Shares fall amid AIB takeover fears
IRISH shares fell as investors fretted that the Government may take over Allied Irish this week. Shares elsewhere in Europe rose to levels last seen before the collapse of Lehman Brothers in September 2008.
The ISEQ slid to 15.29 points, or 0.5pc, to 2,834.73 after all three banks posted declines. Allied Irish slumped as much as 16pc during trading after reports that the Government will use new legislation to nationalise the bank.
The shares eventually closed down 8.9pc at 41c. Shares in Bank of Ireland were down 1.3pc at 31.5c, while Irish Life & Permanent sank 5pc to 91.2c.
"If the nationalisation of Allied Irish was to happen quickly, it may take some investors by surprise," said Ciaran Callaghan, an analyst with Dublin-based NCB Stockbrokers. "The Government's previous intention was to keep the bank quoted."
News of the Government's latest effort to stabilise the banking sector also spooked the markets overseas as the European Central Bank warned of "serious concerns" that the proposals may threaten the Central Bank's independence and its ability to run liquidity operations. The worries weighed on the euro which slipped against 15 of the world's 16 biggest currencies.
Elsewhere in Europe, investors were less gloomy. National benchmark indexes advanced in 14 of the 18 western European markets and the benchmark Stoxx Europe 600 Index climbed to the highest level since September 12, 2008, the last trading day before Lehman's collapse.
The gauge has advanced 6.3pc this month as US reports showed claims for unemployment benefits unexpectedly fell, builders began work on more homes and manufacturing in the New York region rebounded more than forecast.
"The start of 2011 might be quite good as we still have a lot of liquidity driving the market," said Michael Koehler, head of strategy at Landesbank Baden-Wuerttemberg in Mainz.
"The latest economic data that we got, especially from the US, was overall really good and we will definitely not see a double dip. Though the sovereign debt crisis issue is still not solved."
Volkswagen soared 3.7pc after saying it expects sales in China to grow as much as 15pc next year. Albertis added 1.3pc on reports CVC Capital Partners may bid for the Spanish toll road operator. Retailers bucked the trend as snow disrupted holiday shopping across the continent.
888 Holdings surged 18pc after the online gambling company said it was in the early takeover discussions with Ladbrokes. Retail stocks suffered the only drop out of 19 industry groups in the Stoxx 600 as the poor weather kept shoppers at home. Inditex, Dixons and Metro all suffered falls.