Shares fall as default fears grow
IRISH shares stumbled yesterday as ongoing concerns about the state of the Irish economy continued to weigh heavily on the market.
On the day, the ISEQ Overall Index fell 0.59pc, or 15.89 points, to close at 2,682.94, with the financials again leading the market lower.
The ratings agency Moody's Investor Services cut Anglo Irish Bank's unguaranteed senior debt to just one notch above junk status, suggesting a default was more likely to take place.
That news was combined with the yield on 10-year Irish bonds, which remained above 6.4pc for most of the day. The spread against German Bunds was just below 4.2pc last night.
Financial stocks led the market down. Bank of Ireland lost 2.03pc to reach 58c after it was reported that the bank could lose €36m as a developer had gone bust, while Allied Irish Banks' fell 1.12pc to 53c amid reports that takeover talks involving M&T Bank, which AIB has a share in, had broken down. Irish Life & Permanent fell 2.1pc to €1.40.
Away from the financials, the food giant Aryzta tumbled 1.13pc to €33.62 after posting lacklustre annual results.
Few stocks posted gains on the day, but the oil and gas explorer Petroneft gained 5.45pc to 58c while packaging company Smurfit Kappa Group jumped 1.81pc to €7.33.
The ISEQ was not the only index that struggled yesterday, amid worries that this month's rally may have overshot the economic outlook, while fears remain of the knock-on effect a possible Irish default would have on the market.
National benchmark indexes declined in 15 of the 18 western European markets. France's CAC 40 fell 0.4pc and Germany's DAX lost 0.3pc.
The UK's FTSE 100 retreated 0.5pc. The composite Stoxx Europe 600 Index lost 0.4pc.
"There will inevitably be some disappointment -- either in the form of poor economic or earnings data, or signals that quantitative easing will be deferred," said David Shairp, a global strategist at JPMorgan Asset Management in London.
In London, drugmaker AstraZeneca declined 1.6pc as its experimental cancer treatment Zibotentan missed a main study goal after failing to help patients with a kind of prostate tumour live longer.
Unilever gained 1.3pc as the maker of Dove shower gel agreed to buy Alberto Culver to add VO5 and Nexxus to become the world's largest maker of hair-conditioning products.
In Frankfurt, Siemens, Europe's biggest engineering company, declined 1.8pc after the company said profit at the health-care unit would probably be "slightly less" than had been reported a year ago.