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German ruling propels stocks as CRH and Smurfit add major gains

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Markets rallied after German Constitutional Court president Andreas Vosskuhle announced the verdict on Germany’s ratification of the ESM and fiscal compact yesterday while political activists draped in chains demonstrated outside against the decision. Photo: Getty Images

Markets rallied after German Constitutional Court president Andreas Vosskuhle announced the verdict on Germany’s ratification of the ESM and fiscal compact yesterday while political activists draped in chains demonstrated outside against the decision. Photo: Getty Images

Markets rallied after German Constitutional Court president Andreas Vosskuhle announced the verdict on Germany’s ratification of the ESM and fiscal compact yesterday while political activists draped in chains demonstrated outside against the decision. Photo: Getty Images

ALL eyes were on Germany yesterday, with markets breathing a sigh of relief that the country's constitutional court had sanctioned the new bailout fund for the eurozone.

The approval had been expected, but the ruling eliminates uncertainty about the European Stability Mechanism (ESM), even if it limits the amount of money the German government can put into it before having to seek parliamentary approval.

The decision helped to propel stocks, while the euro also climbed against the dollar.

"It was very important for our court to say yes to the ESM," said Robert Halver, head of capital markets research at Baader Bank in Frankfurt.

He added: "The ECB will help find euro-land a way through, as central banks have in the US, Japan and the UK."

There was little or no corporate domestic news to drive Irish stocks yesterday.

The ISEQ Overall Index, which had added just over 0.3pc earlier in the day, was virtually unchanged by the end of the session at 3,250.44, having gained just under one point.

But that masked significant advances by some of the biggest components.

CRH, which has its secondary listing in Dublin, added 1.8pc, or 27 cent, to finish at €15.37.

Eurozone

Packaging group Smurfit Kappa rose nearly 2.2pc, or 15 cent, to €7.20. German container board makers have said they have already achieved price rises this month and that demand in the summer had been good, according to Davy stockbrokers.

Shares in Elan fell 1.85pc, or 16 cent, to €8.45. More data released this week from a failed new drug that it had hoped would be an effective treatment for Alzheimer's Disease confirmed some activity but showed no efficacy.

Shares in Grafton Group slipped 1.3pc, or 4.4 cent, to €3.35, while healthcare firm United Drug added nearly 3.8pc, or 10 cent, to €2.75.

National benchmark indices rose in 14 of the 18 western European markets. France's CAC 40 advanced 0.2pc, Germany's DAX rallied 0.5pc, while the UK's FTSE 100 lost 0.2pc.

The UK's biggest housebuilder by volume, Barratt Developments, lost 6.6pc to 158.5p after it refrained from paying a dividend.

The Danish wind turbine maker Vestas crashed 8.9pc to 39.90 kroner, extending Tuesday's 6.1pc decline after its stock had been downgraded.

Commerzbank jumped 7.2pc to €1.58 on the back of the German court ruling. Fraport gained 5.4pc to €47.29 as the Frankfurt airport owner said aircraft movements at the facility rose by 1.2pc in August.

Shares in defence firm BAE Systems jumped 10.6pc, to 363.6 pence, the biggest increase since January 2003. It is in talks with Airbus owner EADS about a possible combination of the two entities.

BAE bought the Irish financial-software firm Norkom Technologies last year for €217m.

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