ISEQ hit by slump in the US housing market
Construction firms in the Stoxx 600 get hit hardest
IRISH shares struggled for a second day following unexpectedly poor housing figures from the US.
The ISEQ Overall Index closed down 74.96 points, or 2.4pc, at 3,001.82. Few stocks ended the day in positive territory as gains by Petroneft, CPL Resources and Donegal Creameries were overshadowed by declines in heavyweights such as CRH and Elan.
CRH, the benchmark's biggest company which accounts for a third of the index, tumbled 3.8pc to €18.36 as traders reacted to US news that purchases of new homes in May were the lowest on record. An index of construction shares posted the biggest drop among 19 industry groups in the Stoxx 600. HeidelbergCement, the world's third-biggest cement maker, dropped 4.1pc. Wolseley, the continent's largest supplier of heating and plumbing products, sank 5.2pc.
Allied Irish Banks fell 3.2pc to €1 after the Polish government confirmed PKO Bank Polski's bid for AIB's 70pc stake in Bank Zachodni WBK. AIB is selling the stake in Zachodni, Poland's third-biggest bank by market value, to help meet capital requirements set by the Financial Regulator.
Oil and gas exploration firm Petroneft continued its positive year, closing the day up 8.7pc at 50c after finance director Paul Dowling said the company had $50m (€40.8m) available to spend on licences or to make acquisitions. The stock is the best performer on the ISEQ so far this year. Recruiter CPL finished up 4.2 at €2.50 and Donegal Creameries defied the rest of the food sector to end the day up 8.45pc at €2.81.
In London, the benchmark FTSE 100 Index fell 1.3pc, to 5,178.52. Xstrata, the fourth-largest copper producer, and Anglo American sank more than 2pc as base metals retreated. Mining companies Rio Tinto and BHP Billiton fell more than 1pc after earlier reversing losses as Australian Prime Minister Kevin Rudd said he faces a leadership challenge and the US housing data raised concerns for the recovery. Mr Rudd wants to impose a special 40pc tax on mining companies.
Elsewhere in Europe it was a similar story. National benchmark indexes fell in all 17 western European markets that were open, except Iceland. France's CAC 40 sank 1.7pc and Germany's DAX retreated 1pc.
"There are worries about another drop in the global economy," said Matthieu Giuliani, a fund manager at Palatine Asset Management in Paris. "The worry is that growth will be weak and that will hurt the outlook for earnings."
Insurance stocks sank 1.5pc for the second-biggest decline by industry group. Legal & General, the UK's fourth-largest insurer, slipped 2.8 pc. Aegon, the Dutch owner of US insurer Transamerica dropped 2.5pc. Axa, Europe's second-biggest insurer, lost 2.3pc.