Traders spooked by continuing fears over European debt crisis
It was hardly the type of start to the new year that everyone had been hoping for.
After opening higher, European stock markets slid as Italian bank UniCredit -- the country's biggest -- announced a massive rights issue to raise as much as €7.5bn to strengthen its capital base. The issue will be undertaken at a whopping 43pc discount. Its share price tumbled 11pc to €5.63 yesterday.
The euro also dropped to a fresh low against the Japanese yen and sank 1pc against the dollar.
Traders are worried that Europe's debt crisis is still unchecked and getting worse.
There was also renewed speculation that Spain's new government -- which unveiled tough austerity measures last week -- could apply to the IMF and EU for bailout loans. The rumours were denied by the government.
The Irish market tracked the movement of its peers, with the ISEQ Overall Index shedding earlier gains as the day progressed.
It closed down 1.77pc, or 52.40 points, at 2,908.12. The index has risen as much as 8.5pc since mid-December.
Among the main movers yesterday were drug company Elan, which lost 5pc, or 53.5 cent, to close at €10.16. The stock had been on a steady upward trajectory since August last year, when it was trading at €6.19.
Clinical trial firm Icon Pharmaceuticals lost 4.7pc, or 65 cent, to finish the day at €13, while food group Greencore also lost ground, declining two cent, or 3.1pc, to 62 cent.
Gainers included ferry group Irish Continental, which added 2.67pc, or 39 cent, to €14.99. Providence Resources rose 1.6pc, or 4 cent, to €2.49 after it announced that it had secured additional offshore exploration licences.
CRH declined 20 cent, or nearly 1.3pc, to €15.48. It said yesterday that it spent a total of just under €600m on acquisitions and investments in 2011.
National benchmark indices fell in 17 of Europe's 18 western markets. France's CAC 40 dropped 1pc, the UK's FTSE 100 slipped 0.5pc and Germany's DAX 0.7pc.
"The European debt crisis has never really abated," said John Plassard, director at Louis Capital Markets in Geneva.
"Even though 2011 ended relatively well, 2012 remains at risk. States will have to find €800bn in the financial markets this year, so we should have a lot of market volatility ahead of us, at least during the first half."
Germany and Portugal sold bonds yesterday, kicking off a competition for finance that may determine whether eurozone leaders can preserve the single currency.
Danish wind turbine maker Vestas sank 18pc to 57.05 kroner after cutting its earnings forecasts and saying it will announce a significant change to its corporate structure next week.
US stocks were little changed as consumer, industrial and commodity companies rose, helping the market reverse an early drop triggered by lower-than-forecast factory orders and concern Europe's banks need to raise capital.
The S&P 500 Index dropped less than 0.1pc to 1,276.61 by midday after tumbling as much as 0.7pc earlier.
The Dow Jones Industrial Average increased 5.3 points, or less than 0.1pc, to 12,402.68.
The S&P 500 lost 0.04 of a point to 1,257.60 in 2011, the smallest annual change since 1947.
The benchmark gauge for US equities surged 14pc from last year's lowest level on October 3 through December 30 as better-than-estimated economic data fuelled optimism the world's largest economy can shrug off concern over Europe's sovereign debt crisis.