Wait-and-see approach to Greece
Published 28/06/2011 | 05:00
LIKE gunslingers, markets waited for Greece to make the first move yesterday as the country's parliament kicked off a three-day debate on make-or-break austerity plans that are aiming to stave off the first effective collapse of a euro economy.
It's still uncertain whether Prime Minister Papandreou will be able to muster the firepower of his slim majority to see off what would be a cataclysmic rejection of the draconian measures.
And while stockmarkets waited, bond yields reached new highs. The yield on Irish 10-year bonds rose 13 basis points, or 0.13pc, to 12.10pc having earlier reached a record 12.11pc. Portuguese bonds with 10-year maturity rose 30 basis points, or 0.30pc, to 11.68pc.
The Stoxx Europe 600 Index advanced less than 0.1pc to 264.01 at the close in London. The gauge has fallen for eight straight weeks, the longest decline since 1998, as concern grew that Greece will default on its debt, and US economic data trailed forecasts. The retreat has left the measure trading at the cheapest valuation compared with reported profits since 2008.
"There is clearly a lot of value in Europe but investors don't like value when there is a lot of fear around," said Karen Olney, head of thematic equity strategy at UBS in London.
The ISEQ Overall Index paced markets elsewhere in Europe, and was virtually unchanged on the day, closing up just 4.25 points, or 0.15pc, at 2,886.82.
At one stage Bank of Ireland was trading more than 16pc higher -- but everything's relative these days -- before ending the session almost practically unchanged. It nudged 0.8pc higher to 11.7 cent.
Better was the performance from drinks group C&C, which holds its AGM tomorrow. It finished the day up 2.36pc, or 8.3 cent higher at €3.60. The company's off-trade sales of Magners cider are up 26pc in the fiscal year to mid-June in Britain, according to Nielsen data.
Insulation-maker Kingspan also fared reasonably well, edging 1.16pc, or 8 cent higher to €7. Davy Stockbrokers raised its price target for the company's shares to €9.60. Irish Life & Permanent fell 7.7pc to just 6 cent.
National benchmark indices fell in 11 of the 18 western European markets. Germany's DAX slipped 0.2pc, while France's CAC 40 gained 0.3pc and the UK's FTSE 100 rose 0.4pc. Greece's ASE dropped 0.5pc.
Danske Bank, which owns National Irish Bank, led Danish banks lower as Fjordbank Mors became the nation's second regional lender to resort to the state's bank resolution package in 2011 after it failed to meet solvency requirements.
Akzo Nobel tumbled 6.5pc to €42.76, after the chemical company said second-quarter results will be hurt by higher raw-material prices and one-off costs related to factory maintenance.