Tuesday 23 January 2018

Shares plunge as Italian bonds top 7pc for first time since 1999


John Mulligan

IT was another turbulent day for European stock exchanges as yields on Italian two-year bonds soared over 7pc for the first time since the euro currency was introduced in 1999.

That sets the world's eight- biggest economy, and the eurozone's third biggest, on a trajectory already followed by Ireland, Portugal and Greece, which sought bailouts after the 7pc breach made borrowing unsustainable.

The continued destabilisation of the eurozone caused investors and traders to dump stocks, erasing gains made earlier in the day after Italian Prime Minister Silvio Berlusconi offered to resign.

In Ireland, the picture was much the same, with an earlier move into positive territory being firmly eroded by the end of the session. The ISEQ Overall Index shed 0.96pc, or 25.71 points, to end the day at 2,661.55. At the open it had been as high as 2,720.

Share movements were driven by some corporate newsflow during the day.

Smurfit Kappa managed to escape unchanged at €5.00, having earlier sunk as much as 7pc after it issued a third-quarter report.

The company has stuck to earnings and debt-reduction guidance for the year despite softening demand for its cardboard boxes and packaging.


It's the biggest European manufacturer of the products, most of which end up on supermarket shelves. The company reported a 9pc rise in earnings before interest, depreciation and amortisation to €264m in the three months to the end of September.

Shares in building materials group Grafton fared much worse, however.

It warned investors in an interim management statement that its full-year profit was now likely to be considerably below market expectations due to continued pressure in its core UK and Ireland markets.

It said that trading conditions in Ireland -- where it owns the Woodies and Atlantic Homecare chains -- would be challenging for "some time ahead". Its shares closed down 5.3pc, or 14.5 cent, at €2.60. They had tumbled by over 8pc earlier in the session.

Building materials giant CRH yielded much of the gain it made during the week after its announcement that it's moving its primary listing to London. The stock closed up 3.95pc at €13.02 on Tuesday, but slid to €12.70 yesterday.

Food group Greencore, which is the subject of a potential takeover approach, sank 7.7pc, or 6 cent yesterday to close at 72 cent. It's being targeted by US private-equity group Clayton Dubilier and Rice.

Investment group TVC added 2.74pc, or 2 cent, to 75 cent after it released interim results. The company's shares are currently trading at a steep discount to the firm's net asset value.

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