Modest gains for Iseq in thin trading

Eurostoxx 50: 2,234.17 (+12.41) Frankfurt DAX: 5,799.91 (+54.58) Paris CAC: 3,026.76 (+13.83)THE DUBLIN stock market twisted its way to modest gains yesterday on thin volumes as a strong opening on Wall Street translated into a positive swing for European stocks after a mixed morning.

Anecdotal evidence of a buoyant post-Thanksgiving sales in the US, as well as reports of a bounce in consumer confidence across the Atlantic, contributed to Wall Street’s early advances.

They also came in the wake of a well-supported Italian bond auction and hopes that a meeting of European finance ministers yesterday evening would yield measures capable of lowering the risk of contagion.

The Iseq closed up just shy of 0.5 per cent, reflecting the moves made by other major indices. After a day marked by an absence of local stock news, most of the main names, including CRH and Ryanair, traded up in line with the market.

Kerry Group was among a number of defensive stocks across Europe to post gains as investors took refuge from riskier bets amid concerns for the global economic outlook. The food group closed up 2.7 per cent at €26.44. On the flipside, there was a mini-sell-off in Glanbia, which fell 3.3 per cent to €4.35.

There was some buying activity in industrial holdings group DCC, which closed up 0.6 per cent at €17.40.

Bank of Ireland was the biggest climber on the main market, finishing up 4.8 per cent at 9 cents, although volumes were light.

In London, Britain’s blue-chip index rose 0.5 per cent, building on two straight sessions of gains as the strong consumer confidence data from the US offset renewed concerns about the euro zone debt crisis.

The FTSE 100 added 24.24 points to close at 5,337 after turning higher in the afternoon. The stronger-than-expected US consumer confidence data boosted stocks with high exposure to the US, such as Wolseley, the world’s biggest building supplies maker, which climbed 2.1 per cent.

However, stocks exposed to UK consumer spending fell after the British government cut its economic growth forecasts and suggested tough austerity measures would extend beyond the next election due in 2015.

Home improvements retailer Kingfisher fell 1.2 per cent, with consumer goods maker Reckitt Benckiser down 0.3 per cent.

In a further sign that market sentiment is far from solid, traditional cyclicals such as banks and miners also retreated, with investors quick to take profit on recent gains.

Lenders weighed heaviest on the FTSE 100 after Moody’s ratings agency warned it could downgrade the subordinated debt of 87 banks across 15 countries on concerns that governments would be too cash-strapped to bail them out.

State-backed Lloyds Banking Group was bottom of the blue-chip table as it fell 2.1 per cent, with Royal Bank of Scotland, which is also partly government-owned, dropping 1.1 per cent.

Adding to sovereign debt concerns for banks, Italy’s borrowing costs hit a euro lifetime high of nearly 8 per cent at an auction, piling pressure on euro zone finance ministers meeting in Brussels to discuss the region’s crisis.

Analysts renewed their calls for the European Central Bank to intervene with a large-scale liquidity programme designed to ease pressure on distressed countries and avoid a credit crunch.

Elsewhere in Europe, Germany’s DAX advanced 1 per cent and France’s CAC-40 gained 0.5 per cent. The Euro Stoxx volatility index fell just 0.8 per cent, although investors were expecting a bigger decline after strong gains in the past sessions.

The European travel and leisure sector featured among the top gainers yesterday, with the sector index rising 1.7 per cent. TUI Travel advanced 2.5 per cent on expectations that financial troubles at its rival Thomas Cook will help TUI. Thomas Cook shares slumped 13 per cent.

In the US, the Dow Jones and the S&P 500 advanced for a second day as stronger-than-expected consumer confidence data and hopes for further progress on a solution to Europe’s fiscal mess bolstered sentiment.

However, in a sign that investors are still nervous about the European debt crisis, defensive sectors such as utilities and consumer staples were among the best performers. The Nasdaq composite index also closed lower.

Financial shares limited the advance, with the S&P financial index down 0.6 per cent. Shares of Bank of America dropped 3.2 per cent to $5.08, its lowest closing level since March 2009.

Bank shares have been battered by worries that the impact of the euro zone crisis could spread through the global financial system and their losses highlight the fragility of any stocks rally until EU policymakers resolve it once and for all.

The day’s most actively traded stock on the New York Stock Exchange was AMR, even though it was halted more than a dozen times through the day. It plunged 84 per cent to 26 cents a share after the company, parent of American Airlines, filed for bankruptcy protection and named a new chairman and chief executive.

Weakness in some large-cap internet stocks weighed on the Nasdaq. Amazon.com dropped 3 per cent to $183.39. – (Additional reporting: Reuters)