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ISEQ rebounds on economy optimism

Friday, February 01 12:50:02

The ISEQ rebounded from four days of lacklustre trading this morning as European investors cheered some better than expected eurozone economic indicators.

By 12:45, the ISEQ was up 27.73 points to 3,574.06.

The euro hit a 33-month high against the yen and a 14-month peak against the dollar, lifted by improving euro zone manufacturing data and bets of a firm U.S. jobs number.

News that banks will repay less than expected in European Central Bank three-year loans next week dented some demand for the euro, but losses were limited by optimism the worst of the region's debt crisis is over.

A Purchasing Managers' Index (PMI) survey showed euro zone factories had their most resilient month in nearly a year during January, helped by solid German output.

Shares in Grafton Group rose 2c to E4.34. Yesterday B and Q Ireland Ltd (9 stores with sales of circa E90m) was placed in examinership following insolvency with liabilities of more than E17m to its parent company Kingfisher plc. Under the proposed restructuring at least two stores (Athlone and Waterford) would close. The company believes the remaining seven stores could be viable if rents are substantially cut (current rent of E11.6m is believed to be E5.8m above market levels) and further cost cutting means are implemented. Should no agreement be reached on rents the company notes that a further two stores are in jeopardy. "Last year Grafton completed a similar process which led to the closure of two DIY stores and resulted in annualised rental savings of E4-5m. It is encouraging to see further capacity coming out of the market and it is of note that Grafton has a presence in the towns of the proposed closures. We would not be surprised to see other competitors make similar announcements which should help Grafton's Irish businesses to return to profit growth," said Goodbody's.