Stocks fall across Europe as fears multiply over Greece
STOCKS in Dublin and elsewhere in Europe fell yesterday, extending the previous day's declines as a downgrade of Spain's credit rating by Standard & Poor's sparked fresh fears that problems in Greece were spreading to other heavily indebted countries.
Shares in the US rebounded after the Federal Reserve kept interest rates unchanged.
"It seems to be one (downgrade) after the other. Only a few months ago it looked like it was contained to Greece and in the last 24 hours we are seeing the contagion effect having a firm grip across Europe," said Manoj Ladwa, a trader at ETX Capital in London. The ISEQ Overall Index fell 83.55 points, or 2.5pc, to 3,257.02 points after declining 4.5pc on Tuesday. National benchmark indices fell in 16 of the 18 western European markets. Germany's DAX dropped 1.2pc, Italy's FTSE MIB lost 2.4pc and Portugal's PSI-20 slipped 1.9pc.
Among the biggest decliners were Aer Lingus which slid 6.2pc to 69c as the airline denied reports that it had decided to move its operations to Terminal 2 at Dublin Airport. Icon tumbled 6.1pc after the clinical testing company published earnings the previous day.
The biggest company on the stock exchange had another bad day, shedding 3.2pc to close at €19.70 as investors fretted about the prospects for the sector. CRH dropped 7.3pc on Tuesday after rival Cemex published an earnings update.
Elsewhere in Europe, stocks closed lower after S&P's downgrade of Spanish bonds. The Stoxx Europe 600 Index slid 1.3pc to 258.24, the lowest close since March 15.
Spain's IBEX 35 slid 3pc as Santander bank tumbled 4.2pc and Banco Bilbao Vizcaya Argentaria plummeted 4.8pc.
Greece's ASE Index rose 0.6pc, rebounding from the biggest drop since December on Tuesday, as the nation's securities regulator banned short-selling on the Athens stock exchange for two months.
Allianz, Europe's largest insurer, fell 2pc to €84.82 after Equinet downgraded German insurers to "neutral", saying "we cannot rule out anymore a haircut on Greek government bonds as a part of a debt restructuring". Axa, the biggest insurer in France, sank 3.1pc to €15.15.
Royal Dutch Shell limited declines in European shares. The company surged 2.3pc to £20.44, the highest close since June 2008, after posting a 57pc increase in first-quarter profit on a rebound in crude prices and improved refining margins.
US stocks rose as bargain hunting and the Federal Reserve's pledge to keep interest rates near zero overshadowed Spain's credit rating issue.
The S&P 500 rebounded in afternoon trading from early losses as investors scooped up beaten-down shares of financial companies and welcomed the Fed's widely predicted decision to keep rates unchanged.