ISEQ falls 1.2% in day of uncertainty

THE ISEQ fell by nearly 1.2% yesterday on a day of further uncertainty over the restructuring of the country’s banks, further rises in bond yields and continued weakness in the euro.

Wednesday’s marginal rise in Dublin was wiped out by a 1.17% (31.4 point) reversal that brought the exchange down to 2,655 points.

The banking stocks again had a varied day — AIB down by 2c (nearly 6%) to 32c; Bank of Ireland up by 1c (2.41%) at 27c; and Irish Life & Permanent (IL&P) down 4c (5.56%) at 60c.

However, share price falls were widespread and not confined to the financial players; with the building materials sector tumbling as the likes of Kingspan, Grafton Group and CRH all showed significant losses, the latter down by 25c/1.77% at €14.06.

The likes of exploration company, Petroneft; medical devices specialist Icon and food groups Glanbia, Aryzta, Greencore and Kerry were among the few decent climbers.

Yesterday’s overall share woes were played out against a backdrop of a still weakening euro, which dipped to a two-month low against the US dollar, as the eurozone’s debt crisis concerns remained.

Meanwhile, yesterday also saw yet another increase in the yield/interest rate payable on long-term Irish Government bonds or debt.

The rate nudged the all-time high by reaching 9.21% as international credit ratings agency, Moody’s announced that it is reviewing the debt of some Irish banks for a possible downgrade.

While investor concern mightn’t have been cooled by Wednesday’s publication of the Government’s four-year recovery plan, one of the world’s leading bond buyers, Pimco, said that investors should share the burden of financial failure with taxpayers.

That opinion was shared by German Chancellor Angela Merkel — who urged European Governments to be more courageous by forcing private investors to burden more of the fallout from financial losses.

Much of the concern on the markets surrounds the ongoing uncertainty over when and how the Government will restructure the country’s banking system, with speculation rising that a final decision (which could see both of the big two banks here virtually totally nationalised) is pending in the coming days.