Wave of optimism keeps stocks up
EUROPEAN bourses put in another solid showing yesterday, keeping up the positive pace after last week's announcement by the European Union that its rescue fund will be used to prop up banks directly.
The market was also buoyed by hopes the ECB will at last cut rates by 0.25pc on Thursday. That will bring what was a record low 1pc rate to an even lower 0.75pc.
Positive data from China, Japan and Australia also supported stocks. Home prices there rose as demand for property improved.
"Investors will focus on the European Central Bank decision this week," said Guillaume Chaloin, a fund manager at Meeschaert Asset Management in Paris, which oversees $2.5bn in assets.
"There is a rotation toward cyclical stocks, such as oil and technology, with the idea that if we've found a solution to the debt problem, there will be less negative impact on industries sensitive to the economy."
Morgan Stanley's European Equity Strategy team raised Europe's equities to neutral from underweight, saying last week's decisions by euro-area leaders have lowered risk.
In Ireland, the ISEQ Overall Index was carried along by the wave of optimism. But it yielded much larger gains made during the day when it was up over 40 points. It closed 12.75 points, or just 0.4pc, at 3,161.37.
A range of shares benefited from the improved sentiment.
Bank of Ireland, which last week said it had completed a €10bn deleveraging of its international loan book, climbed 7pc to 10.7 cent.
Independent News & Media advanced 9.5pc to 21.9 cent, while Paddy Power rose 1.6pc, or 85 cent, to €52.40. The gambling group's stock has gained nearly 43pc in the past year.
Ryanair lost 1.5pc, or 6 cent, to close at €3.94, while Kerry Group dropped 2.9pc, or just over €1 to €33.59.
National benchmark indices advanced in all of the 18 western European markets except Iceland. France's CAC 40 climbed 1.4pc and the UK's FTSE 100 added 1.3pc. Germany's DAX increased 1.2pc.
The Stoxx Europe 600 Index climbed 1.5pc to 254.82 at the close of trading, the highest since May 7. The gauge rallied 1.9pc last week, trimming its second-quarter decline to 4.6pc.
Invensys, which makes software that runs the London Underground trains, gained 1.4pc to 225.8p. China South Locomotive is in the early stages of planning a possible £2bn takeover bid for the company.
Barclays gained 3.4pc to 168.4 pence after earlier falling as much as 3.8pc. Chairman Marcus Agius resigned after the bank was fined a record £290m for trying to rig inter-bank lending rates. BNP Paribas, France's largest bank, jumped 4.3pc to €31.56.
CA Cheuvreux added the stock to its select list.