Better economic data bolsters stocks
AFTER days of negative momentum, European and US stocks rallied yesterday as better-than-expected economic data from both sides of the Atlantic bolstered traders.
Indices around Europe emerged from the red, with all the markets racking up gains during the day. Investors bet that the sharp decline in equities has been overdone and doesn't represent a fair reflection of companies' more positive earnings outlooks.
Germany's manufacturing sector shrank less than anticipated this month. The country's purchasing managers' index rose to 48.1 in December from 47.9 in November. Any reading below 50 indicates a contraction.
France's latest PMI barometer also climbed, from 47.3 last month to 48.7 this month. That was way ahead of economists' expectations.
Spain also managed to offload more bonds than anticipated in an auction, while, in the United States, the number of jobless claims last week declined by 19,000 to 366,000. A figure of around 390,000 had been expected.
The ISEQ Overall Index regained just some of the past few days' lost ground. It closed up 1.01pc, or 27.06 points, to finish the session at 2,708.27.
The biggest main mover of the day was packaging group Smurfit Kappa. It advanced 8.07pc, or nearly 34 cent, to €4.54. Davy Stockbrokers predicted yesterday that the company would probably be able to comfortably refinance debt early in 2012, and has an €8 price target on the stock.
Index heavyweight CRH closed up 1.52pc, or 20 cent, at €13.38, while Paddy Power added 1.3pc, or 51.5 cent, to €40.
But there were plenty of losers, despite the ISEQ's overall gain. Bank of Ireland was off 2.4pc at eight cent, while United Drug fell 3.4pc, or seven cent to €1.98. Fruit distributor Fyffes shed 5.1pc, or two cent, to finish at 37 cent.
National benchmark indices rose in all of the 18 western-European markets. France's CAC 40 gained 0.8pc, Germany's DAX rose 1pc and the UK's FTSE 100 advanced 0.6pc.
Germany's Commerzbank rose 6.7pc to €1.31. Raiffeisen Bank International rallied 5.3pc to €18.40. A gauge of banking shares on the Stoxx 600 gained 1.3pc.
Travel firm TUI jumped 12pc to €4.55 after Cheuvreux upgraded the shares to "outperform" from "underperform".
O2 owner Telefonica fell 1pc to €13.05. Spain's former telephone monopoly reduced its 2012 dividend forecast by 14pc, citing market conditions that have changed "significantly".
"Management credibility has been tarnished and Telefonica remains on an unjustified growth premium," said James Britton, a telecoms analyst at Nomura Holdings.