Banks tread water as Europe GDP drags on prices

IRISH stocks slid 0.5% yesterday as markets around Europe reacted to less favourable economic data.

Although Dublin’s ISEQ was down, CRH gained 0.8% to €12.26 after reporting an increase in first-half profits.

Bank of Ireland was up 1.04% to 10 cent while Irish Life and Permanent was flat at 4 cent.

Food shares were weaker, with Glanbia down 2.4% to €4.10 and Greencore down 5.7% to 56 cent.

Markets were reacting to news that gross domestic product in the euro area rose 0.2% from the first quarter, when it increased 0.8%, the worst performance since the euro region emerged from recession in late 2009.

Most European stocks fell, with the Stoxx Europe 600 Index snapping its biggest three- day rally since May 2010, as the economies of the euro area grew at a slower-than-estimated pace. Germany grew at 0.2% in the last quarter.

The benchmark Stoxx 600 slid 0.1% to 237.56 at the close in London, as three stocks dropped for every one that climbed.

Britain’s FTSE 100 Index climbed 0.1% and France’s CAC 40 Index slid 0.3% while Germany’s DAX sank 0.5%.

The ECB spent €22 billion last week buying up government bonds to keep Italy and Spain from financial disaster.

Crédit Agricole Corporate & Investment Bank strategist Orlando Green said: “It was essential that it [the amount] reflected that the ECB was committed to the cause as and when needed. Rather than targeting a certain amount of bond-buying, we think the ECB will be targeting ongoing stability in the Italian and Spanish markets.

“The crucial test for the success of the SMP program will be whether it can continue to provide stability when both Italy and Spain offer fresh bond supply.”