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Bond yield worries send shares lower

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Worries over rising bond yields and falling metals prices trumped well-received earnings updates from Kering and Credit Suisse on Wednesday, sending European shares to a one-week low.

Wall Street was also tracking lower after warnings by top US firms about rising costs fuelled worries that corporate earnings may have peaked.

Concern remained over higher bond yields after the yield on the US 10-year Treasury breached 3 per cent level on Tuesday, making equities relatively less attractive.

Dublin
The Iseq index finished slightly in the red on a relatively active day of trading, as negative sentiment took its toll on several key stocks.

The market was boosted by cement-maker CRH, which went against the prevailing trend, closing up almost 2.5 per cent at €29.90 after it announced plans to buy back up to €1 billion of its shares over the next 12 months.

Ryanair fell 0.6 per cent to €15.39 amid rising oil prices, while paper and packaging group Smurfit Kappa fell more than 3 per cent to €34.38.

Food group Glanbia slipped 1.9 per cent to €13.95 after a quarterly management statement that reflected relatively weaker dairy markets. A gain of 1.3 per cent to €5.27 made Origin Enterprises the other main riser.

London
Takeda’s enhanced bid for drug maker Shire and a fresh offer for Sky failed to lift the London market, with the blue-chip FTSE 100 closing down 0.62 per cent.

Sky shares were the top performers after US media group Comcast submitted a bumper bid, prompting the European pay TV group to drop its support for a lower offer from Rupert Murdoch’s 21st Century Fox. It closed up 3.9 per cent having touched a 52-week high during the session.

Rare disease specialist Shire lost 2.6 per cent after it said it was willing to recommend a sweetened offer from Takeda Pharmaceutical.

GlaxoSmithKline shares lost 3.6 per cent. It reported a 2 per cent fall in sales and earnings held back by a stronger pound and more pricing pressure in respiratory medicine.

Whitbread shares got an initial boost after announcing the spin-off of Costa Coffee – a move long sought by activist investors – but then retreated, closing 0.2 per cent down on the day.

The tobacco sector was one of the only other areas trading in positive territory with Imperial Brands up 3.5 per cent and British American Tobacco rising 2.8 per cent.

Lloyds Banking Group lost 1.7 per cent after slightly missing expectations for pre-tax profits.

Europe
The pan-European Stoxx 600 index was down 0.8 per cent at its lowest in a week, with Germany’s DAX falling 1 per cent and France’s Cac 40 losing 0.6 per cent.

Kering closed 4.7 per cent higher, after hitting a record earlier in the day. The luxury goods company posted impressive first-quarter results thanks to demand for its Gucci clothing and handbags. The luxury conglomerate helped boost the retail sector up 1.3 per cent, the best sectoral gainer.

Credit Suisse stood out among falling banks. It shares jumped 4.2 per cent after beating first-quarter profit expectations as a revamp at the bank bore fruit.

German lighting group Osram Licht sank 17.1 per cent to a 16-month low after cutting its profit guidance because of slower trading and a weak dollar.

New York
US stocks swung between gains and losses as investors mulled the implications of rising bond yields and disappointing earnings. The dollar resumed its rally, climbing to the highest in three months.

Disappointing earnings are weighing on some of the biggest names in tech while chip stocks look to snap their five-day skid. Twitter dropped as much as 7.7 per cent after reporting earnings, as analysts questioned the pace of growth. Facebook, which was due to report numbers after the closing bell, slid as much as 2.2 per cent. – Additional reporting: Bloomberg / Reuters

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