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EU recession news hits markets

IRISH shares fell again yesterday, taking two-day declines to 3pc as official figures showed the eurozone is back in recession for the second time in four years. The ISEQ wasn't alone; national benchmark indexes declined in every western European market except Spain.

The ISEQ closed down 38.2 points, or 1.2pc, to 3,195.12 points as a rake of blue chips sang the blues. Kingspan slid for the ninth day, closing down another 4.7pc at €7.26. The insulation company issued gloomy forecasts earlier this week which led Goodbody to lower price targets and prompted Davy to reduce earnings forecasts.

Ryanair also extended Wednesday's sharp declines to close down 2.4pc at €4.58 after the European Commission knocked back its plans for a takeover of Aer Lingus and the shares went ex-dividend.

Independent News & Media suffered the worst decline of the day, falling a dizzying 41pc to 5 cents after MSCI removed the shares from some of its indexes. Elsewhere in Europe, SBM Offshore and Man Group declined more than 5pc for the same reason.

Among the few gainers in Dublin were oil companies Fastnet, which advanced 2.4pc to 38 cents, and Petroceltic, which rose 1.8pc to 8.5 cents on optimism that oil prices may rise.

US stocks erased losses after benchmark indexes fell to their lowest levels in more than three months during afternoon trading. The S&P 500 had lost more than 5 pc since November 6 by yesterday afternoon, the worst seven-day drop in a year.


Shares elsewhere in Europe dropped to a two-month low as the euro area entered its second recession in four years. "The euro zone as a whole has slipped back into recession," said Nicholas Spiro, managing director of Spiro Sovereign Strategy in London. "Europe's economic downturn has not only deepened, it has also broadened with the core of the eurozone now much more affected. The bleak economic data out of Europe will further undermine sentiment."

Zurich Insurance Group retreated 3.9pc after Switzerland's biggest insurer reported quarterly profit that missed analysts' estimates.

Hennes & Mauritz fell 3pc after Europe's second-largest clothing retailer said its October sales missed some estimates.

MSCI's decision to remove companies from its indices also affected other stocks. Davide Campari-Milano, the maker of Cinzano wine, slipped 4.3pc and John Wood Group, the UK oil-services company active in Africa and the Middle East, slid 5.9 pc. Fuchs Petrolub sank 5.5pc. Exane BNP Paribas had predicted that MSCI would add the companies to its indexes.

Tesco slipped 1.6pc as rival Royal Ahold NV, the Dutch owner of Stop & Shop grocery stores, said third-quarter profit missed analysts' projections.

Irish Independent