Uncertainty continues to stifle markets

EUROPEAN markets dropped further yesterday chiefly on the back of rising bond yields and uncertainty over the new Italian government doing little to convince investors that the debt crisis is close to coming under control.

Despite the latest figures from Eurostat showing that the eurozone economy remained stable in the third quarter, helped mainly by growth in Germany and France; all major European bourses fell again. Of the big guns, the CAC in Paris was down the most, by just shy of 2%; while the DAX in Frankfurt was down by just under 1%.

London’s FTSE-100 came closest to stability with just a marginal 0.03% dip.

In Dublin, the ISEQ shed 1.17%, falling by over 30 points to close at 2,663 points.

There was good and bad on show, with significant falls for the likes of CRH, CPL Resources, FBD, Aryzta, Donegal Creameries, Smurfit Kappa, ICG and United Drug; but good gains for DCC, Origin Enterprises, Dragon Oil, Providence Resources and Paddy Power — which gained 1.10 on the eve of its latest trading update.

The national benchmark indices in Greece and Spain fell by 1.34% and 1.61%.

Greece’s economy in GDP terms fell by 5.2% year-on-year in the third quarter and Spain was hit with yields on its 10-year Government bonds rising past the 6.3% mark, ahead of its general election at the end of the week.

Uncertainty in Europe was compounded by Italy’s 10-year bond yields rising to 7.13% — the post 7% mark seen as “unsustainable” by most economists — and its incoming prime minister, Mario Monti, seemingly struggling to align parties behind him in order to copper-fasten the country’s new government.

Italy’s main index — the Borsa Italiana in Milan — was down by nearly 1.1% yesterday.

Further afield, yesterday’s global trading began with falls of nearly 1% for both the Nikkei in Tokyo and the Hang Seng in Hong Kong.

However, by late afternoon, European time, there were gains in New York — the Dow Jones rising by half a percent, the Nasdaq up nearly 1% and the S&P-500 Index rising by 0.6%.