Monday 20 November 2017

Spain still euro whipping boy

A man reads the newspaper at Madrid's Stock Exchange. Photo: Getty Images
A man reads the newspaper at Madrid's Stock Exchange. Photo: Getty Images
John Mulligan

John Mulligan

Spain became the renewed focus for a beating in the eurozone playground yesterday as its 10-year bonds tumbled, with yields edging towards the critical 7pc level deemed to mark unsustainable borrowing costs.

The country sold €3.56bn worth of the bonds at a punitive 6.975pc interest rate -- the highest rate since late 2004. With eurozone countries Ireland, Greece, Portugal and Italy already on the economic gallows, Spain could be the next to face the mob. France too was under pressure, as the yield on its 10-year bonds also increased.

In Ireland, the ISEQ Overall Index shed 1.52pc, or 40.74 points yesterday, to end the session at 2,638.62.

There was little major domestic corporate newsflow yesterday, with most of the member firms having already issued results and trading updates in previous weeks.

Main gainers yesterday included transport group Irish Continental, which advanced 1.75pc, or 25 cent, to close at €14.55. The company this week said the tourist market has softened, although it has attracted more freight traffic.

Fruit distributor Fyffes gained 2.6pc, or 1 cent, to close at 39.5 cent.

Gambling group Paddy Power continued to make modest gains, closing up 0.65pc at €43.28. That's its highest ever closing price and values the company at €2.1bn.


Grafton Group, which generates most its turnover and profit in the UK, sank nearly 3.9pc, or 10 cent, at €2.48. Travel software group Datalex lost 8.1pc to close at 34 cent.

National benchmark indices fell in all but one of the 18 western-European markets yesterday. France's CAC 40 slid 1.8pc, the UK's FTSE 100 fell 1.6pc and Germany's DAX lost 1.1pc.

The benchmark Stoxx Europe 600 Index dropped 1.3pc to 233.97 at the close in London, extending the decline from this year's high on February 17 to 20pc as the debt crisis spreads across the region's core.

"You have a lot of pressure on yields, you have the structural issues, the liquidity issues, plus market fears -- it's very bad," said Patrick Legland, head of research at Societe Generale. "We are not very far from the point where the European Central Bank will need to intervene one way or another."

Stocks briefly pared some of their losses after data showed fewer Americans than forecast filed first-time claims for unemployment insurance payments last week, an indication the labour market may be gaining traction. Builders broke ground on more homes than forecast in October and construction permits climbed to the highest level since March 2010.

BNP Paribas, France's largest lender, fell 4.6pc to €28.49. Societe Generale slid 3.9pc to €16.95. Credit Agricole lost 4.7pc to €4.43. Deutsche Bank, Germany's largest bank, declined 3.7pc to €27.29.

Irish Independent

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