Nervous slide in share prices continues

STOCKS DECLINED in 13 of Europe’s 18 leading markets yesterday as nervousness increased ahead of this week’s summit on the EU’s debt woes.

Sentiment was not helped by reports that German chancellor Angela Merkel had criticised EU president Herman Van Rompuy’s proposals for the summit, which she said had the wrong balance between shared liability and shared control. The remarks were made at a private meeting.

In Dublin, dealers said markets were not confident that the summit would reach a solution.

The meeting, which begins tomorrow, will be the 19th since the euro debt crisis broke in early 2010. Traders noted that investors were growing increasingly fatigued with the failure to arrive at a solution.

News that US consumer confidence sank to a five-month low also hit trade yesterday. However, signs that the decline in house prices there has slowed helped to temper the impact of this.

DUBLIN

DEALERS IN Dublin reported a generally weak day, but pointed out that a boost for its biggest stock, international building materials group CRH, helped the Irish market to buck the more general trend.

Indications from the US that Congress may resolve the debate over highway construction funding lifted the Irish group’s share price. CRH generates about half its revenues in the US and owns its largest asphalt supplier, Apac.

CRH stock rose 1.41 per cent to close at €13.64. The group accounts for about one-third of the benchmark Iseq index.

Aer Lingus, subject of a bid from its biggest rival and shareholder Ryanair, rose 2 per cent to €1.07, although there was no real development in the story yesterday. Ryanair itself slipped back 2.13 per cent to €3.995.

Drinks group CC, which holds its annual general meeting today, fell 2.46 per cent to €3.17.

LONDON

BRITAIN’S TOP shares dipped into negative territory in a lacklustre session. Dealers expect the market to remain muted ahead of the EU summit.

Stagecoach, the operator of Britain’s busiest commuter-train service, gained 5.5 per cent to 263.5 pence. The company reported earnings that exceeded analysts’ estimates, increased its final dividend and said the outlook for its bus and rail operations was positive.

Shire recovered 3.2 per cent to 1,798p as analysts advised buying the Dublin-headquartered drugmaker after Monday’s 11 per cent plunge. Société Générale and Berenberg Bank each upgraded their recommendations to buy from hold after the stock sank the most in more than nine years on Monday. This followed an unexpected approval by US drug regulators for a copycat version of Shire’s second-biggest selling drug, attention deficit disorder treatment, Adderall XR.

However, analysts argued that the share price reflected the impact of this and pointed out that its likely double-figure growth rates meant it should trade at a premium to its peers.

EUROPE

THE STOXX Europe 600 Index, which tracks leading shares in 18 markets, fell 0.1 per cent to 242.6 at the close of trade yesterday.

Across the continent, two shares declined for every one that increased. The index fluctuated between gains and losses at least 20 times yesterday and fell 2.8 per cent over the previous four days.

Aixtron, a maker of equipment for the semiconductor industry, slipped 2.8 per cent to €10.58 as UBS reduced its share-price estimate by 14 per cent to €12.

BMW lost 2.3 per cent to €53.70 as Citigroup cut its recommendation on the shares to neutral from buy, citing more challenging motor markets. The sector in general suffered yesterday and experienced the second biggest decline of the 19 industry groups in the Stoxx 600.

Daimler lost 1.4 per cent to close at €33.40 and Fiat fell 2.9 per cent to €3.63.

Bankia led declines in Spanish banks, falling 8.7 per cent to 87.6 cents after Moody’s cut the ratings of 28 Spanish lenders because of the country’s sovereign debt and souring real estate loans. Banco Popular Espanol dropped 7.1 per cent to €1.72 while Banco de Sabadell slid 5.3 per cent to €1.50.

NEW YORK

US STOCKS advanced yesterday, rebounding from Monday’s selloff, as optimism about the housing market tempered concern about a worsening of Europe’s debt crisis.

News Corp rose 8.3 per cent as Rupert Murdoch’s company said it was considering splitting into two publicly held corporations.

Apollo Group, the largest US for-profit college chain, surged 10 per cent after beating earnings and revenue estimates and raising its forecast. Homebuilders in SP indices advanced with PulteGroup and Lennar adding more than 3 per cent.

Shares of JPMorgan increased 1.1 per cent, while Morgan Stanley added 0.2 per cent.

Facebook shares rose 3.2 per cent while Dow Chemical slid 2.9 per cent.– (Additional reporting: Bloomberg)