MW: European shares notch mild gains, but Irish banks fall
Swiss bank UBS, mining giant BHP Billiton and airline Aer Lingus advance
By Sarah Turner, MarketWatch
LONDON (MarketWatch) -- European shares edged higher on Tuesday, helped by gains for mining giant BHP Billiton and Swiss bank UBS, but Irish banks dropped sharply for the second straight day.
The Stoxx Europe 600 index (ST:SXXP 264.46, +0.57, +0.22%) rose 0.2% to 264.30, the second day of gains this week, with the move bringing year-to-date gains to 4.2%.
However, Irish banks had another weak session, with Allied Irish Banks (IE:AIB 1.16, -0.21, -15.02%) (AIB 3.24, -0.34, -9.50%) down 16.5% and Bank of Ireland (IE:BIR 1.24, -0.01, -0.40%) (IRE 6.79, +0.19, +2.88%) shares down 4.4%.
"These share prices suggest that people are expecting the Irish government to take a higher equity stake. Certainly it looks like that's going to the case for AIB. It's possible they could take up to 75%," said Stephen Dolmen, strategist at Dolmen Stockbrokers.
"Today is probably one of the biggest days for the Irish economy for decades," he said. "We've going to get details about the actual haircuts in relation to the banking loans that have been transferred into the National Asset Management Agency. We're also going to get details from the financial regulator of the new capital ratios that are going to be required for the banks."
Overall, the Irish ISEQ 20 index traded down 0.9% at 499.35.
The euro (CUR_EURUSD 1.3482, +0.0008, +0.0594%) couldn't hold onto early gains, trading flat at $1.3472 against the dollar and pressuring commodity futures, with gold futures down $1.70 at $1,108.60 an ounce.
"We're starting to see the euro come off. I think that there are concerns about Greece," said Taylor. Greece issued a bond on Monday, testing demand, but Taylor said cover was poor.
The Greek ASE Composite Index (XX:??? 2,137, -10.46, -0.49%) declined 1.9% to 2,096.70.
Of the major regional equity markets in Europe, the U.K. FTSE 100 index (UK:UKX 5,710, -0.49, -0.01%) declined 0.1% to 5,706.35, the German DAX index (DX:DAX 6,161, +4.38, +0.07%) advanced 0.1% to 6,162.06 and the French CAC-40 index (FR:PX1 4,001, +0.38, +0.01%) rose 0.1% to 4,002.74.
Asian shares were higher and U.S. stock futures were pointing to mild gains on Wall Street.
Of companies gaining ground, BHP Billiton (UK:BLT 2,298, +27.84, +1.23%) (BHP 81.68, +0.91, +1.13%) shares were up 1.2% after the firm said that annual iron-ore agreements with a significant number of its Asian customers will change to shorter-term contracts.
"The structural change that these settlements represent is consistent with BHP Billiton achieving market clearing prices," the firm said.
Other metal firms on the move included Anglo American (UK:AAL 2,881, +45.50, +1.61%) , up 1.2%, and Antofagasta (UK:ANTO 1,043, +12.00, +1.16%) , up 1.1%.
The lender generated around $2.3 billion of revenue in its fixed-income business in the first quarter of 2010, according to a Bloomberg report, citing people familiar with the situation.
In response, UBS said that the figure in the report is slightly higher than current first-quarter forecast revenues for the business.
"Because the quarter has not ended and results to date are subject to possible fair value adjustments, including those relating to own credit, this forecast may not be reliable," it said.
Irish airline Aer Lingus Group (UK:AERL 0.75, +0.04, +5.63%) gained 5.6% after it said that slightly higher revenues and lower volume-related costs have resulted in the business trading ahead of prior year for the first quarter of 2010.
Its 2009 net loss widened to 130.1 million euros ($175 million) from 109.9 million euros in 2008. Revenue dropped 11% to 1.2 billion euros from 1.36 billion euros.
Shares of electronics firm Thales (FR:HO 29.88, +0.64, +2.17%) climbed 2.4% after an upgrade to buy from hold for the firm at Citigroup.
"With most bad news probably out of the way, we believe that the current share price offers an attractive entry point for long-term investors," the broker said.
