IL&P feels chill of Icelandic bank woes

A PICK up in trading on Wall Street by mid-afternoon yesterday helped rally markets across Europe in what was a mixed day of trading.

However, that fillip was insufficient to lift the ISEQ into positive territory and it closed down almost 1% after recording a substantial loss of 6.45% on Wednesday.

One of the key features was the sharp fall in the shares of Irish Life & Permanent (IL&P) which dipped more than 12.6%, to €3.10.

This followed confirmation that the lender — which deals in life and pensions as well as mortgages — has exposure to senior debt issued by the Icelandic banks which had to be taken into state ownership recently to keep them from going under.

Elsewhere, AIB bucked the trend with an increase of 3.83% in its share price to €3.25, while Anglo recorded no change at €1.80.

That contrasted with a sharp dip of over 3% by Bank of Ireland to €1.60 as investors worry that injections of capital into the banks by the State will erode the worth of their own holdings in Irish banks.

Independent News & Media group, whose earnings outlook has darkened considerably in the past six months due to the sharp declines in the outlook for both the British and Irish economies, lost further ground.

Its share price fell over 8% to 55c after Merrion Stockbrokers issued a note revising its earnings forecasts downwards for this year and next. The brokers cut earnings for next year by 20% and put a price tag of 60c on the stock in the period ahead.

It has left its hold recommendation unchanged on the shares for the past 12 months. A hold rating means the broker does not expect the shares to rise by more than 10%.

Britain’s leading share index, the FTSE 100 ended up 1.2% after a volatile session, having swung between a high of 4,108.36 and a low of 3,927.57.

Energy stocks provided the main strength for the FTSE, with the sector recovering from earlier falls as crude prices rallied by over $3 a barrel ahead of today’s OPEC meeting, with production cuts expected.

In Europe banks lurched to an 11-year low following a grim outlook from Credit Suisse on the back of a serious slowdown in European growth. The Cac 40 in France managed to close up by a modest 0.38% while the Dax fell 1.12% as exposure by German banks to weak European economies raised doubts about the economy.


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