Bond jitters send ISEQ into red
THE Dublin market closed in negative territory last night as concerns about today's bond auction and negative economic sentiment dragged the index 11 points into the red.
AIB, Bank of Ireland and Irish Life & Permanent were all nursing losses at the end of the session as investors digested the funding implications of rising government bond yields.
AIB was the biggest loser, closing the day down 4.3pc at just over 80c, having briefly touched the 79c mark in morning trading.
The bank is expected to tap the international funding markets for a multi-billion euro raising later in the year -- the high premium commanded by Irish government debt is seen as a serious negative.
Bank of Ireland, which has already completed its €2.9bn recapitalisation but has €7bn of debt to refinance in September, also spent much of the day in negative territory before closing down just over 2pc.
Meanwhile, fellow financial Irish Life & Permanent finished the session down just over 2pc, as shareholders sold out ahead of the company's half-year results at the end of the month, and insurer FBD closed down 2.5pc ahead of its results next week.
While the financials accounted for the bulk of the ISEQ's fall, troubled housebuilder McInerney was the biggest loser of the day, shedding 40pc of its value to trade at just 3c as investors face a near wipeout under a massive restructuring.
Kingspan also closed in the red, shedding 3.4pc, while Aer Lingus closed down just over 3pc as concern mounts about the bottom line implications of its cabin crew stand-off.
The biggest winner was housebuilder Abbey whose shares closed 2.4pc ahead followed by Providence Resources, which closed up 1.6pc. Ryanair was also on the up, gaining 1.35pc to close at €3.75, while food giant Aryzta closed up almost 1pc as its €349m takeover of Maidstone Bakeries continues to lure investors.
While domestic concerns largely dominated on the home market, international indexes were dragged down by news that the Japanese economy slowed to a virtual halt in the second quarter, coupled with disappointing from the US data.
In London, the FTSE 100 index of leading shares closed flat at 5,276.10 points. In Paris, the CAC 40 shed 0.37pc to 3,597.60 points but in Frankfurt the DAX was unchanged at 6,110.57 points.
The Japanese economy expanded 0.4pc in the three months to June, its slowest pace in the previous three quarters.
While business conditions improved slightly in August for New York manufacturers, new orders and shipments indices fell below zero for the first time in more than a year in another worrying pointer for the economy. (Additional reporting: Reuters)