European shares slide over US rate fears

European shares closed off their highs yesterday amid continued fallout from the Volkswagen emissions scandal and indications from Federal Reserve chairwoman Janet Yellen that a US interest-rate hike may not be far off. DUBLIN News from a number of leading stocks helped drive activity on the Irish market.

Packaging group Smurfit Kappa gained 1.76 per cent to close at €25.705 after announcing 77 per cent profit growth in the third quarter. The stock actually fell early in the day before picking up momentum after lunch when it reached €25.90 before paring back some of those gains.

Airline Ryanair followed up this week's news that it made €1 billion surplus in the first half of the year with strong passenger numbers for October. Its shares added 1.07 per cent to end the day at €14.66.

Bank of Ireland's plans to end over-the-counter transactions for withdrawals of less than €700 and deposits under €3,000 left investors cold. Its shares ended 1.49 per cent down at 33 cent at the end of a day during which they tumbled as far as 32 cent at one point.

Traders said that investors off-loaded more than 300 million of the bank’s shares in Dublin.

Food group Glanbia's shares fell 4.42 per cent to €17.30 after releasing a trading statement showing revenues rose 9 per cent and announcing plans for expanding its New Mexico cheese manufacturing facility. Most of the business in the stock was down at around €17.60, traders said.

LONDON British retailer Marks & Spencer advanced nearly 3 per cent after it raised annual non-food profit margin forecast and beat first-half profit estimates.

The UK mining index surged 1.8 per cent, the top sectoral gainer, helped by a rally in metals prices. Trader and miner Glencore led the index higher, with its shares rising 5.4 per cent after saying it was on track to reduce its debt to $20 billion from $30 billion. Glencore plans to boost liquidity with asset sales and to cut copper output further to help lift prices. "Given how heavily they've fallen and then subsequently rallied thereafter, we still think they represent good value alongside some other picks in the mining sector," said Atif Latif, director of trading at Guardian Stockbrokers.

Other miners were also up, with Anglo American, BHP Billiton and Rio Tinto rising 1 to 3 per cent. However, British housebuilders fell, with Berkeley, Persimmon, Taylor Wimpey and Barratt Developments down 2.3 to 3.9 per cent. Traders cited concerns over possible interest rate hikes and valuations in the sector.

EUROPE ING Groep gained 2.9 per cent after the Dutch lender reported a 14 per cent rise in third-quarter profit. Volkswagen slid 7.9 per cent after it said it found faulty emissions readings for the first time in gasoline-powered vehicles, with an internal probe showing 800,000 cars had "unexplained inconsistencies" concerning their carbon- dioxide output.

Porsche Automobil Holding slumped 7.2 per cent after a financing arm of the company was said to have pulled a $505 million asset-backed bond deal on Tuesday after US regulators said they were expanding their probe into emissions-cheating software. The STOXX 600 autos and parts index was top sectoral loser in Europe with a decline of 2.2 per cent.

US Wall Street fell further after Federal Reserve chair Janet Yellen said the US economycould justify an interest rate hike in December. The dollar and US Treasury yields moved higher after the comments, building on a rise that followed earlier data showing stronger-than-expected private-sector US job growth.

Pfizer merger target Allergan increased 1.4 per cent after its results topped analysts' estimates. Groupon plunged after forecasting fourth-quarter revenue that was below analysts' targets. – Additional reporting: Bloomberg, Reuters