Business World

Sunday 18 February 2018

Shares fall amid fears for Allied Irish

Thomas Molloy

IRISH shares fell, paced by Allied Irish which tumbled on concern that its disposal programme is faltering and the bank will end up under government control. Worries about the US and Chinese economies also weighed on shares across the continent.

Shares in Allied Irish slid 6.5pc to 87c yesterday following rumours that Intesa Sanpaolo, Italy's second-biggest lender, has pulled out of the bidding process to buy a 70pc stake in Bank Zachodni WBK from Allied Irish.

The shares began falling during early trading after Davy Stockbroker analyst Stephen Lyons said the Government was likely to take a majority stake in Allied Irish.

"Based on what we know now, it's hard to see how they can avoid that," the analyst said. Mr Lyons also cut his forecast for pre-provision profit this year to €1.15bn from €1.3bn.

Bank of Ireland slid 2.9pc to 85c ahead of today's interim results while Irish Life & Permanent closed down 2.6pc at €1.85.

Smurfit Kappa was down 4.6pc at €7.84. Rival Mondi forecast "strong" second-half earnings growth after an increase in prices and orders helped it restore profit in the first six months of 2010.

Among the gainers were food company Aryzta which advanced 2.1pc to €30.83 among hopes that the jump in wheat prices won't affect the margins of the Irish-led food group. NCB Analyst Paul Meade said last week that Aryzta may even expand its margins during the crisis.

"Unlike the previous food crisis of 2008, global grain inventory stocks are more than double the 2007/8 pre-harvest level and wheat substitution options, such as rice, are in plentiful supply," he said.

Elsewhere in Europe, stocks fell from a 15-week high after reports added to evidence that Chinese economic growth is slowing and the markets waited for the Federal Reserve's latest policy statement.

In the UK, builders Taylor Wimpey and Barratt Developments lost more than 4pc as house prices retreated.

German bank Hannover Re slipped 6.1pc after profit fell while TUI Travel slumped 10pc as the Thomas Cook owner predicted full-year results at the lower end of forecasts.

The Stoxx Europe 600 Index lost 0.9pc by the close in London. National benchmark indexes fell in 15 of all 18 western European markets. Germany's DAX lost 1pc and France's CAC slid 1.2pc. The UK's FTSE 100 decreased 0.6pc.

"Investors remain cautious on the China growth story, whilst nerves are rising ahead of the Fed pronouncement later," said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.

"The Fed's statement could yet signal a turnaround to the previously bearish sentiment, depending on the nature of its comments on the interest rate decision and any potential return to quantitative easing."

Irish Independent

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