Rating cut has little impact as shares post small gain
THE news that Moody's had cut Ireland's credit rating to junk status had little effect on the markets yesterday, as Irish shares posted a small gain.
By close of trading, the ISEQ Overall Index was up 0.73pc, or 21.05 points, at 2,908.10.
The market was buoyed by data from China showing strong economic growth during the second quarter of the year, while in the US federal reserve chairman Ben Bernanke said he was open to another stimulus package for the US economy if struggles since the end of the latest quantitative easing measures a fortnight ago continued.
The big winner on the day was Greencore, which stormed back to its highest close in a week -- a day after announcing it had agreed a deal to take over the UK convenience foods maker Uniq. The stock rose 14.19pc, closing at €1.
CRH recovered some of its losses from earlier in the week, gaining 1.97pc to end the session at €14. Mr Bernanke's comments proved especially valuable for a company that conducts a huge amount of its business in the US.
CRH's gains lifted the wider construction sector, with Grafton rising 2.94pc to €2.90.
Packaging firm Smurfit Kappa Group added 1.09pc to €8.22 on the back of a 'buy' rating from Deutsche Bank, which initiated coverage of the firm.
Stragglers on the day included Kerry Group, which closed down 1.72pc the day after the UK's office of fair trading announced an investigation into the company's January merger with Headland Foods.
Elsewhere, national benchmark indices in 16 out of 18 western European markets advanced. The UK's FTSE 100 Index jumped 0.6pc and France's CAC 40 Index increased 0.5pc, while Germany's DAX Index rallied 1.3pc. The Stoxx Europe 600 added 0.7pc.
"Investors are realising the sell-off early in the week on Italy was overdone as the Italian economy is much stronger than the other PIGS countries," said Witold Bahrke, a strategist at Copenhagen-based PFA.
"Italy is on track with its budget and is the world's third-largest bond market, so there's a lot of private support out there to keep Italy from spinning into the ground."
BMW surged 4.4pc as Exane brokers raised its recommendation on the carmaker to 'neutral' from 'underperform'.
Daimler, the maker of Mercedes luxury cars, rose 2.9pc. Morgan Stanley increased its estimate for the company's shares to €68 from €62.
Burberry soared 6.5pc after posting revenue in the three months ended June 30 that surged 30pc. That beat the average estimate of 11 analysts.