LONDON: European stocks rose yesterday despite the airlines sector flying into turbulence after Irish no-frills carrier Ryanair issued a shock profits warning.
Stocks initially fell deep into negative territory but recovered as Wall Street pushed into positive territory ahead of the release of the US Federal Reserve’s “Beige Book”, which gives a read of US regional economic conditions and could provide clues on whether the central bank is likely to taper its aggressive bond-buying stimulus programme.
London’s benchmark FTSE 100 index ended the day up 0.10 percent at 6,474.74 points. Frankfurt’s DAX 30 climbed 0.19 percent to 8,195.92 points and the CAC 40 in Paris added 0.16 percent to 3,980.42 points.
Madrid rose 0.53 percent while Milan dropped 1.35 percent amid renewed fears over the government’s stability as former prime minister Silvio Berlusconi tries to avoid being expelled from parliament for his tax fraud conviction.
In foreign exchange trading, the euro firmed to $1.3217 from $1.3170 late on Tuesday, when it had hit a one-month low point at $1.3139. The dollar was flat at 99.54 yen.
On the London Bullion Market, gold prices slid to $1,390.00 an ounce from $1,399.50.
With no surprises likely from the the European Central Bank and Bank of England at their interest rate meetings on Thursday, investors were able to take advantage of a loosening of tensions over prospects of military intervention in Syria.
“Another factor weighing on sentiment was an apparent softening of tone by Russian President (Vladimir )Putin, when he suggested that he was not, in principle opposed to a strike on Syria, if it was proved that Assad was guilty of the use of chemical weapons,” said CMC Markets UK analyst Michael Hewson.
The profits warning by Ryanair sent airline shares tumbling across Europe. Its own share price plunged by about 15 percent at one stage. In late trading, Ryanair’s share price was down 12.22 percent at ¤5.95 on Ireland’s main stocks index, which was showing a loss of 1.86 percent overall.
Ryanair warned that its annual net profits could miss forecasts owing to intense competition and falling airfares. Ryanair “now expects the full-year outturn will be at the lower end of its full-year net profit range of $750m-$790m”, it said in a statement.
The gloomy news sent shockwaves through the rest of Europe’s airlines sector. Easyjet dropped 5.1 percent to 1,215.00 pence. International Airlines Group — which owns British Airways and Spanish carrier Iberia — slid 1.3 percent to 291 pence, despite announcing a hike in traffic in August thanks to its budget Spanish carrier Veuling. Lufthansa slumped 2.9 percent to ¤12.93, while Air France-KLM shares slid 0.35 percent to close at ¤5.65.
Asian stock markets, meanwhile, closed mixed as profit-taking tempered buying sentiment, dealers said. Tokyo ended 0.54-percent higher, following gains of more than four percent in the previous two sessions. Shanghai was up 0.21 percent, but Hong Kong fell 0.31 percent and Sydney slipped 0.67 percent.
Wall Street rose ahead of the release of the Fed’s Beige book. In midday trading, the Dow Jones Industrial Average rose 0.74 percent to 14,943.71 points. The broad-based S&P 500 added 0.90 percent to 1,654.54, while the tech-rich Nasdaq Composite Index climbed 1.01 percent to 3,649.08 points. AFP
