Bank of Ireland, AIB post more steep declines in Dublin
By Simon Kennedy, MarketWatch
LONDON (MarketWatch) — European stock markets rose Wednesday, recovering some of the week’s heavy losses, as strong data from Germany helped offset continuing sovereign-debt fears.
The Stoxx Europe 600 Index (ST:STOXX600 265.23, +1.61, +0.61%) rose 0.6% to 265.12 after heavy selling in the previous two sessions.
The German DAX 30 index (DX:DAX 6,782, +76.96, +1.15%) gained 1.1% to 6,781.76 after the Ifo Institute’s closely watched business-climate index rose to its highest level since the nation was reunified. See story on the Ifo gauge.
U.S. stock-market futures also edged higher Wednesday ahead of a raft of economic data.
The moves came after Asian markets reacted relatively calmly to the heightened tensions between North and South Korea, which had weighed on European markets Tuesday. Stocks in South Korea fell in early trading but swiftly recovered most of their losses. See story on the market reaction to the clash.
Most other European indexes were higher. The U.K.’s FTSE 100 (UK:UKX 5,614, +32.58, +0.58%) climbed 0.6% to 5,614.91, and the French CAC 40 (FR:PX1 3,735, +10.69, +0.29%) rose 0.2% to 3,733.68.
The Irish ISEQ index, however, dropped 0.5% amid sharp declines in Irish banking stocks and after Standard & Poor’s Ratings Services downgraded its rating on Irish sovereign debt to A from AA-minus.
The highly volatile shares of Bank of Ireland (IE:BIR 0.23, -0.07, -22.00%) (IRE 1.32, -0.38, -22.35%) slumped 24% on reports that the Irish government will take a majority stake in the lender as part of a bailout package for the country.
Oliver Gilvarry, analyst at Dolmen Stockbrokers, said Irish authorities want to push banks’ capital ratios as high as 12%, compared with the current requirement of 8%. If all the capital is supplied by the state, then the government’s holding in Bank of Ireland will be about 78%. For AIB, which is already largely government-controlled, state ownership could hit 99.9%.
“Uncertainty will continue in the coming days until the final details of the bank deal are announced, which we expect to be at the weekend,” Gilvarry said.
Among other countries with lingering sovereign-debt worries, Portugal’s PSI 20 index rose 0.3%, and Spain’s IBEX 35 added 0.1%.
Public- and private-sector workers in Portugal united Wednesday for what may be the country’s biggest-ever strike to protest the government’s austerity measures. See story on Portugal’s general strike.
Among other stocks on the move, shares of SAP AG (DE:SAP 35.68, -0.59, -1.61%) slipped 1.4% after news that Oracle Corp. (ORCL 27.72, +0.53, +1.95%) won a $1.3 billion verdict against the German software firm in an intellectual-property trial. Read about the SAP verdict.
Compass Group (UK:CPG 551.00, +23.50, +4.46%) rose 4.7% after the U.K. food-service company lifted its dividend payout by a third.
Miners Xstrata (UK:XTA 1,293, +22.50, +1.77%) and Kazakhmys (UK:KAZ 1,426, +35.00, +2.52%) both rose about 2% as the sector found support after recent heavy selling. Up until Tuesday’s close, shares in Xstrata had lost more than 13% in less than two weeks.
Capital Shopping Centres Group (UK:CSCG 348.10, -7.40, -2.08%) dropped 3.2% after it said it’s in talks to buy the Trafford Centre shopping mall in a deal worth around 1.6 billion pounds ($2.5 billion).
