MORE GOOD news from the US and a positive view of the take-up of this week’s European Central Bank’s (ECB) loan auction boosted stocks yesterday.
Jobless claims in the US fell for the second week running, dropping to 364,000, its lowest level since April 2008.
The markets took it as a sign the world’s biggest economy may be picking up.
Goldman Sachs said the large take-up by lenders of the ECB’s long-term refinancing operation on Wednesday is an important positive, underpinning banks during the sovereign storm and it expects the amount to grow further still in the February auction.
The broker nominated said UK-listed Lloyds Banking Group and HSBC as top picks among its group of investable banks.
Bank stocks in London and the rest of Europe led the rally yesterday.
DUBLIN
The Iseq’s advance – 0.92 per cent – was not as marked as other European indices, but the Dublin market had bucked the previous day’s trend by adding 1 per cent.
The market’s biggest stock, CRH, added 1.45 per cent to close at €14.71. The international building materials group was admitted to London’s blue-chip FTSE 100 index at the close of business on Friday and has made ground since Monday, when it opened in Dublin at €13.35.
Volumes in the stock were solid yesterday, with just under two million shares changing hands in Dublin.
In a related sector, insulation specialist Kingspan added 1.88 per cent to close at €6.52.
DIY and builders’ merchant Grafton gained 2.15 per cent to close at €2.376.
Exploration group Providence Resources released an upbeat end-of-year statement, but investors were only interested in selling the stock, which fell 3.61 per cent to end the day at €2.40.
Elsewhere, bookmaker Paddy Power’s shares gained ground, jumping 1.09 per cent to close at €42.56.
Packaging specialist Smurfit Kappa also had a good day, adding just over 2 per cent to close at €4.80.
DCC, whose largest business is oil distribution, added 1.73 per cent to close at €18.50.
LONDON
Banks buoyed Britain’s FTSE 100 on Thursday as Goldman Sachs analysts said the take-up by lenders of ECB loans should be seen as an “important positive” and market bulls attempted to push the index through important technical levels.
London’s blue chips closed up 67.23 points, or 1.3 per cent, at 5,456.97, although the index failed to push on from an earlier high of 5,469.03 in volumes which were just 61 per cent of their 90-day average.
Bill McNamara, a technical analyst at Charles Stanley, said a close above the 50-day moving average, about 5,450, could give investors confidence that this reversal off the lows is something more than just fleeting. “It is not inconceivable that the FTSE could run back up to test its short-term downtrend again before the year is out, which would take it up to 5,590 or so,” he said.
EUROPE
European stocks advanced, extending this week’s gains. International Consolidated Airlines Group SA and Deutsche Lufthansa AG climbed after the parent of British Airways reached a binding agreement to buy Lufthansa’s BMI unit.
Deutsche Bank and BNP Paribas jumped more than 3 per cent, as banks pared some of this year’s slump. Stagecoach Group slid 3.4 per cent after JPMorgan Chase Co advised selling the shares.
The Stoxx Europe 600 Index added 1.1 per cent to 239.78 in London, bringing this week’s gains to 2.6 per cent. The benchmark measure has rallied 12 per cent from this year’s low on September 22nd amid optimism US economic growth is holding firm and euro-area leaders are moving to stem the region’s debt crisis.
The pan-European FTSEurofirst 300 index of top shares rose 1 per cent to a close of 980.89 points. As in London, volumes were thin.
“We’ve seen encouraging economic news out of the US,” said Robert Talbut, who helps oversee about $70 billion as chief investment officer at Royal London Asset Management.
“I still believe that the necessary shifts will occur in Europe and that in combination with more supportive moves elsewhere, 2012 can turn out to be a decent year for credit and equities.”
The Stoxx 600 index has still tumbled 13 per cent this year as the crisis spread to Italy and Spain.
Banks and commodity companies have posted the largest declines among 19 industry groups on the gauge, both slumping more than 30 per cent.
US
US stocks rose, putting the SP 500 on the cusp of finishing out the year higher as another decline in jobless claims pointed to further improvement in the labour market. The SP rose for a third day in seasonally light volume that has contributed to sharp swings recently.
