Negative US employment data takes shine off markets

NEGATIVE employment data from the US and rising fears – among some of the leading European banks – that the sovereign debt crisis could spread across central Europe, took much of this week’s shine off international stock markets and dragged most of them down heading into the weekend.

The mounting European debt crisis concerns hit Italian banking giant Unicredit and its French counterpart Societe Generale, the latter a major contributor to the CAC in Paris, falling by nearly 3% yesterday.

Elsewhere, the German DAX was down by 1.9% and falling banking stocks (RBS and Barclays, in particular) also dragged London’s FTSE down by over 1.5%.

The debt crisis also dragged the value of the euro down to a four-year low against the dollar of under $1.21 yesterday.

New EU figures have also shown that the eurozone economy – those 16 member states which have adopted the euro as their national currency – posted a 0.2% level of quarter-by-quarter growth for the first three months of this year – positive movement, but still well short of the sort of growth evident in the US and Japan.

Dublin’s ISEQ ended its recent run of positive form, by falling 1.7% to just below the 3,000 point mark again.

Traditional strong movers like DCC and CRH both fell sharply, yesterday, the latter by as much as 71c (nearly 4%) to €18.36 and the former by 45c to €18.80.

Irish Life & Permanent (IL&P) shed more than 4% to close at €1.85; with AIB down 3% to 96c.

Bank of Ireland was the only upward mover amongst the Irish banks on the final day’s trading before the Bank Holiday weekend.

Reports that more than 90% of its investors are likely to participate in its €1.7bn rights issue – a major element of its €3.42bn fundraising plan – helped boost its share price by over 5.5% to 76c. The rights issue, the results of which are expected next Wednesday, is being viewed as something of an acid test for the Irish banks’ capital-raising/recovery chances. There had been concerns that many shareholders might not take up their rights, even though the plan was unanimously approved.

Meanwhile, CRH wasn’t the only Irish building-related stock to underperform yesterday. Insulation products specialist, Kingspan shed 29c to close at €6.82; while Grafton was down 14c at €2.98; although housebuilder McInerney Holdings was up by 2c at 9c.

While there had been better news on the US jobs front earlier in the week, final figures showing fewer job creations in May than had been expected dragged the Dow Jones and Nasdaq in New York down by 1.7% and 1.4% respectively.

The main Asian markets in Japan and Hong Kong also saw marginal declines yesterday.