UK Stocks Struggle; Ireland Bond Yields at 9%

Devan Biswas
11 Nov, 2010
New York City

UK stocks and broader indexes fell after investors feared that Ireland and other smaller nations may struggle with bonds repayment. Copper prices closed at a record high on the inflation worries in China. Irish bonds yields rose to 9%.

[R]5:30 PM London – UK stocks and broader indexes fell after investors feared that Ireland and other smaller nations may struggle with bonds repayment. Copper prices closed at a record high on the inflation worries in China. Irish bonds yields rose to 9%.[/R]

UK indexes closed higher on a record price in copper and braved the rising yields on the Irish bonds.

Irish central bank governor Patrick Honohan said at a speech in Dublin that loan losses at domestic and international banks may reach as high as 85 billion euros largely linked to construction industry.

Yields on 10-year Irish bonds rose to 9% as the bonds declined for the thirteenth day in a row. European Commission President Jose Manuel Barroso said that Ireland has not requested financial assistance but the commission is ready to extend help if asked.

Resource stocks were active after rising inflation worries were in focus in China trading.

FTSE 100 index closed up 0.05% or 2.89 to 5,819.93 but the broader FTSE 250 index fell 82.00 or 0.8% to 10,912.50.

Indexes in Athens, Lisbon, Stockholm and Zurich declined nearly 0.3% and in Milan fell 1%. The DAX index in Frankfurt closed higher after trading down most of the day. The index in Madrid dropped 0.8% and in Dublin plunged 1.2%.

Investors focused on the abilities of Ireland and Portugal to repay sovereign debt and are increasingly bracing for a debt restructuring that may force bond holders to accept partial payment.

The yields spreads of the sovereign bonds of Portugal, Spain, Ireland and Greece jumped to between 500 and 650 basis points to German bonds after French Finance Minister Christine Lagarde commented that investors “must” be a part of debt restructuring.

Bank of Ireland plunged 7.3% to 38.59 euros and National Bank of Greece SA declined 3.2% to 7.24 euros.

Stock Movers

Aviva Plc dropped 4% and Legal & General Group declined 1.4% on the worries that insurers may be included in the new capital rules discussed at the standards and rule setting committee in Basel, Switzerland.

Resource stock closed sharply higher after copper prices surged to a record on London Metals Exchange.

Xtrata Plc added 4% to 1,422 pence, Kazakhmys Plc soared 3.1% to 1,540 pence and Antofagasta Plc rose 4.2% to 1,466 pence.

Vedanta Resource Plc declined 1.1% after it reported first half pre-tax income increased to $1.1 billion from $605 million a year ago.

Cookson Group Plc dropped 6% to 531 pence after the company did not give any indication of the annual outlook.

SuperGroup soared 12.5% to 1,350 pence after it reported accelerated earnings growth in the latest period.