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November 22, 2010    

Bank of Ireland, Allied Irish Banks down after bailout request

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by Elaine Frei
Bank of Ireland, Allied Irish Banks down after bailout request

European equities markets were lower Monday after Moody’s Investors Service said that it will likely reduce Ireland’s rating by several levels after the nation formally requested a bailout from the European Union over the weekend, all of which made analysts and investors worry that the bailout might not be enough to protect markets, especially with trouble still looming for Spain and Portugal.

As part of the bailout plan, Ireland’s banks could be downsized, merged or sold off, according to reports which left the Bank of Ireland (ISEQ: BKIR) down over 19 percent during the session while Allied Irish Banks (ISEQ: ALBK) dropped 6.2 percent.

Banks were lower in London as well, where the FTSE 100 fell 0.91 percent to 5,680.83 and the FTSE 200 was down 0.28 percent to 10,796.5.

Royal Bank of Scotland Group (LSE: RBS) was down 4.62 percent to lead declines on the 100 and in the banking sector, while Lloyds Banking Group (LSE: LLOY) was 4.18 percent lower.

Others in the financial sector also saw declines, with insurance and pensions provider Standard Life (LSE: SL) down 3.1 percent while Legal and General Group (LSE: LGEN) dropped 2.82 percent.

Over on the 250, investment managers Gartmore Group Ltd (LSE: GRT) fell the most as it declined 10.83 percent.

All miners save two were lower, with Aquarius Platinum (LSE: AQP) down the most as it dropped 3.54 percent and only iron-ore miner Ferrexpo (LSE: FXPO) and Vedanta Resources (LSE: VED) up, adding 0.62 percent and 0.59 percent respectively.

The retail sector was mixed with consumer electronics retailer Kesa Electricals (LSE: KESA) up the most, adding 3.88 percent, followed by a gain of 2.96 percent for sporting goods retailer Sports Direct International (LSE: SPD), while the biggest decline in the sector came for supermarkets chain Sainsbury’s (LSE: SBRY), which was down 1.36 percent.

The travel and leisure sector was also mixed as TUI Travel (LSE: TT) added 3.59 percent to lead gains in the sector and on the 100, while Punch Taverns (LSE: PUB) turned in the worst performance in the sector as it dropped 2.49 percent.

The best performance on the 250, meanwhile, came from boiler and pipeline control valve manufacturer Spirax-Sarco Engineering (LSE: SPX), which added 4.77 percent.

The FTSE Eurofirst 300 was down 0.74 percent to 1,094.02 while the Dax fell 0.31 percent to 6,822.05, the CAC-40 was 1.07 percent lower to 3,818.89 and the IBEX dropped 2.68 percent to 9.996.4.

Asia-Pacific regional markets were mostly higher.

The Nikkei 225 was up 0.93 percent to 10,115.2 in Tokyo, while the Topix index added 0.69 percent to 875.48 and the Mothers market gained 2.31 percent to 382.72 and the yen weakened versus the euro on the news regarding Ireland.

The weaker yen helped exporters, including carmaker Toyota (TYO: 7203), which added 1.1 percent, while manufacturer Kyocera (TYO: 6971) was up 2.4 percent.

The oil sector gained on higher prices for crude oil, with Japan Petroleum Exploration (LSE: 1662) gaining 3.3 percent while Inpex (TYO: 1605) was 3.6 percent higher.

Trader Mitsubishi Corp (TYO: 8058) was up 1.4 percent as oil and metals prices gained.

Central Japan Railway (TYO: 9022) added 0.8 percent, Toshiba (TYO: 6502) was up 1.2 percent and Hitachi (TYO: 6501) was 1.8 percent higher on reports that they are among a group of Japanese companies which will bit to be part of the construction of a high-speed rail system in Florida, in the United States.

Other gainers in the region included South Korea’s Kospi, which added 0.17 percent to 1,944.34.

The Sydney Ordinaries gained 0.3 percent to 4,731.8 in Australia, while the S&P/ASX200 was up 0.31 percent to 4,643.5.

Taiwan’s Taiex added 0.83 percent to 8,374.91 while the Sensex was 1.9 percent higher to 19,957.6 in India.

On the other hand, the Shanghai Composite was down 0.15 percent to 2,884.37, the Straits Times Index was 0.2 percent lower to 3,190.92 and the Hang Seng dropped 0.35 percent to 23,524.

New York markets were lower as the Dow Jones Industrial Average dropped 1.15 percent to 11,074.9 at just before 1 p.m. local time, while the S&P 500 was down 1.07 percent to 1,186.86 and the Nasdaq Composite was 0.52 percent lower to 2,505.06.

Crude oil prices were lower in midday trade, with West Texas Intermediate crude down just over $1 per barrel, while in metals markets precious metals were higher but copper had dropped 8 cents per pound.

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