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ISEQ in cautious rebound after losses

Wednesday, September 05 17:34:02

The ISEQ rebounded after two days of weak and negative trading ahead of a crucial meeting of ECB policy makers tomorrow.

The ISEQ was up 17.99 points to 3,173.90.

European stocks were up around midday today in choppy trade in the run-up to this week's ECB policy meeting, as low demand at a Bund auction signalled that investor appetite for safe-haven assets is drying up, a bullish sign for equities. Germany sold 3.61 billion euros of new 10-year government bonds on Tuesday, drawing bids worth less than the amount on offer. That sparked a rally in Germany's DAX stock index, up 0.6 percent.

Stocks have also been buoyed by expectations of strong new measures from the European Central Bank on Thursday to fight the debt crisis.

Shares in CRH rose 22c to E14.05. Day-two of the Holcim investor meeting included presentations on group regions Asia, Switzerland and Latin America as well as a visit to its cement facilities in Holderbank and Siggenthal. Built from the ruins of the Asian financial crisis, Holcim's business in south-east Asia now contributes 33pc of group EBITDA. From key markets like India, Vietnam, Indonesia and the Philippines, the group operates a regional network aimed at maximising profit by servicing outlying markets with a deficit of cement. Management outlined the CHF 500m profit improvement to be extracted from Asia through the 'Leadership Journey' initiative. This will be delivered through savings in logistics, procurement, energy and fixed costs as well as 'customer excellence'. The greatest opportunity appears to lie with energy where savings of CHF 200m have been targeted. Like the group's overall energy saving target, this looks readily achievable. Not surprisingly, divisional management was bullish on the outlook for the region.

Among the other movers were Aryzta, up 47c to E39.55, Elan, which dropped 8c to E8.91 and Paddy Power, which climbed 45c to E56.20.

Shares in IFG were flat at E1.50. Davy has reduced its earnings estimates for IFG following its recent interim results. "Our revised 2012 operating profit forecast of £13m compares to over £16m previously and broadly assumes the £1.4m reduction in H1 2012 profits persists during H2. The reduction was due to higher risk and compliance costs £0.5m, lower Irish private client profits £0.5m and the proportion of central overheads that previously went to the international business £0.4m," analyst Emer Lang said.