Iseq reacts cautiously as euro-zone plan studied

Iseq:2,755.85 (-10.53) Settlement Date:November 2nd

THURSDAY’S POSITIVE reaction to Europe’s make-or-break rescue plan for the euro area gave way to a more circumspect response yesterday, as investors turned their attention to the question of how the euro area plans to fund its enlarged bailout facility.

Having risen in early trade, European stock markets slipped at lunchtime as the US market opened lower.

As the investment community prepared for the bank holiday weekend on the last trading day of the month, it was an extremely quiet day in Dublin, with one Dublin broker noting “a lot of cash on the sidelines”, though the Irish stock exchange is open on Monday.

Pharmaceutical company Elan was one of the best performers of the session, adding 6.5 per cent to close at €8.42, following positive results on Thursday which showed that third-quarter earnings rose by 39 per cent, boosted by higher sales of its multiple sclerosis drugs, Tysabri.

Smurfit Kappa continued to find favour with investors, advancing 3 per cent to end the session at €5.10.

Analysts noted profit-taking in CRH as the construction stock closed at €13.81, down 2.2 per cent.

Petroceltic closed 9.4 per cent lower at €0.07, after the company held its first investor day in London on Thursday.

Kenmare Resources gave up Thursday’s gains after its reported strong third quarter earnings, to finish down just over 5 per cent at €0.48. Dragon Oil also finished the week lower, dropping 4.4 per cent to €6.20.

On the bond markets, Italian 10-year yields climbed above 6 per cent despite bond buying by the ECB, while the extra yield investors demand to hold Italys 10-year bonds instead of German bunds widened to 382 basis points from 367 basis points.