No shortage of fallers in major stocks

INVESTORS DUMPED stocks yesterday, forcing a retreat from a five-month high on European equity markets, amid fears that the euro zone debt crisis will make it harder for sovereigns and banks to raise necessary capital this year.

National benchmark indexes fell in all of Europe’s 18 western markets, with only Iceland and Switzerland gaining.

A slide in bank shares prompted by a rights offer at UniCredit, Italy’s largest lender, weighed heavily on investor sentiment, while a disappointing Christmas sales update from Next, the UK’s second-largest clothing retailer, also proved a drag on the FTSE ahead of similar trading updates from other retailers.

DUBLIN

The Iseq spent the day zig-zagging downwards, plunging at the close to finish the session down almost 1.8 per cent on the previous day.

It was a day when only market minnows managed to post a climb, in most cases on the back of tiny volumes.

There was no shortage of fallers among the major stocks. Pharmaceutical group Elan slid 5 per cent to €10.17, while there was a drop of 2.6 per cent to €3.68 for Ryanair and a 2.7 per cent fall to €2.01 for United Drug. Food group Greencore fell 3.1 per cent to 62 cent, drinks group CC finished down 2.4 per cent at €2.81, while the banks also closed in the red.

Building materials giant CRH escaped relatively lightly with a 1.3 per cent decline to €15.48. The cement-maker issued a strategy update signalling that its total 2011 development spend would arrive at €600 million. It added that 23 bolt-on acquisition and investment initiatives totalling €400 million were undertaken in the second half, meaning strategic spending by the company picked up as the year progressed.

LONDON

The FTSE 100 slipped 0.6 per cent, outperforming some of the major markets across Europe, despite grim seasonal fortunes for leading retail stocks.

Next Plc dropped 3.1 per cent as the retailer reported sales that missed analyst estimates. Next dropped 3.1 per cent to 2,656 pence after it reported sales that showed growth in online revenue failed to offset lower store sales during a period that included the peak Christmas holiday season.

Larger rival Marks and Spencer Group sank 2.6 per cent to 308.8 pence. Home Retail Group, the owner of Homebase outlets in the UK, slumped 3.5 per cent to 90.95 pence.

However, the FTSE’s decline was pared by gains at oil companies BP and Royal Dutch Shell. BP rose 0.5 per cent to the highest level since July 25th and Shell reached the highest since 2005 before slipping back.

Oil held near an almost eight-month high, having surged on Tuesday following speculation tension between Iran and the West will tighten supply.

EUROPE

The Stoxx Europe 600 Index fell 0.6 per cent to 249.62 at the close in London, snapping a four-day rally. France’s CAC 40 Index dropped 1.6 per cent and Germany’s DAX lost 0.9 per cent.

Among the big fallers was Italian lender UniCredit, which slid the most in more than two decades after setting a 43 per cent price discount for the rights offer.

UniCredit tumbled 14 per cent to €5.42 , the largest decline since at least 1988, as the bank said it will sell shares at €1.943 apiece to raise €7.5 billion . The rights offer is a 43 per cent discount to yesterday’s closing price, excluding the value of rights.

Other financial stocks followed its lead, with the result that a gauge of banks was the worst performer of the 19 industry groups in the Stoxx 600.

Spain’s Banco Santander slid 3.9 per cent to €5.79 as new stock sold last month to bolster capital at Spain’s biggest lender started trading in Madrid.

Elsewhere, Denmark’s Vestas Wind Systems, the biggest wind-turbine maker, fell to its lowest since 2003 in Copenhagen after cutting its sales forecast, prompting analysts to say management’s future and chances to avoid a bid may be in doubt. Vestas sank 19 per cent to 56.25 kroner, the lowest price since 2003, after cutting its earnings forecasts and saying it will announce a significant change to its corporate structure on January 12th.

US

Equities trading in New York were little changed during the early hours of the session, erasing losses after positive US economic data offset worries about the euro zone’s debt problems.

New orders for US factory goods rose in November, providing further evidence the economy is on track to recovery. But the data also showed business capital spending is cooling.

Financial shares remained lower, dropping alongside European banks. Morgan Stanley fell 1.2 per cent to $15.89 while Regions Financial was off 1.8 per cent to $4.27.

US new vehicle sales showed automakers ended the year with strong sales, but they forecast lower growth in 2012.

(Additional reporting: Bloomberg/Reuters)