Business World

Saturday 23 September 2017

Losses for fourth day running as uncertainty hits UK and Germany

John Mulligan

John Mulligan

Poor economic data from the UK and Germany, coupled with continuing uncertainty about Spain and Greece, weighed on European stocks yesterday.

Bourses were propelled into their fourth successive day of losses as figures showed the UK economy endured a third consecutive quarter of recession. The extent of the GDP decline in the three months to the end of June, -0.7pc, surprised economists.

"The UK gross domestic product number was a bit of a startler," said Mike Lenhoff, chief strategist at Brewin Dolphin Securities in London. "After three-quarters of negative growth, the UK's now firmly in the European camp of stagnation. Decent earnings results, particularly from the big international companies, are providing some support."

In Germany, business confidence fell to its lowest level since March 2010, while in the US, markets dropped following poor results from Apple and data that showed new home sales unexpectedly fell.

In Ireland, the ISEQ Overall Index fell, but by the close had clawed back almost all the losses it made earlier. However, it yielded gains made in the early afternoon. It closed down just 8.8 points, or 0.29pc, at 3,062.92.

Shares in oil and gas exploration firm Providence Resources shot up earlier in the day, after it said that its Barryroe field off Cork could hold as much as 1.6 billion barrels of oil. That's much more than it previously anticipated. However, analysts reckon that about 160 million barrels of that would be recoverable. Providence shares closed up just 0.7pc, or 6 cent in Dublin at €8.44.

In the UK, shares in Tullow Oil slumped 6.2pc to £12.84 after half-year profits jumped 48pc to $829m on the back of a $701m gain from selling a stake in a prospect in Uganda.

Pharmaceutical company Elan suffered another tough day as it released second-quarter results that were tempered by impacts, including foreign exchange effects. It also continued to be drawn lower by partial results released this week from trials into an experimental Alzheimer's treatment in which it has a 25pc stake. The stock closed down 4.6pc, or 45 cent, at €9.34.

Shares in Bank of Ireland rose 3.4pc to 9 cent, while financial services group IFG advanced 3.4pc to €1.50.

National benchmark indices rose in 14 of the 18 western European markets. The UK's FTSE 100 fell less than 0.1pc, while France's CAC 40 gained 0.2pc. Germany's DAX climbed 0.3pc.

Telecoms group BT slid 3.3pc to 210.2p, its biggest retreat in six weeks, after reporting fiscal first-quarter sales of £4.48bn. That missed the average analyst estimate of £4.58bn.

Daimler advanced 4.1pc to €37.62 after second-quarter sales increased 10pc to €28.9bn. (Additional reporting, Bloomberg)

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