Stocks fall on ECB tender worries

HOPES FOR a “Santa rally” across European stock markets faded yesterday, although the Dublin market managed to buck the trend by finishing in positive territory.

European shares fell after heavy demand by banks for cheap European Central Bank loans was seen as a bit too keen by investors, who fretted about the banks’ funding needs.

Traders said the rush for almost €490 billion worth of ECB money reflected the pressure banks are under, making it unlikely they would use it to buy more of the euro zone’s risky debt.

DUBLIN

The Iseq went against the grain, closing up 1 per cent – largely as a result of the performance of building materials group CRH. The cement-maker rose 3.35 per cent to €14.50 on the Dublin market, a day after figures showed US housing starts in November were the highest in 19 months. The stock also posted gains on the London market, where it now has its primary listing.

Ryanair fell 2 per cent to €3.72. The airline was one of six Irish stocks identified by stockbroking firm Bloxham yesterday as having the potential to generate positive shareholder returns in 2012. The other five stock picks in its outlook were DCC, FBD, Kerry, Paddy Power and insulation-makers Kingspan, which advanced 4.9 per cent yesterday to €6.40.

Bank of Ireland rose 1.2 per cent to 8 cent on a day when more than 500 banks across Europe piled into the ECB’s tender.

The bank has also had its second restructuring plan approved by the European Commission, which confirmed it is in line in state aid rules – the approval was described by Davy analysts as “an important hurdle” for the bank.

LONDON

At the close of a volatile session, the FTSE 100 index was down 29.86 points, or 0.6 per cent at 5,389.74, reversing a chunk of Tuesday’s 1 per cent advance.

Banks ended lower as a sector, dragged back by big falls in global heavyweight HSBC and emerging markets specialist Standard Chartered, down 0.8 per cent and 0.2 per cent respectively.

Lloyds Banking Group, however, was the top FTSE 100 riser, up 5.5 per cent as Exane BNP Paribas upgraded the UK lender to “outperform” from “underperform” on valuation grounds.

That move provided support to other domestic British banks, with Barclays and Royal Bank of Scotland up 0.3 per cent and 0.8 per cent respectively.

Among other blue-chip gainers, building products firm Wolseley and recently-promoted Irish peer CRH added 2.1 per cent and 2.6 per cent respectively, boosted by Tuesday’s better-than-expected housing data in the US.

Elsewhere among the FTSE 100 fallers, Essar Energy was the biggest faller, down 3.4 per cent after announcing its chairman was stepping aside temporarily following allegations by India’s central bureau of investigation relating to the extent of the equity holding of Essar in loop telecom limited.

Blue chip retailers were unsettled by further depressing news on the high street in a crucial week for the sector ahead of the holiday break, with Marks Spencer and Sainsbury both down around 2.0 per cent. Small cap chocolate producer and retailer Thorntons was the latest high street casualty, plunging 37.5 per cent after issuing a profit warning.

EUROPE

The Stoxx Europe 600 Index declined 0.5 per cent to 237.29 at the close of trading. The benchmark measure rallied as much as 1.4 per cent after the ECB agreed to provide three-year loans to euro-zone banks to keep credit flowing to the economy, before erasing its advance two hours later.

National benchmark indexes fell in 14 of the 18 western European markets, with France’s CAC 40 retreating 0.8 per cent and Germany’s DAX down 1 per cent.

Among European financial stocks, UniCredit, Italy’s biggest bank, dropped 4.4 per cent to 70.8 cents and France’s Societe Generale SA slid 3.4 per cent to €16.63.

US

US blue chips were down 0.5 per cent by the close of trading in Europe. The tech-laden Nasdaq dropped 1.8 per cent weighed by disappointing results from Oracle, which has seen its earnings fall short of Wall Street forecasts for the first time in a decade.

Technology shares had the biggest decline in the Standard and Poor’s 500 Index among 10 industries, dropping 2.5 per cent as a group in early trading. Oracle, the world’s number three software-maker, plunged 14 per cent, the most since 2002.

Shares in Research in Motion Ltd jumped 11 per cent to $13.90 after Reuters reported that Amazon and other potential bidders had been looking at making an offer for the BlackBerry maker.

Walgreen, the largest US drugstore chain, slumped 1.9 per cent as profit trailed estimates.

By 2 pm New York time, the Dow Jones Industrial Average lost 39.32 points, or 0.3 per cent, to 12,064.26. The Nasdaq Composite Index slumped 1.6 per cent to 2,562.77. (Additional reporting: Reuters / Bloomberg)