Stocks fall as borrowing costs increase

ACROSS EUROPE, trading volumes remained thin yesterday, as weak retail sales in the US and on-going uncertainty in the euro zone saw investors choose to stay out of the market ahead of Sunday’s Greek elections.

DUBLIN

IN LINE with markets across Europe, the Iseq was off yesterday, on what was a quiet day overall.

Glanbia continued its bad run yesterday, giving up 22 cent or 4.1 per cent to finish down at € 5.13, bringing its losses for the week up to more than 8 per cent.

There was also some weakness in airlines, despite a decline in the price of oil as uncertainty continues to hang over European economies.

Aer Lingus ended the day down by 3.1 per cent, or 3 cent at € 0.93, following a sell trade late in the day. Ryanair held up slightly better, finishing the day up by 0.4 per cent or 2 cent at € 3.88, although it had been off for much of the day.

Under pressure was Smurfit Kappa, which fell by 29 cent or 5.3 per cent to close down at € 5.15.

Amidst its on-going boardroom battles, Independent News Media saw its share price plunge by 19.6 per cent, as it gave up 0.05 cent to close down at € 0.20.

Grafton Group was sold-off, dropping 9 cent, or 3.2 per cent to decline to € 2.75, albeit on particularly light volumes.

Paddy Power was one of the stronger performers, adding 7 cent or 0.14 per cent to finish the day up at € 51.57. Also in the black was Kerry Group, which enjoyed a strong surge late in the day to finish up at € 35.45, up by 50 cent or 1.4 per cent.

Dragon Oil completed a buy-back of 591,528 shares for between £5.35 and £5.45 and saw its share price climb as a result. It added 2 cent, or 0.3 per cent to finish the day up at € 6.64.

Also strong on the day was fellow exploration firm Kenmare Resources, which gained 1 cent, or 2.7 per cent to advance to € 0.54

LONDON

IN LONDON, mining stocks helped the FTSE 100 close up by 0.2 per cent at 5,482.81 points. As the price of gold rose towards $1,625 an ounce, gold mining specialists Fresnillo and Randgold led the FTSE leaderboard. Fresnillo advanced by 4.1 per cent, while Randgold Resources added 2.1 per cent. However, rival miners Xstrata and Glencore both fell sharply after broker Liberum Capital issued a cautious note over the two companies’ plans to merge with one another.

However, overall trading volumes were light, and traders said they expected the FTSE to continue to trade within a tight range of between 5,200-5,500 points while worries over Europes debt crisis remained.

Supermarket chain Sainsbury’s saw its shares plunge by 2.6 per cent after it reported a lower than expected rise in sales. Smaller rival Morrisons was also off on the day, as it gave up 1 per cent to close down at 277.8p.

EUROPE

EUROPEAN STOCKS declined as borrowing costs increased at debt auctions in Germany and Italy and as Sweden’s SKF AB reported weakening demand for its products in the second quarter.

The Stoxx Europe 600 Index dropped 0.4 per cent to 242.56, while in Paris, the CAC 40 lost 0.6 per cent, and in Frankfurt, the DAX fell by 0.1 per cent.

The Swedish engineering company SKF, whose products are used by customers in the construction, automotive and aviation businesses globally, fell by 7.3 per cent to 133.20 kronor in Stockholm, its biggest decline since August, after it reported “slightly lower” demand for its products and services in the second quarter than in the same period a year earlier.

Renault led a sell-off by carmakers, falling 4.2 per cent to €30.98 as Carlos Ghosn, chief executive officer of Renault and Nissan Motor Co, forecast “three to four more years of stagnation” in Europe’s auto industry.

In Madrid, clothing retailer Inditex jumped by 12 per cent to €75.40, its highest price since it went public in 2001, as it reported a 30 per cent jump in first- quarter profits.

US

STOCKS SWUNG between gains and losses as JPMorgan Chase sparked a rally in bank shares, tempering a disappointing retail sales report. Economic data showed that retail sales fell in May for a second month, as slower employment and subdued wage gains dampened demand.

JP Morgan jumped by 3.5 per cent as CEO Jamie Dimon testified about his bank’s practices to lawmakers, although analysts noted that the bump in share price was more because Dimon didn’t put “his foot in his mouth” rather than say anything helpful.

Computer manufacturer Dell was also on the rise, adding 3.8 per cent after saying it will pay a dividend.

Johnson and Johnson gained 0.9 per cent to $63.68 after it said that its $19.7 billion purchase of Synthes, the largest acquisition in its 126-year history, will add 3 cent to 5 cent a share to 2012 earnings as it gained US clearance for the deal. – (Additional reporting Bloomberg/Reuters)