Markets advance on positive US signals

It’s likely the euro zone economy contracted again at the end of last year, although data yesterday suggested the worst may be over. Surveys conducted by financial information firm Markit and the Institute for Supply Management showed US manufacturing grew in January, boosted by a surge in domestic demand and helping to lift markets across the globe.

DUBLIN

It was an auspicious start to February for the Iseq with a good volume of trading across the list, rising by 0.8 per cent to close at 3,572.85.

A busy overall day for the market saw Ryanair shares in particular following through on momentum accrued over recent days, finishing at €5.68, up 3.4 per cent. Aside from that, activity was broadly spread with Bank of Ireland and CRH remaining fairly flat, finishing at €0.14 and €15.78 respectively.

Shares in the Grafton Group were up 2 per cent to €4.40, as were Kenmare (up 1.5 per cent to €0.39) and Kingspan, up 0.56 per cent, closing at €8.59.

LONDON

UK stocks advanced with the FTSE 100 Index yesterday posting a fifth straight weekly gain.

The BT Group jumped to its highest in five years rallying 6.5 per cent to 264.80 pence. It posted third-quarter adjusted earnings before interest, taxes, depreciation and amortisation of £1.55 billion ($2.5 billion). That compared with the average analyst estimate for profit of £1.53 billion.

Elsewhere, Afren soared 7.4 per cent after people with knowledge of the matter said China Petrochemical is in talks to buy more than $1 billion of assets from the company.

Diageo Plc advanced 1.6 percent after analysts raised their share-price forecasts.

EUROPE

Stocks posted their biggest weekly decline this year as a report showed the US economy unexpectedly shrank in the fourth quarter and Spain’s markets regulator lifted a ban on shorting equities.

Spanish banks led a gauge of European lenders lower, with Banco Santander SA and Bankia SA each dropping more than 7 per cent. Saipem SpA plunged 36 per cent, after lowering its earnings forecasts for 2012 and 2013.

Imagination Technologies Group Plc rallied 18 per cent, the best performance on the Stoxx Europe 600 Index, after Morgan Stanley recommended the shares.

However, the benchmark Stoxx 600 fell 0.5 per cent to 288.2 this week, its biggest drop since the end of 2012.

National benchmark indexes retreated in 12 of western Europe’s 18 markets this week. France’s CAC 40 dropped 0.1 per cent; Germany’s DAX slipped 0.3 per cent and Spain’s Ibex 35 slumped 5.7 per cent.

In Italy, Banca Monte dei Paschi SpA dropped 11 per cent. The lender facing a criminal probe into money-losing structured deals had its credit rating cut by Standard and Poor’s on concern the investigation may lead to bigger losses.

US

Stocks surged as growth in American payrolls was enough to ease concern about the economy without stoking speculation the Federal Reserve will hasten the end of stimulus.

At just before 2pm yesterday, the Dow Jones Industrial Average rose 145.75 points in New York to trade above 14,000 for the first time since 2007, while the S and P 500 Index jumped 1 per cent to return to a five-year high following a two-day slump.

According to traders, the market’s behaviour was sending signals that the US economy was not as bad as many had feared.

Bank of America, Travellers and United Technologies climbed at least 2 per cent to lead gains in the Dow Jones Industrial Average.

Zoetis, the animal health company owned by Pfizer, surged 20 per cent in its trading debut following an initial public offering.

Exxon Mobil was little changed after reporting fourth-quarter earnings that topped estimates.– (Additional reporting: Bloomberg/Reuters)