ISEQ rises despite default jitters
Published 10/11/2010 | 05:00
THE ISEQ advanced yesterday as traders fretted about the prospects of a default and shares in some of the biggest companies and banks continued to fluctuate wildly.
The benchmark ISEQ closed up 52.7 points, or 1.9pc, at 2774.02 points. While this was a two-month high for the index, it was a long way from the two-year high posted by shares elsewhere in Europe.
The difference in yield, or spread, between 10-year Irish bonds and German bunds widened to a record 554 basis points while the cost of insuring against default soared to a record 602 basis points, before closing 30 basis points lower.
The biggest gain on the stock exchange was posted by Allied Irish Banks, which bounced 31pc to 38c after touching a record low on Monday.
Bank of Ireland closed up 4.7pc at 42c while Irish Life & Permanent ended the session 7.8pc higher at 94.5c.
Other stocks to post huge double-digit gains included Kenmare Resources which closed up 12pc at 28c after the miner resumed operations a month after a settling pond burst its banks, swamping hundreds of homes and almost killing a four-year-old girl.
Howth-based Datalex soared 28pc to 23c after the software company won two awards at the World Travel Awards in London.
CRH, the company with the biggest weighting on the index and thus the biggest influence on the ISEQ's ebbs and flows, jumped 4.4pc to €14.47 as the company told investors that the rate of decline in sales moderated in recent months, with like-for-like third-quarter sales down 4pc compared with last year.
This followed a 10pc like-for-like fall recorded for the first half of the year.
DCC, which tweaked full-year forecasts upwards after profits rose in the first half, also posted gains, rising 2.5pc to €21.85 after earlier touching a 52-week high.
Elsewhere in Europe, stocks also climbed, sending the Stoxx Europe 600 Index to a two-year high, after companies from Barclays to Adecco posted better-than-estimated results.
Barclays, Britain's third-largest bank, added 4pc after saying its capital ratio remained strong.
Adecco advanced 3.7pc after the staffing company posted a jump in third-quarter profit.
"Corporate profitability continues to bounce back nicely," said London-based Henk Potts, who helps oversee $248bn (€179bn) as an equity strategist at Barclays Wealth.
"Despite the rally, valuations still look undemanding," he added.
National benchmark indexes rose in 15 of the 18 western European markets. The UK's FTSE 100 Index climbed 0.4pc, while France's CAC 40 Index advanced 0.8pc. Germany's DAX Index gained 0.6pc.