WEEKLY ROUND-UP : Dublin out of steam

Saturday February 17th 2007

THE Dublin market suddenly ran out of steam yesterday as fresh data from the US took the wind out of the market's sails and shares slipped back during a generally quiet session.

With US house prices and construction activity showing a greater than expected slowdown, the market paused for breath as investors digested data which could impact on those stocks with exposure too the world's biggest economy.

By the end of business the ISEQ Index had dropped back by a modest 21.74 points lower at 9911.51.

Construction

After setting the market alight for most of the week on the back of a bullish report from Davys, CRH ran out of steam after the poor US housing data.

With construction starts hitting the decks, the building materials group was bound to be hit, and after soaring to record highs on Wednesday and again on Thursday ,the stock was sold down during Friday's session to close the week 34c lower at �33.11.

Banks

The banks also set new records this week but they were a mixed bag yesterday. Even news that Davy is again upping its price target for Bank of Ireland could not save the shares yesterday. The broker said it was rerating its targets for the banks to take into account higher ratings prevalent across continental Europe.

In both AIB and Bank of Ireland's case, the effect is to raise the price target by 7pc.

For AIB this means a new target of �26.50 and the shares made further progress yesterday, closing up 10c at �23.75.

Bank of Ireland however was the subject of some profit taking and edged 7c lower to �18.31, well short of its new target of �19.50.

Shares in Irish Life and Permanent were up 7c to �22.42 ahead of its full year results due at the end of the month.

Davy is forecasting a bullish statement from the bank, predicting that outgoing ceo David Went will depart on a high note.

Drugs

After storming ahead on Thursday, Elan was once again the day's best performer yesterday, though gains were slightly more modest, the stock advancing by 35c or 3.23pc to �11.20.

Elan is being driven by the the release of initial uptake figures for its joint Multiple Sclerosis drug Tysabri. Biogen Idec said that nearly 10,000 patients have been prescribed Tysabri since its reintroduction last June.

London

Profit taking and weaker metal prices caused the mining sector to drag on the London market, while fading hopes of a bid battle for supermarket giant Sainsbury did little to cheer investors.

The FTSE 100 Index closed down 13.8 points at 6419.5, even as other retailers benefited from positive outlook reviews.

Metal prices softened after the Chinese central bank took steps to cool the country's economic growth, sparking fears over future demand for base metals.

Vedanta Resources led the sector losses, off 18p at 1286p, with Rio Tinto down 35p at 2799p and Anglo American losing 32p to close at 2538p.

Weaker oil prices also took their toll on the blue-chip index as the continued mild weather in the US saw stocks rising amid reduced demand. BG Group was down 10.5p at 710.5p, Cairn Energy fell 21p to 1592p, while Royal Dutch Shell lost 15p to 1685p and BP closed 2p lower at 535p.

The Footsie's performance was also hit as the prospect of a private equity bid battle for Sainsbury receded, with reports emerging earlier in the day that Cinven had dropped plans to form a rival team to bid for the group. Sainsbury shares were off 4.5p at 504p.

Europe

European shares ended slightly lower on, as mining stocks retreated from recent highs and as weak housing data from the US rattled sentiment in building materials companies.

Spanish bank BBVA was a top faller, down 0.5pc after it agreed to buy US bank Compass Bancshares for $9.6bn.

The pan-European FTSEurofirst 300 index ended down 0.13pc at 1,544.03 after hitting a six-year high of 1,550.2 in the previous session.

Britain's FTSE 100 dipped 0.2pc, the German DAX fell 0.02pc and the French CAC 40 declined 0.13pc.

Shares in building materials companies fell after the US government said the pace of US home construction in January suffered the sharpest drop since October.

US

US stocks declined after Microsoft Corp tempered revenue expectations for the Vista computer operating system, dragging on all of the three major stock indexes.

Elsewhere, the battered home builder industry received another dose of bad news as data showed weaker-than-expected housing starts last month, sending the Dow Jones Home Builder index down 1.6pc. Microsoft chief executive Steve Ballmer said after the market's close on Thursday that analysts' revenue forecasts for Vista were "overly aggressive".

Pat Boyle

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