EUROPEAN STOCKS recovered yesterday from Tuesday’s panic-selling session, but the rebound may yet prove short-lived if today’s bond auction in Italy fails to go smoothly or Friday’s gross domestic product figure from China disappoints.
The week-long decline in equity values was interrupted by what some traders described as a short-term technical bounce, as hedge fund investors covered their short bets, steadying markets.
And though Spanish bonds rose as a European Central Bank official signalled the ECB may revive its bond-purchase programme, fears about borrowing costs in the euro zone are also anticipated to resurface in the days ahead.
However, sentiment was buoyed when HSBC, Europe’s biggest bank, declared there was a “glimmer” of light for European bank earnings as it upgraded the industry to overweight for the first time in four years. European bank earnings may have “bottomed” as long as the region’s economy doesn’t contract by more than 2 per cent this year, HSBC analyst Peter Sullivan wrote to clients.
DUBLIN
THE ISEQ index finished flat on a topsy-turvy day, underperforming the major European markets, as index heavyweights Ryanair and Kerry both tumbled, dragging down the overall value of the market. Ryanair fell 2.4 per cent to €4.31 as oil prices advanced, while food group Kerry declined 1.6 per cent to €33.35. Exploration company Providence posted a fall of 4.6 per cent to €6.77.
However, building materials group CRH, the largest stock on the index, counted among the gainers, posting a 1.44 per cent climb to €14.81 on decent volume, while food group Glanbia was a star performer on a day with little local newsflow, advancing 4.3 per cent to €5.63. Bank of Ireland finished up almost 3 per cent at 11 cent on a day of positive trading for banks across Europe.
LONDON
BRITISH STOCKS climbed, rebounding from the lowest level this year, as mining companies and banks rallied after Alcoa kicked of the US earnings season with an unexpected first-quarter profit.
The FTSE 100 Index added 39.19, or 0.7 per cent, to 5,634.74 at the close in London.
Among the mining stocks, Kazakhmys and Antofagasta rose in tandem with copper, while the advance of the banking stocks was led by Barclays, which rose 2.8 per cent to 212.1 pence as HSBC Holdings strategists upgraded its forecasts.
G4S increased 2.6 per cent to 280.1 pence after analysts at Morgan Stanley recommended the security company to investors.
British Sky Broadcasting fell 0.8 per cent to 649 pence. The pay-TV broadcaster in which Rupert Murdoch’s News Corporation owns a 39 per cent stake, was downgraded to underperform from neutral at Bank of America.
EUROPE
PRESSURE ON equity and bond markets lifted as panic-sellers took a breather, with banks and car-makers leading the rebound.
The Stoxx Europe 600 Index rose 0.7 per cent, while the euro ended a five-day drop against the yen and yields on Spanish and Italian 10-year debt dropped at least 10 basis points.
Deutsche Bank, Germany’s largest bank, added 2.3 per cent to €34.48. Italian banks also gained, with UniCredit, the country’s biggest bank, adding 5.5 per cent to €3.21 after falling 8.1 per cent the previous day. Banco Santander SA, Spain’s largest bank, added 2 per cent to €5.30.
Preferred shares of Volkswagen added 3 per cent to €128.80, after four days of losses. Europe’s largest carmaker said first-quarter auto sales rose 10.5 per cent to 1.36 million units. Daimler AG added 1.2 per cent to €41.31. BMW, the world’s largest maker of luxury vehicles, gained 2.5 per cent to €66.71.
Finnish handset maker Nokia plummeted 14.5 per cent and hit its lowest level since 1997 after the mobile phone maker warned its phone business would post losses in the first two quarters this year as it struggles to revamp its product line to compete with rivals Apple and Samsung.
US
STOCKS ADVANCED in New York, snapping a five-day decline for the SP’s 500 Index, after Alcoa reported a first-quarter profit. Alcoa, the first company in the Dow Jones Industrial Average to announce quarterly results, climbed 7.9 per cent. Bank of America and General Electric added at least 1.8 per cent, pacing gains among the largest companies. The SP 500 increased 0.9 per cent to 1,370.79 by lunchtime in New York, while the Dow average advanced 104.60 points, or 0.8 per cent, to 12,820.53.
Apple trimmed a gain of as much as 1.3 per cent, rising 0.2 per cent to $629.75. The US government sued Apple, Hachette, HarperCollins, Macmillan, Penguin and Simon and Schuster in New York district court, claiming the publishers colluded to fix eBook prices. Simon and Schuster, Hachette and HarperCollins agreed to settle their suits, the Justice Department said. – (Additional reporting: Bloomberg /Reuters)
