Markets ignore rating agency's outlook

Eurostoxx 50: 2,488.29 (–0.13%) Frankfurt DAX: 6,728.19 (–0.15%) Paris CAC: 3,375.64 (–0.26%)MARKETS ACROSS Europe yesterday shrugged off the move by rating agency Moody's to downgrade Italy, Spain and Portugal, and put Britain and France on negative outlook. However, lower than expected retail sales in the US saw markets decline nonetheless.

DUBLIN

IT WAS another quiet day in Dublin yesterday, with light volumes across the board. According to brokers, Moody’s downgrade had “zero impact” on the Irish market, although it was still down on the day.

CRH fell on the back of poor sector news in the US. It lost 10 cent, or 0.7 per cent, to close down at €15.15.

Having had a strong run recently, Bank of Ireland fell back a little, with brokers pointing to profit taking in the stock. It gave up one cent, or 4.4 per cent, to fall back to €0.13

Paddy Power gave up some of its gains, losing €1.15 or 2.7 per cent to close down at €42.25.

While airlines were weaker across Europe, Ryanair held up reasonably well and was largely flat on the day, adding one cent to close at €4.21.

Kerry rose on the back of several positive international broker reports, adding 36 cent, or 1.2 per cent to advance to €29.36.

Elan was also up on the day. It added 10 cent, or 1 per cent to finish up at €9.95.

Aer Lingus was up by two cent, or 1.6 per cent on the day, to €0.93, amid broker speculation that it is readying a 25 cent special dividend, although this was denied by the company.

LONDON

DISAPPOINTING RETAIL sales in the US saw the FTSE 100 slip backwards yesterday, over-shadowing the market’s resilience to Moody’s decision to put the UK’s AAA rating on negative outlook. It fell back by five points to 5,899.87.

Miners lost ground after their big gains on Monday, with Rio Tinto off 118p at 3,727.5p and Xstrata down 29p at 1184p.

“It is looking as if all the wooing in the world will not succeed in pushing the FTSE higher from here, and growing skittishness regarding the rally suggests that a major turn in sentiment might well be on its way,” Chris Beauchamp, market analyst at IG Index, said.

Banks were also among the biggest fallers, with Royal Bank of Scotland sinking to the bottom of the FTSE 100 with a 1.5p fall to 26.7p.

Lloyds Banking moved 1p lower at 34.3p.

Going in the opposite direction was Bunzl, which advanced by 32.5p up to 910.5p, BAE Systems which added 9.4p to close up at 329.4p, and Burberry, which was rose 30p to 1,423p.

EUROPE

ACROSS EUROPE, stock markets fell in all of the 18 western-European markets except Italy, despite new statistics from Germany showing that investor confidence increased in February more than economists had forecast, rising to a 10-month high.

In Frankfurt, the DAX Index fell by 0.2 per cent, while France’s CAC 40 Index lost 0.3 per cent.

“Worse-than-expected retail sales data out of the United States forced stocks lower in afternoon European trading and countered much of the support gained from better than expected German ZEW sentiment data,” said Joshua Raymond, chief market strategist with City Index.

Banks, many of which have significant exposure to peripheral euro zone countries and have taken a hit on their balance sheets following the long-running euro zone debt crisis, were among the biggest losers.

The STOXX Europe 600 euro zone Banking Index fell by 1.4 per cent.

ThyssenKrupp, Germany’s biggest steel maker, fell by 3.8 per cent after posting a first-quarterloss following project delays.

Cosmetics group L’Oreal gained 3.8 per cent to €84.73 after the world’s largest cosmetics maker said it was confident of achieving sales and earnings growth this year after reporting a 7.7 per cent increase in 2011 operating profit, thereby beating analysts’ estimates.

In Italy, markets rose following a €6 billion bond auction, at which its borrowing costs fell to the lowest since last March.

US

SLOWER THAN expected retail growth hit US markets, with the SP 500 Index down by 0.4 per cent at lunch-time.

Retail sales had been expected to rise by 0.8 per cent in January, but only managed an increase of 0.4 per cent, a Commerce Department report showed.

“The market had been bid higher on the back of a remarkable array of positive surprises. I don’t view the retail sales report as bad, but rather as a lack of continued better-than-expected news,” Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott said.

Bank of America was down by 3.1 per cent in early trading after Citigroup cut its recommendation on the lender’s shares. – (Additional reporting (Bloom- berg/Reuters)