Friday 19 January 2018

ECB's plan to buy more eurozone bonds helps ISEQ recover losses

CRH leads rally with 3.21pc surge to €13.83 as stocks across the board benefit from 'watershed moment'

Workmen carry out
repairs to the euro sign
sculpture outside the
European Central Bank
(ECB) headquarters in
Frankfurt yesterday. Photo: Bloomberg News
Workmen carry out repairs to the euro sign sculpture outside the European Central Bank (ECB) headquarters in Frankfurt yesterday. Photo: Bloomberg News

Peter Flanagan

IRISH stocks recovered some of their recent losses yesterday amid expectations that the ECB may take further measures to stop the ongoing sovereign debt crisis, while strong manufacturing data acted as a boon for the market.

At the close the ISEQ Overall Index was up 1.45pc, or 38.3points at 2684.30, with stocks rising more or less across the board.

The eurozone bailout fund will issue bonds next month to provide emergency loans to indebted nations in what was described as a "watershed moment" for the currency union's bond markets. The bailout fund is expected to be increased by around €8m, while ECB president Jean Claude Trichet said the central bank could step up its purchases of eurozone bonds in an effort to stabilise the market.

CRH led the index, surging 3.21pc to €13.83, after strong demand for a bond issue forced the construction giant to increase the issue by 50pc to $750m (€571m), and the improved PMI figures across the west heightened trader confidence.

CRH's rise helped a jump in construction stocks, with Kingspan jumping 2.68pc to €6.21 and Grafton Group surging 1.65pc to €2.96, shaking off the problems the poor weather may cause.

Mixed financials

It was a mixed day for financials, with Allied Irish Banks slipping 1.16pc but Bank of Ireland and Irish Life and Permanent both posting small gains.

Few major stocks lost ground on the day, although Irish Continental Group slid 0.78pc to €15.35.

The Irish gains were not unique on a day when European stocks jumped by the most in three months.

National benchmark indexes advanced in all 18 western European markets, with gauges in Spain, Italy and Greece rising more than 2pc. London's FTSE rose 2pc, France's CAC 40 jumped 1.6pc and Germany's DAX index 2.6pc. The Euro Stoxx 600 climbed 2pc.

"Given the severity of recent declines it's not surprising to see a bounce today," said Ioan Smith, a London-based director at Knight Capital Europe.

"The focus very much remains on what's happening in bond markets. It's all about what the ECB does next.

"This is a big moment for the market, it will go a long way in determining what happens next year."

Commodity stocks had a strong day, with BHP Billiton, the world's largest mining company, gaining 3.7pc as copper led base metals higher on the London Metal Exchange. Rio Tinto advanced 3.3pc.

Insurance firms also rose, Aviva, the UK's second-biggest insurer, rose 4.3pc and Legal & General increased 3.6pc.

In Frankfurt, Porsche climbed 5.6pc after investors approved plans for a stock sale.

Irish Independent

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