Monday 18 December 2017

European stocks rise on back of Irish bailout exit

The Bank of Ireland headquarters in central Dublin.
The Bank of Ireland headquarters in central Dublin.
Sarah McCabe

Sarah McCabe

IRISH news was on investors' minds all over the world yesterday, as the country's first bond sale after the bailout exit pushed down European borrowing costs and boosted the Stoxx Europe 600 Index to its highest level since 2008.

Analysts said the low yield achieved on Ireland's bond sale was an important milestone for other peripheral economies.

Ireland's existing 10-year bond yield fell to the lowest for any benchmark security in almost eight years and comparable benchmark bond yields for Portugal and Italy fell to their lowest since May after the sale, while Greek borrowing costs tumbled to the lowest since May 2010.

"Strong demand for the Irish bond sale suggests confidence returns to Ireland and perhaps other peripheral countries as well," said Michael Leister, a fixed-income strategist at Commerzbank. "Strong secondary market performance also points to a similar picture. This will bode well for Portugal, which is likely to follow with a new bond this month."

Irish stocks soared, with the ISEQ Overall Index closing up 1.88pc or 86.57 points to 4682.16. Some 21 of its 45 listed companies rose.

Bank of Ireland added 8pc, its biggest rise in months, after the lender said it had appointed advisers for its own five-year bond sale this week. Permanent TSB and AIB enjoyed a halo effect, up 5pc to 5c and 4pc to 12c respectively.


Karelian Diamond saw the biggest percentage losses, with a 20pc fall wiping out earlier and closing at 4c. Text message gaming company Zamano also fell, down 4pc to 11c after adding 17pc the day before. Mincon, the newly listed mining company, shed 2pc to 96c.

In Europe, stocks rose, boosted by falling German unemployment figures, as well as Ireland's post-bailout return to the bond market. National benchmarks rose in 16 of the 18 western European markets. Germany's DAX and France's CAC 40 gained 0.8pc, while the UK's FTSE 100 added 0.4pc.

A gauge of European banks jumped to a two-and-a-half-year high as European borrowing costs fell, contributing the biggest gains to Stoxx 600, which rose 0.7pc to 329.24 at the close of trading.

In Lisbon, Banco Espirito Santo advanced 5.7pc to €1.20, its highest price since September 2011. In Madrid, Banco Popular Espanol climbed 6.6pc to €4.96.

Shipping giant Maersk added 3.5pc to 62,300 kroner after the owner of the world's largest container-shipping line said it would sell a large stake in several holdings, which should book it a gain of about €1.9bn.

In France, Hugo Boss slid 2.3pc to €100. Societe Generale downgraded the the luxury-clothing maker controlled by buyout firm Permira Advisers to hold from buy yesterday.

Irish Independent

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