ECB pledge boosts European markets

On a day marked by Japan’s slide back into recession, another conditional pledge of action to revive the euro zone economy from ECB chief Mario Draghi buoyed European markets after a downbeat start.

The Irish market was subdued, however, and a warning from Minister for Finance Michael Noonan about the overvaluation of publicly traded shares in the nationalised AIB brought its stock down.

DUBLIN

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index gained 0.43 per cent to close at 4,765.02 but volumes were thin and there was little by way of major news flow. “It was all forgettable,” said one trader.

Ferry operator Irish Continental Group delivered positive quarterly results as revenue rose 10.3 per cent to €93.4 million in the three months to September.

AIB may be something of an irrelevance in market terms these days, but Mr Noonan saw fit to warn investors who buy shares on its limited free float before the Government starts selling down its stake that they will lose their money. As the Minister noted, recent prices imply an unrealistic nominal value of €55 billion on AIB. His intervention saw the stock drop 13.59 per cent to finish at 8.9 cent, implying a market of €46.59 billion.

Bank of Ireland had a better time of it. Having come under pressure early in the day, the bank went better once markets turned as buyers showed their hand. The stock finished 2.43 per cent higher at 29.5 cent .

Ryanair had a quiet day, closing up 0.18 per cent at €8.42. There was greater volume in trading in Smurfit Kappa, whose shares declined 0.66 per cent to finish at €16.62. Ahead of interim results this morning, Paddy Power gained 1.38 per cent on slim volumes to finish at €60.45.

LONDON Britain’s top share index turned positive late in the day after Mr Draghi said unconventional monetary policy measures could include buying sovereign bonds.

The ECB chief also told the European Parliament the central bank would continue to do “whatever it takes” within its mandate to save the euro and that the single currency was irreversible.

The FTSE 100 index ended 0.3 per cent higher at 6,671.97 points, after earlier touching a low of 6,616.12 as news that Japan's economy unexpectedly shrank in the third quarter reinforced worries about global growth.

With the economic picture for the euro zone already weak, sectors such as banks and energy underperformed.

EUROPE

European stocks rose by the highest level in a week, reversing earlier losses, after Mr Draghi said the ECB’s expanded purchase programme could include government bonds.

The Stoxx Europe 600 Index added 0.5 per cent rise to to 337.25 at the close of trading in London, after earlier falling as much as 0.8 per cent as Japan unexpectedly slipped into a recession. The FTSEurofirst 300 index of top European shares closed 0.5 percent higher at 1,352.01 points.

In Europe, 18 of the 19 industry groups in the Stoxx 600 climbed, with banks contributing the most to the advance.

NEW YORK

US stocks fell as energy shares dropped alongside crude futures after Japan slipped into recession, although M&A activity and hopes for more stimulus capped declines and kept indexes near record highs.

The M&A news partly offset the declines as Allergan agreed to be bought by Actavis while Halliburton said it would buy Baker Hughes. Allergan and Baker Hughes were the top point gainers on the S&P 500.

Japan's economy unexpectedly slipped into recession in the third quarter, prompting prime minister Shinzo Abe to delay an unpopular sales tax hike and call a snap election two years before he has to go to the polls. The Japanese data hurt crude futures prices, with Brent off 1.1 per cent at $78.55 per barrel. The energy sector fell 0.8 percent, the largest weight on the S&P 500.