin Securities. "We are getting to a point where policy makers are now responding. The message from the market is clear: get your act together or we are going to destroy you."
German newspaper 'Welt am Sonntag' reported yesterday that France and Germany plan for member states to commit to greater fiscal discipline without waiting to change European Union treaties.
The euro climbed as German Finance Minister Wolfgang Schaeuble urged fast-track treaty changes to tighten budget discipline.
A gauge of bank shares rallied 5.7pc as borrowing costs fell in Spain and Italy ahead of a meeting of euro-area finance ministers in Brussels today.
BNP Paribas surged 10pc amid reports that it may sell its portfolio of more than 50 private-equity fund interests.
Commerzbank advanced 4.1pc after it was reported that it was planning to repurchase so-called hybrid bonds to boost capital and reduce risk.