European shares weaken on US interest rate fears and Italian budget row

European shares weakened on Friday on fears of rising US interest rates and a budget row between Brussels and Italy.

DUBLIN

Cardboard box maker Smurfit Kappa tumbled more than 5 per cent in Dublin yesterday as investors continued to swerve the industry, also hitting the Irish player's European rivals.

Smurfit’s shares closed 5.29 per cent down at €26.86. “The general dynamics of the paper sector seem to be tough at the moment,” one Dublin broker remarked.

Airline Ryanair was down 1 per cent shortly before the close, but clawed back ground to finish 0.86 per cent off at €12.97. Dealers noted that investors seem unwilling to bid above the €13 mark for the carrier's shares.

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The banks had contrasting fortunes. AIB shed 1.94 per cent to close at €3.942, while Bank of Ireland gained 1.12 per cent to €6.345. Permanent TSB inched up 0.31 per cent to €1.926.

Building materials giant and Iseq index heavyweight CRH dipped 0.77 per cent to €25.80 on a day when some of its competitors also fell out of favour with investors.

Insulation specialist Kingspan added 1.44 per cent to €42.16. The company is due to issue a trading statement on Monday and is expected to be included in one of the leading international indices from early next week.

Food group Glanbia climbed 4.36 per cent to €15.79. In the same industry, Kerry nudged 0.32 per cent to €94.10.

Real estate investment trust Hibernia Reit shed 2.32 per cent to €1.348. That company is due to publish interim results on Tuesday.

LONDON

Irish convenience food producer Greencore gained 1.34 per cent to 193 pence sterling on Friday. The group is listed on the London market.

Aer Lingus owner International Consolidated Airlines Group advanced 1.87 per cent 643p. In the same business, EasyJet gained 2.12 per cent to 1,254. Dealers said airlines were popular with investors yesterday.

Airtricity parent SSE was in the doldrums amid fears its merger with rival Npower has been left "in a shambles" after being delayed due to the incoming cap on default tariff prices.

The two firms had been hoping to seal the merger of their retail operations in the first quarter of 2019 after it was recently given the green light by the competition watchdog. SSE shares were down 30p or 2.54 per cent at 1,152.5p at the close.

Packager and Smurfit Kappa competitor DS Smith fell 4.8 per cent to 357.8p as volatility in the industry left it out of favour with investors.

Another of the sector's players, Mondi, saw its shares fall almost 4 per cent to 1,750.5p.

EUROPE

German airline Lufthansa gained 4 per cent to €20.24, benefiting from generally good sentiment towards the sector. Heidelberg Cement dipped 1 per cent to €60.10.

Germany's Thyssenkrupp fell 9.2 per cent to its lowest levels since July 2016 after cutting its profit outlook for the second time this year.

Luxury goods group Richemont's shares fell 6.4 per cent after it said sales growth slowed and management struck a cautious note.

Europe's banks also fell sharply with BBVA the worst performing. Shares in the Spanish lender tumbled 5.9 per cent in the fallout from an unexpected Bill in Mexico proposing to limit bank commissions, which triggered the stock market's biggest fall in more than seven years on Thursday.

Santander fell 1.6 per cent and Banco Sabadell was down 2.2 per cent, but BBVA suffered the biggest tumble as Mexico is its biggest market, accounting for 41 per cent of the bank's overall profits.

US

The S&P 500 fell more than 1 per cent on Friday, with shares of large technology, industrial and material companies taking a hit as weak Chinese data and a slide in oil prices raised concerns about global growth.

Apple dropped 2.4 per cent and semiconductor stocks tumbled 2.1 per cent.

Shares of Caterpillar, which serves as a bellwether for global economic activity, fell 3.1 per cent. – Additional reporting: Reuters