Thursday 8 December 2016

Shares slump in face of debt fears

Markets

Published 12/07/2011 | 05:00

IRISH shares slumped yesterday, in line with the rest of Europe, as concerns that the European debt crisis was spreading to the much bigger economies of Italy and Spain.

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By the close of trading the ISEQ Overall Index was down 1.47pc, or 43.28 points, at 2,900.25.

The yield on 10-year Italian government bonds jumped again to 5.68pc -- almost the same as the 5.8pc Ireland is paying for its bailout.

A debt crisis in Italy would dwarf the problems in Portugal, Greece and Ireland.

That concern saw a general flight from risk across the ISEQ, with shares falling across a broad spectrum of industries.

Construction giant CRH dropped 2.46pc to €13.90, continuing its losses from last week, while Grafton Group crashed 7.72pc to €2.81.

The latest Ulster Bank Construction PMI showed that activity in the sector fell sharply again last month, deteriorating for the fourth month in a row and pushing the building slump into a fifth year.

Not even the food and agri sectors were immune to losses. Greencore fell 4.85pc to 96c while Kerry Group slid 2.82pc to €28.48. Origin Enterprises lost 2.7pc to close at €3.60.

Bank of Ireland dropped 12.93pc after shareholders approved a new share issue.

Elsewhere, European stocks tumbled the most in seven weeks, led by banks and insurers, as contagion from Greece's debt crisis threatened to spread to Italy and Spain.

National benchmark indices declined in all 18 western European markets. Germany's DAX lost 2.3pc and the UK's FTSE 100 fell 1pc. Portugal's PSI-20 Index plunged 4.3pc and Spain's IBEX 35 sank 2.7pc. Italy's FTSE MIB Index slid 4pc, bringing the retreat since February to 21pc. The Stoxx Europe 600 Index lost 1.4pc.

"What we're seeing today is the result of 20 to 30 years of Western countries living beyond their means," said Matthieu Giuliani, a fund manager at Palatine Asset Management in Paris.

"We pulled on the thread a bit and everyone is naked underneath. I'm cautious on stocks. Emerging markets were the final motor. If we have to slow down that machine, that motor will be removed."

UniCredit, Italy's biggest bank, tumbled 6.3pc. Intesa Sanpaolo, the second-largest, plunged 7.7pc as it was downgraded to "neutral" from "overweight" at HSBC.

Fiat tumbled 5.4pc as the carmaker was cut to "sell" at Societe Generale.

In London, BSkyB tumbled 4.6pc, the lowest since November, as Culture Secretary Jeremy Hunt referred News Corporation's £7.8bn (€8.84bn) bid to buy all of the pay-TV operator to the Competition Commission.

News Corporation also withdrew its pledge to spin off its Sky News channel as part of its offer for BSkyB.

Irish Independent

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