Business World

Friday 6 December 2019

Shock waves of Bailout Thursday felt across Europe

John Mulligan

John Mulligan

THE day following the Government's announcement of the scale of the bailout facing the nation's taxpayers got off to a solid start, with investors by and large reacting positively to what they hope will mark the death of speculation as to just how far the country's finances will be stretched. But the gains made during the day in Dublin didn't have the steam to make it to the weekend, and the downward trajectory sparked at lunchtime continued for the rest of the afternoon.

By the close, the ISEQ Overall Index had shed just over 14 points, less than 1pc, to 2,662.03, having earlier been as high as 2,694. New data yesterday showed that Ireland's manufacturing sector, along with that of Spain and Greece, also contracted during September.

The heaviest hit stock on Thursday, Allied Irish Banks, fared badly again in the trenches yesterday as investors continued to digest news that the institution will need to raise more capital than anticipated and will ultimately be majority-owned by the State. Its shares closed down 6.7pc at just over 47 cent. Bank of Ireland, which is emerging from the financial catastrophe in a relatively better position, continued to make gains, exiting the session up 3.2pc at 64 cent. Irish Life & Permanent, which isn't receiving any state aid, yielded some of its earlier gains to end the day 1.7pc ahead at over €1.41.

Building materials group Kingspan regained ground lost earlier in the week, notching up a 3.4pc, or 19 cent, gain, to end the day's trading at €5.75. Construction giant CRH fell further yesterday, compounding Thursday's losses. Its shares declined 1.2pc, or 14 cent, to €11.89 with about half the volume of shares traded yesterday as had been on Thursday.

Markets around Europe limped towards the weekend after posting their worst week's trading in three months. The benchmark Stoxx Europe 600 Index fell 0.3pc to 258.84 at the close in London, capping its biggest weekly drop in three months. The FTSE-100 added 0.8pc, while Germany's DAX slipped 0.3pc and France's CAC-40 declined 0.6pc.

Bank stocks in Europe declined after the EU said lenders may be at risk of contagion from the wider debt crisis being fuelled in part by Ireland.

Yesterday, we inadvertently suggested Irish Life & Permanent is not a covered institution under the State guarantee scheme. It is. It has, rather, not received any direct state aid.

Irish Independent

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