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Shares fall on eurozone growth fear

IRISH shares fell yesterday, as the head of the European Central Bank warned the European economy was still some way away from a full recovery.

By the close in Dublin, the ISEQ Overall Index slipped 1.17pc, or 46.37 points, to close at 3,911.73. That was the second consecutive fall for the index and the worst day in more than a fortnight.

The market trended down for most of the day but fell away sharply once ECB president Mario Draghi commented on the state of the continent's economy.

"Weak economic activity has extended into the early part of the year and a gradual recovery is projected for the second half of this year, subject to downside risks," he told reporters in Frankfurt.

CRH was the main laggard among major stocks in Dublin. The construction materials giant slid 2.4pc to €16.70. Analysts at Goodbody Stockbrokers said on Wednesday CRH had "relatively large exposure to challenging European markets".

In percentage terms the big faller was Dragon Oil, which tumbled 5.4pc to €7.31.

It was a difficult day for commodities in general as oil fell. Brent Crude dipped 1.3pc to $105.36. As well as Dragon, Providence Resources slid to 2.2pc to €7.35.

Ultimatum

Paddy Power fell 1.6pc to €68.46. Company chief executive Patrick Kennedy cashed in more than 70,000 shares in the company.

On the other side of the board Elan posted another sizeable gain, this time adding 1.1pc to hit €9.01. The Irish takeover panel gave Royal Pharma a 'put-up-or-shut-up' ultimatum on Wednesday, calling on the US firm to either make a bid for Elan, or walk away from the pharmaceuticals firm.

Origin Enterprises climbed 1.7pc to €4.93. The agronomy firm has a 24pc stake in Continental Farmers Group (CFG) and stands to make a huge profit if a Saudi bid for CFG is successful.

Elsewhere, Mr Draghi's comments had a similar effect, as European stocks retreated, posting the biggest two-day slump in more than four months.

National benchmark indices declined in 16 of the 18 western-European markets. Germany's DAX dropped 0.7pc and France's CAC 40 lost 0.8pc. The UK's FTSE 100 Index retreated 1.2pc. The composite Stoxx Europe 600 Index fell 1.1pc.

"The outlook for growth in Europe isn't great, meaning earnings expectations for the second quarter are a little lower, but that's a known risk," said Carsten Hilck, at Union Investment Private Funds in Frankfurt. "There's nothing new in what Draghi is saying – just more of the same. It's a strange reaction in the market, I expect it to recover and bounce back."

Tullow Oil fell 3pc amid indications it may have to pay a tax on a deal with a partner that is being disputed by Ugandan authorities.

Irish Independent