Downgrading knocks shares
BAD news from Ireland knocked back share prices here and in the rest of Europe as investors took a deep breath following rating agency Moody's decision to cut Ireland's credit rating and the NAMA's decision to apply even harsher discounts to lenders' loans than in April.
The ISEQ Overall Index fell for a fourth day, closing down 34.84 points, or 1.2pc, at 2,820.68 points with banks posting some of the steepest declines.
Shares elsewhere in Europe fell in early trading after Moody's cut its rating for Ireland but later recovered some of their losses only to fall again on bad news from the US.
National benchmarks declined in 15 of the 18 western European markets. The UK's FTSE 100 slid 0.2pc, France's CAC 40 slipped 0.4pc and Germany's DAX fell 0.5pc. In Dublin, Bank of Ireland slid 4.4pc to 61c while Allied Irish was down 3.5pc at 85c as Moody's warned the country faces a slow climb out of recession as the cost of a rescue of its banking sector mounts.
The shares fell further in the afternoon after NAMA applied even more stringent discounts to the second tranche of loans transferred from the banks to the agency.
Allied Irish, which has to meet a capital shortfall of €7.4bn this year, accounted for just over half the loans transferred yesterday, received a 48pc discount, up from the 42pc "haircut" applied in April. Bank of Ireland saw its €1.8bn loans discounted by 37pc, two percentage points higher than last time.
The response of other shares to the bad news was muted. Paddy Power bucked the trend, rising 1.1pc to €26.99 after the 'Sunday Business Post' reported the bookmaker is considering entering the social-gaming market, in which computer users play against each other over the internet. European shares also slipped for a fourth straight session yesterday, led lower by oils and banks, with Moody's downgrade, a decline in US homebuilder confidence and disappointing results from major US companies hurting sentiment. General Electric, Bank of America and Citigroup have all recently reported a drop in quarterly revenues.
BP slid 4.7pc after the oil company's talks with Apache reportedly stalled. Sweden's Electrolux slid the most in five months after the world's second-biggest appliance maker said that demand weakened "substantially" in southern Europe. Philips, the world's biggest lighting company, dropped 3.6pc after forecasting sales growth will slow.
Heidelberger Druckmaschinen gained 6pc as the world's largest maker of printing presses said preliminary orders in the first quarter rose 43pc from a year earlier to €786m, helped by increasing demand in China.