European shares sink as St Stephen’s Day optimism vanishes

The Euro Stoxx 50 index sank 1.2 per cent on Thursday, entering a bear market, as European equities failed to sustain optimism from the Wednesday rally in US stocks.

Shares sank not long after markets reopened after the two-day Christmas holiday, amid higher volatility and sluggish trading, as worries about a slowing global economy and a trade spat between Washington and Beijing returned.

Trade-sensitive sectors such as mining and automotives led the retreat, keeping equities in the region on track for their worst year since the 2008 financial crisis.

Wall Street stocks were also unable to maintain their record St Stephen’s Day rally.

European equities fail to sustain optimism from Wednesday’s rally in US

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Stock markets nervous amid increasing geopolitical tensions

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Wall Street remains volatile after run of bruising declines

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US stocks bounce after run of bruising declines

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Dublin

The Iseq index finished down more than 1 per cent on a lacklustre day of thin trading volumes and a general waning of sentiment across Europe.

Among financial stocks, Bank of Ireland declined 4.25 per cent to €4.78, while Permanent TSB was down 5 per cent at €1.57 on extremely low volume. AIB closed flat at €5.41.

Building materials group CRH, the largest stock on the index, declined 1.4 per cent to €22.23 in line with the mood of the markets, while major stock Ryanair was also a faller, ending the session down 1.65 per cent at €10.16.

Paper and packaging group Smurfit Kappa joined the sea of stocks in the red, ending 2 per cent lower at €22.72.

London

UK shares fell to their lowest point in more than two years, as global economy fears snuffed out cheer from Wall Street.

The FTSE 100 index of blue-chip stocks declined 1.5 per cent, with energy stocks among the biggest decliners as oil prices fell. Oil giant BP ended 2.6 per cent lower, while Shell was down 0.9 per cent.

AstraZeneca tumbled 4 per cent, while HSBC, Unilever, Reckitt Benckiser, GlaxoSmithKline and British American Tobacco all fell 1.4-3.7 per cent.

Retailers were back under the spotlight, with more bad news pulling down household names such as Marks & Spencer, JD Sports, Dixons Carphone, Boohoo, Primark-owner Associated British Foods by 1.6-5.2 per cent.

Among smaller companies, Earthport more than trebled its value, jumping 279 per cent after Visa said it would acquire the British payments firm.

Europe

Despite gains of up to 0.5 per cent at the opening of markets, losses in utility companies and carmakers dragged the Stoxx Europe 600 Index firmly into the red. It ended down 1.75 per cent as traders cited a lack of visibility.

All sectors and national indexes in Europe were in the red. Germany’s Dax fell 2.4 per cent, while the Cac 40 in France was 0.6 per cent lower.

Italian banks fell 1.13 per cent, coming under fresh pressure after the top shareholder at Banca Carige put the troubled lender's future into question by blocking a €400 million new share issue.

The main corporate news came courtesy of French construction group Vinci, which agreed to acquire control of Gatwick Airport for £2.9 billion (€3.2 billion), seizing its chance to add a major London hub to its aviation portfolio. The stock initially traded down in Paris, but it was up 0.2 per cent at the close.

US

Stocks in New York fell across the board on Thursday, erasing a chunk of the previous day’s big rally, as fresh concerns arose about the US economy with a measure of consumer confidence dropping by the most in more than three years.

The pullback on the heels of Wednesday’s huge advance, which featured the Dow Jones Industrial Average’s first-ever 1,000 point daily surge, was led by the technology stalwarts that have also been under some of the greatest selling pressure since late summer.

Apple, Amazon. com and Google parent Alphabet all fell by 2 per cent or more in the first half of the session. Energy, consumer discretionary and communications stocks also lost ground. – Reuters / Bloomberg