European stocks down for second day

STOCK MARKETS remained quietly nervous yesterday, while the euro weakened amid concern that Greece’s bailout may unravel as the country struggles to form a coalition government.

Concern that Greece will be forced out of the euro zone grew after weekend elections resulted in a parliament divided over whether to implement austerity measures. Stocks extended losses on reports that European countries are debating whether to delay €5.2 billion in bailout funds, then trimmed declines as German Chancellor Angela Merkel was quoted in Passauer Neue Presse as saying she aims to keep Greece in the monetary union and Reuters reported that the European Financial Stability Facility will pay the aid.

DUBLIN

THE ISEQ index closed up 0.4 per cent after “bottom fishing” by investors towards the end of the session led to a turnaround on what had earlier been a weak day for Irish equities. But there was little volume with one Dublin-based trader noting that the market “lacked conviction” in either direction.

After a mixed interim management statement from building materials group CRH, its stock suffered in early trading but eventually recovered in line with the broader market, closing up almost 1 per cent at €14.29.

United Drug sold off on light volume despite issuing a positive set of interim results, but though a few buyers came in at the end of the day, it closed down 2 per cent at €2.28. Glanbia finished fractionally higher at €5.65 on a day when the food company held its agm.

Independent News and Media drifted lower, finishing down 4 per cent at 28 cent, as investors waited to see what Denis O’Brien, who holds a 29.9 per cent, does next.

Ryanair was one of the few stocks to attract decent trading volumes, with a dealer describing its shares as “a bright light in a weak market”. It climbed 1.3 per cent to €4.42 on a day when EasyJet climbed to its highest level in two years.

LONDON

UK EQUITIES slumped to their lowest level this year and faced further losses amid downbeat corporate reports and concerns about the health of the euro zone.

The London blue chip index closed down 24.50 points, or 0.4 per cent, extending Tuesday’s 1.8 per cent drop. In volatile trading, it hit an intra-day trough of 5,464.41 points - its weakest level since late December 2011.

Miner Glencore rose 1.5 per cent after reporting stronger demand for the commodities it extracts from emerging powerhouse China and the US. But it said that the picture in Europe remained weaker – a factor that has caused problems for some other UK companies.

Software firm Sage Group, whose small business customers - especially in Spain - have been shutting down in droves, missed forecasts on first-quarter revenues, sending its shares down 5.5 per cent.

EUROPE

EUROPEAN STOCKS dropped for a second day, to the lowest level in almost four months, as investors awaited a resolution to the political impasse in Greece and as Spanish credit risk surged. The Stoxx Europe 600 Index lost 0.3 per cent to 249.73 at the close of trading, the lowest since January 13th, as the euro weakened for an eighth day.

National benchmark indexes fell in 14 of the 18 western European markets. France’s CAC 40 lost 0.2 per cent and Spain’s IBEX 35 Index sank 2.8 per cent, its lowest close since October 2003.

The cost of insuring against a Spanish default surged to a record on concern a bailout of Bankia won’t fend of a banking crisis triggered by bad real-estate loans.

Bankia tumbled 5.8 per cent to €2.13, the lowest since it listed its shares in July 2011, as JPMorgan Chase downgraded the Spanish lender to underweight, the equivalent of a sell recommendation.

Banco Santander, Spain’s largest lender, dropped 4.5 per cent to €4.64 and Banco Bilbao Vizcaya Argentaria retreated 4.7 per cent to €5.01.

Kloeckner tumbled 8.2 per cent to €8.33 after Europe’s largest independent steel trader reported a first-quarter loss of €10 million ($13 million), wider than expected. The company said its 2012 earnings will improve only if Europe’s economy recovers.

Mediaset lost 11 per cent to €1.45, the lowest since it sold shares to the public in July 1996. The broadcaster reported an 85 per cent slump in first-quarter net income to €10.3 million after the close of trading yesterday on lower advertising sales.

US

AS GLOBAL stocks pared declines, US stocks trimmed losses, with commodity and technology shares making gains and financial and industrial companies falling. Macy’s, the owner of its namesake department stores, slumped 3.5 per cent as its profit forecast for this year trailed analysts’ projections. Walt Disney jumped 2.2 per cent, a record high, after the world’s largest entertainment company said earnings rose 21 per cent. – (Additional reporting: Bloomberg/Reuters)