Markets plunge to two-month low

EUROPEAN SHARES fell to a two-month low yesterday after disappointing levels of buyer interest in an auction of Spanish debt reignited fears about the euro zone debt crisis, prompting a day of volatile trading as investors anticipated a fresh wave of economic uncertainty.

So comprehensive was the sell-off that every FTSE 100 stock closed down.

DUBLIN

TRADERS IN Irish stocks were not immune to the anxiety. Iseq-listed companies tumbled in tandem with the rest of Europe, with few climbers on a day of almost uninterrupted negative sentiment.

The unrelenting declines took 2 per cent off the value of the Iseq by the end of the session, just days after it reported its best quarterly performance in a decade, leaving the market down 65 points on the previous day’s closing value.

Building materials group CRH, the largest stock on the index, fell 2.9 per cent to €14.72, while Ryanair finished down 2 per cent at €4.40. It was a bad day even for defensive stocks like food group Kerry, which closed down 2.7 per cent at €34.46.

Drinks group CC shed 2.8 per cent to close at €3.72, Aer Lingus fell 2 per cent to 96 cent, while sellers also abounded in financial and oil stocks.

A notification to the Irish Stock Exchange highlighted that Organo Investments, a company controlled by Irish investors Neill Hughes and Peter Crowley, has recently sold some of its holdings in UTV Media, taking its stake down to 13 per cent.

LONDON

BRITAIN’S BLUE-chip index fell to a two-month low, dragged down by commodity stocks after reduced prospects for fresh US stimulus and deepening concerns over the euro zone’s debt and growth outlook weighed on risk appetite.

Energy stocks were the biggest drag on the index and International Power was among the most traded, seeing volume nearly three and a half times its 90 day average after the electricity supplier rejected a takeover bid.

Mining stocks were also heavy fallers, sliding in parallel with copper as weak trade data from mining heavyweight Australia further clouded the outlook for commodity linked stocks.

Domestic banks meanwhile, were led lower by Barclays, down 4.5 per cent after weak demand for the Spanish bonds. The bank operates more than 100 branches in Spain.

The retailer Next was a big individual FTSE 100 faller, down 4 per cent in volume nearly three times its average after the retailer said its chief executive had sold approximately 7.4 per cent of his stake, reducing his total holding in the business to around 0.9 per cent

Drug stocks such as GlaxoSmithKline and Shire countered the broad cyclical weakness during much of the session as investors sought out their defensive qualities, but even these eventually pared early gains to end lower, leaving all FTSE 100 stocks down on the day.

EUROPE

FOR ALL their woes, the FTSE (and the Iseq) still outperformed major European indices, with both France’s CAC-40 and Germanys DAX down between 2.8 per cent and 3 per cent, weighed by weak regional economic data and warnings from European Central Bank chief Mario Draghi on the outlook for the euro zone periphery.

The pan-European FTSEurofirst 300 index closed 2 per cent lower at 1,050.99, posting its biggest one-day drop in a month, while the Euro Stoxx 50 fell 2.5 per cent to 2,398.

Euro zone banks, which own the bulk of the region’s government debt, fell 3.1 per cent after Spain sold fewer bonds than it had hoped, reflecting investor anxiety about the country’s efforts to reduce its deficit.

Debt fears were exacerbated by euro zone orders data suggesting the region was likely in a mild recession, which means governments have even less room for manoeuvre if they need to implement new austerity measures.

Struggling Belgian financial group KBC Group fell 9.3 per cent in volume nearly three times its average, while France’s Credit Agricole fell 5.2 per cent and Italy’s Banco Popolare was down 4.8 per cent.

NEW YORK

US STOCKS fell in early trading, with the Standard and Poor’s 500 Index headed for this year’s second-biggest decline, as a result of both the Spanish bond auction and lower forecasts from SanDisk, which dragged down technology shares. Computer and software makers fell 1.7 per cent for the largest retreat among 10 groups in the SP 500 as SanDisk, the biggest maker of flash-memory cards, tumbled 10 per cent.

Alcoa lost 2.6 per cent, pacing declines among material companies as investors sold shares of companies most tied to the economy after a report on US service industries missed estimates. Bank of America and JPMorgan Chase slumped at least 2.6 per cent as financial stocks slid. – (Additional reporting: Bloomberg / Reuters)