Stocks lose ground after initial surge
EUROPEAN stock markets started yesterday's session strongly but were rattled by late afternoon and surrendered decent gains that had been made earlier.
Stocks had initially been buoyed by better-than-expected results from France's second largest bank, Societe Generale, and BMW.
Borrowing costs for France and Spain also softened as the two nations completed bond sales. Spain also managed to exceed its maximum target in its latest auction, selling €2.52bn of bonds. However, it still had to pay more for three-year debt than it did in March.
In the US, jobless claims fell more than expected last week.
The European Central Bank also kept its benchmark interest rate unchanged at 1pc, which was expected. However, there's speculation that ECB boss Mario Draghi might move to cut the rate as inflationary pressures in the eurozone have eased and economic pressures remain. He said there had been some "tentative" positive economic signs. But even a rate cut might not have any meaningful impact now.
"The latest data suggest the euro area is slowly sliding toward a deeper recession," said James Nixon, chief European economist at Societe Generale in London. At the same time, "with overnight rates already very low, it is hard to see how cuts in interest rates would meaningfully boost growth".
In Ireland, the ISEQ Overall Index had been up very slightly at midday. But it later fell, ending the session down just under 16 points, or 0.5pc, at 3,252.53.
The biggest mover of the day was Independent News & Media. Its shares soared after reports that businessman Denis O'Brien had snapped up a further 5pc of the company, reportedly bringing his holding to 27pc and confirming his position as the media group's single largest shareholder. The shares closed up 15.2pc, or 4.2 cent, at 31.7 cent.
Shares in Aer Lingus were 1.5pc, or 1.5 cent higher at the close at 99 cent. The airline predicted that it will make an operating profit of around €50m this year after reporting a narrowing of losses in the first quarter.
Smurfit Kappa declined nearly 1.1pc, or 7 cent to €6.40 even as South African packaging peer Mondi said demand is improving -- despite it recording a fall in operating profit in the first quarter. Smurfit Kappa releases first-quarter results this morning.
Shares in pharma group Elan fell 2.9pc, or 30.5 cent, to €10.29, while CRH declined 1.3pc, or 20.5 cent to €15.26 in Dublin.
National benchmark indices slid in 10 of the 18 western- European markets yesterday. France's CAC 40 lost 0.1pc, the UK's FTSE 100 rose 0.2pc and Germany's DAX fell 0.2pc.