Irish shares tumble on fear EU debt crisis will derail recovery
Irish shares fell yesterday on growing concern that Europe's debt crisis will derail the economic recovery.
The benchmark ISEQ dropped 0.7pc to 3055.13 as airlines and banks led the index lower.
Ryanair fell 3.8pc to €3.23, while Aer Lingus lost 2.7pc to 71c as they were forced to ground flights as the return of the Icelandic ash cloud closed terminals from Ireland to the Netherlands.
The Stoxx 600 Travel & Leisure Index lost 1.1pc, the third-biggest retreat among 19 industry groups in the European index.
Bank of Ireland slipped 5.2pc to €1.46 as it revealed details of a rights issue to help the bank meet new capital ratio rules. The bank will give shareholders to right to buy shares for 55c each. Allied Irish Banks slipped 3.1pc to €1.21.
Stocks elsewhere in Europe and further afield slid for a third day as the euro erased gains and oil fell below $70 a barrel.
The MSCI World Index lost 1.1pc and the Standard & Poor's 500 Index slid 0.6pc by noon in New York, with both dropping below their lowest closing levels in more than a week.
Trader demand for insurance against a slide in the euro is the highest in more than seven years as they bet European plans to fix the region's debt crisis will worsen the currency's tumble.
The Federal Reserve Bank of New York said manufacturing in the New York region expanded at a slower pace than forecast in May as sales cooled.
"It's a wait-and-see attitude," said Stanley Nabi, New York-based vice chairman of Silvercrest Asset Management Group.
"What's the end game in Europe and the eurozone? American investors are watching the developments in Europe, which are not very steady. There's a great deal of concern still on the effect of all that on the global recovery."
Credit Suisse and Morgan Stanley recommended clients add to European stock holdings and UBS suggested buying German shares after the May 14 sell-off reduced valuations on the Euro Stoxx 50 Index to 10.2 times forecast income, from this year's peak of 11.8.
Shares in Vodafone, the most common stock for Irish investors, advanced 1.4pc. The gains came as Vodafone's Egyptian unit said it expects the number of subscribers to increase 15pc by the end of the year.