Shares fall for eighth day spooked by fears of faltering US recovery
IRISH shares fell for the eighth day -- the longest losing streak since February 2009 -- as shares across the globe plunged on concern the US may re-enter recession.
The benchmark ISEQ Overall Index lost 71.21 points, or 2.6pc, to close at 2639.15 yesterday. The index has now lost 9.8pc of its value since last week.
Among the heavyweights to fall were Elan which shed 9.6pc to close at €7.25 as health shares with exposure to the US took a beating. Merrion closed down 6.9pc at €1.08 while Icon slid 5.7pc to €15.
Another big decliner was Smurfit Kappa which tumbled 7.5pc to €5.91 as investors got out of cyclical industries such as packaging that depend of economic growth in other companies. CRH extended its recent decline falling 0.7pc to €12.56.
Among the penny stocks to post falls were Bank of Ireland which tumbled 9.9pc to 9 cents and Balmoral International which plunged 14.3pc to just 1 cent after management said it was removing the company from the Dublin and London exchanges.
It was much the same story elsewhere in Europe as stocks extended an 11-month low amid concern the US recovery is faltering and the country may lose its top credit rating.
The benchmark Stoxx Europe 600 Index retreated 2pc by the close in London, the biggest drop since March 15.
The gauge has declined 13pc from this year's high on February 17 as the yield on Italian and Spanish bonds surged to record levels amid speculation the debt crisis won't be contained.
Societe Generale, France's second-largest bank, tumbled 9pc after the company reported second-quarter results that missed analysts' estimates. Cairn Energy fell 5.1pc after abandoning an oil well off Greenland.
Axel Springer, Europe's largest newspaper publisher, surged 9.7pc after saying that first-half operating profit rose 11pc. Earnings before interest, taxes, depreciation and amortisation increased to €288.7m.
"The market sentiment at the moment is on apocalypse level," said Peter Buergler, a trader at Luzerner Kantonalbank in Lucerne, Switzerland.
"With the budget cuts in the US, opinions are resurfacing that the US could possibly slide into a recession. The loss of its AAA rating would send the markets even more into a descent," he added.
Moody's Investors Service said the outlook for US debt is negative after President Barack Obama signed into law a plan to lift the nation's borrowing limit and cut spending.
The US economy is "balanced on the edge," said Harvard University professor Martin Feldstein, who joined four members of a nine-person panel that dates recessions and that sees rising odds of another downturn. The US economy now faces a 50pc chance of sliding into a new recession, Mr Feldstein said this week.