Slide in equity markets halted on guarded comments by Greenspan

INVESTORS breathed a sigh of relief yesterday as equity markets halted their slide on guarded comments from the chairman of the Federal Reserve, Alan Greenspan.

He indicated that although he expected more “previously undisclosed misdeeds,” in an allusion to the recent rash of corporate fraud scandals, he would hold off from imposing an interest hike. In London, the FTSE rallied initially before plunging to a new six-year low of 3,860 and recovering on an upswing from the Nasdaq to close 27 points higher at 4,022. Pharmaceutical company GlaxoSmithKline shed 2.4% on the news that its flagship drug Augmentin was under threat from a new generic version.

Telecoms registered some gains, mostly due to a significant rise for mobile phone operator Vodafone, which closed 6.1% at 91.5p. Incumbent BT Group rose 5% to £2.33. Energy distribution group Centrica, which has seen its shares hard hit in recent sessions amid question marks over its accounting, said it was confident it will continue to meet market expectations. It said that its accounting policies were “entirely appropriate” despite market speculation. Centrica said it had no plans to issue any shares for cash. The shares initially rose 3.7%, but quickly turned lower to close 3.4% lower at 1.55. American markets were unsteady and reacted moment-by-moment during Mr Greenspan’s twice-yearly speech to the Senate’s Banking Committee.

Mr Greenspan also said the path of the dollar was uncertain, but he would not intervene at this point. The euro fell back to $1.0067 yesterday after closing at $1.007 on Monday.

In early afternoon trading, the Dow Jones was down 51 points at 8,587 and the Nasdaq gained 21 to 1,403 on positive earnings reports from tech companies, which are all due to file their second-quarter results this week. Nextel Communications gained $1.48 to $6.48 on well-received results, but Intel dropped $0.11 to $19.01 on early reports that it would lower its forecasts when it released its earnings after the close of the day’s trading. The Iseq recovered on the FTSE’s late rally, but still closed down 30 points at 4,313. Financials fared well, with AIB up 10 cent to 12.50 and Bank of Ireland gained one cent to close at 11.40.

Ennex gained 3 cent to 0.16 on the news of its new contract. Iona Technologies gained 20 cent to 3.20 in advance of its second-quarter results and AGM tomorrow.

Other main movers included Elan, which lost 7 cent to 1.98 and Ryanair, which shed 25 cent to 5.65. United Drug fell 5 cent to 13.40 and McInerney Holdings, which lost 15 cent to 2.