Euro zone share indexes fall again

European markets ended another difficult week as investors remained concerned that US President Barack Obama and Congress would fail to agree on a new budget to avoid the so-called fiscal cliff.

Share indexes dropped to a second consecutive week of losses as uncertainty over the US budget talks, a weak economic outlook and violence in the Middle East spooked investors.

European shares fell to a closing low last seen 3½ months ago as markets put in their worst weekly performance since late September.

Shares fell in every western European market except Greece and Iceland, with the main bourses falling by between 2.4 and 3 per cent.

DUBLIN

The Iseq index of shares closed down 0.2 per cent, pushing the decline for the week to more than 3.5 per cent on the back of a bleak economic picture in Europe and US, coupled with weaker earnings from the market’s main share, building materials giant CRH. The share fell 1.6 per cent or 22 cent to €13.60 a share yesterday, down from €14.28 at the start of the week and below what a trader called “the psychological barrier” of €14 a share.

There was continued interest in the shares of food group Glanbia yesterday following the deal on Wednesday to hand control of its Irish diary subsidiary to a farmer-led cooperative.

The deal allows the company move away from lower margin dairy processing to concentrate on its international business.

Glanbia’s shares fell almost 2 per cent or 15 cent yesterday to close at €7.85, down from €8.04 at the start of the week.

One trader described the company as the “stock of the week” given the interest in the business arising from the deal.

Building materials company Kingspan was the best mover of the bigger stocks, rising 3.4 per cent to €7.50, recovering the previous day’s losses, but down €7.88 over the week.

Ryanair traded down 0.72 per cent or three cent to €4.55 a share after going ex-dividend dropping from €5 to €4.66 after agreeing to a special pay-out to shareholders of 34 cent a share at the end of this month.

Bank of Ireland edged up another 1 per cent to 9.5 cent a share, putting in a better performance over the course of the week having started at 9.2 cent.

The bank’s positive trading update and €1 billion public bond sale, the first by an Irish bank in more than two years, lifted the stock over the week but the share price is still below the 10-cent rights issue price at which the bank was bailed out by shareholders and the North American private investors.

LONDON

Britain’s index of top shares extended losses for a third day, posting its biggest weekly fall in six months amid concerns about global growth and the US fiscal cliff of federal spending cuts and tax increases.

The FTSE 100 closed down 1.3 per cent taking the index’s weekly losses to 2.8 per cent, its steepest decline since May.

British buyout group Melrose offered a taste of things to come, warning of uncertain 2013 sales outlook and sending its shares 11.5 per cent lower.

To date, 39 per cent of UK companies have missed earnings forecasts in the quarterly results season, compared to 30 per cent of US companies.

EUROPE

Stock markets in Europe surrendered early gains yesterday as persistent worries about the euro zone debt crisis and US budget negotiations rattled investors, with banking stocks featuring among the top fallers.

This included Commerzbank which fell 2.9 per cent.

US

Shares in New York rose by lunchtime, erasing earlier losses, as house speaker John Boehner said budget talks with the president were constructive and he would accept an increase in government revenue if coupled with spending cuts.

Oil added 1.8 per cent as conflict escalated in Israel. US Treasury 10-year yields fell two basis points to 1.57 per cent. – (Additional reporting: wires)