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ISEQ rebounds but trading nervous

Friday, June 15 12:49:31

The ISEQ rebounded this morning in nervous trading ahead of Greece's elections over the weekend with hopes rising that central banks will intervene to deal with the risk of a Greek exit from the euro zone.

By 12:30, the ISEQ rose 46.71 points to 3,053.14.

While European shares gained, many traders remained wary ahead of the Greek election on June 17, which could determine the country's future within the euro zone currency bloc, and said the equities market rally could be a short-lived one.

Smurfit Kappa's stocks rose 4c to E5.20. The latest pricing data from RISI, released yesterday, showed that recycled containerboard prices in Germany continued to decline in June, while OCC prices were also down. Testliner prices declined by E25-30/tonne in June bringing the total decline from recent highs in April to E45-50/tonne. Last week RISI noted that prices were expected to decline in June by "up to E20/tonne" and clearly the pricing environment has turned out more difficult. In addition, OCC prices declined by E10/tonne which leaves prices E20/tonne down from the recent peak. It would appear supply discipline is waning, given that testliner declines are outstripping those of OCC, which is a negative for the sector.

Following the lease buyout at its Dublin HQ and some small adjustments to our divisional forecasts, Goodbody are increasing their earnings per share (EPS) forecasts for United Drug (UDG) by 2pc in 2012 to 24.5c and by c.4pc in 2013 to 27.3c. The exceptional performance of the US packaging business year to date should continue into H2 and will offset the weakness seen in Europe, while a turnaround in the specialty business gives a small welcome lift to the bottom line, the broker said. "Having spent E30m on Magna Park, UDG has plenty of firepower for additional accretive acquisitions. We would expect news over the coming months regarding Celesio's sale of Movianto and Pharmexx. We believe either or both acquisitions would be value enhancing for the Group. While the upgrade is small, it copper fastens the welcome return to earnings growth which we believe will please investors. We leave our PT unchanged at E3 and keep our BUY recommendation on the stock," said analyst Donal O'Neill. Shares in United Drug rose 4c to E2.16.