Italian stocks lift European bourses
ITALIAN stocks turned from a drag into a boost for European markets yesterday as signs the government would target a lower budget deficit quelled investors’ fears of a damaging showdown with the European Commission.
US stocks were heading for another record in midmorning trading there, as investors remained optimistic about the world’s biggest economy.
Italian bank stocks jumped as much as 3pc after government bond yields fell back and the spread to Bunds narrowed thanks to reports the government there was targeting a lower budget deficit in 2020 and 2021. Still in the thrall of developments on the Italian front, the pan-European STOXX 600 climbed 0.65pc near the close, with bank stocks the best-performing.
Italy’s FTSE MIB outperformed, up 1.3pc.
Banks, which have large sovereign bond holdings, suffer the most from selloffs in the bond market and the index saw its fifth consecutive day down on Tuesday before news the Italian government was aiming for a lower budget deficit.
“Any indication from the government that may deny such indications and lead to a step up in confrontation will negatively affect BTP spreads,” said Unicredit analysts. “The situation remains fluid and mood can make sudden U-turns, depending on a rather unpredictable news flow.”
Ireland’s Iseq Overall Index was performing well soon before the close, having added 1pc, or 67.54 points, to 6,540.18.
Ryanair regained some of the ground it lost earlier in the week after it issued a profit warning. Its shares were 2.6pc higher at €11.63 as the end of the session approached. Shares in Bank of Ireland were up 2pc at €6.84, while AIB was 1.3pc higher as the close neared. Permanent TSB was down 1.4pc. Homebuilder Abbey was 4.5pc lower at €14.70. The company, headed by Charles Gallagher, holds its AGM in Dublin tomorrow.
The UK’s FTSE-100 was 0.5pc higher as the session neared its end. Germany’s DAX was 0.4pc lower. France’s CAC-40 was up 0.6pc. Oslo-listed aluminium firm Norsk Hydro was a big faller yesterday, tumbling as much as 13.6pc after announcing it would shut all output from its Alunorte alumina refinery in Brazil.