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European rally evaporates in mid-session

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European shares fell again, compounding a difficult week that saw a widespread equity sell-off. The Iseq in Dublin limited the drop to 0.2 per cent.

In London, Vodafone posted a disappointing trading update and dragged British shares into a third day of losses as outsourcing firms failed to recover after Capita’s profit warning during the previous session.

DUBLIN
Total Produce was the big climber on the Iseq, on foot of its €242 million deal to buy a 45 per cent stake in the US-based Dole Food Company. Chairman Carl McCann, called it the “most positive step” in the company’s history. It finished up 6.4 per cent at €2.38, while it also raised €145 million in a share placing.

Shares in the troubled Swiss-Irish food group, Aryzta, finished the session up almost 5 per cent to €22.34 after it announced it would sell its Cloverhill facilities in Chicago and Cicero in the US to Hostess Brands and Bimbo Bakeries.

Travel software firm Datalex continued its recent choppy ride, finishing down 4.4 per cent at €3.06. It had regained ground earlier this month after falling heavily in December on concerns about its possible exposure to a troubled Chinese company.

LONDON
The FTSE 100 fell 0.6 per cent to a six-week low with most European bourses also closing in negative territory.

Intense competition in Spain and Italy took the shine off Vodafone’s third-quarter revenues and sent the shares of the world’s second-largest mobile operator down 4.5 per cent at £2.14.

Shell shares also weighed heavily, falling 2.8 per cent at £24.06 after its results showed weaker quarterly cash generation than expected.

Shares of British outsourcing companies also ended in the red, failing to recover from Capita’s profit warning on Wednesday as the collapse of Carillion clouds the sector.

Interserve, Capita, Mitie and Serco fell 19.6 per cent, 13.1 per cent, 6.9 per cent and 3.4 per cent respectively.

IWG tumbled 14.4 per cent at £2.27 after Canadian private equity firm Onex and Brookfield Asset Management said they would not make an offer for the British serviced office provider.

Building products distributor SIG retreated 4.1 per cent after it said its 2016 profit was overstated. A stand-out performer was NEX Group, jumping 7.7 per cent after the financial technology firm said “noticeably” more active markets this year had helped its revenues rise.

EUROPE
A tentative rebound in European stocks evaporated in afternoon trading, with Germany’s DAX Index leading losses after breaking below a key technical level. The DAX fell sharply after crossing below its 50-day moving average, posting its worst drop in almost three months. It closed down 1.4 per cent after earlier rising as much as 0.9 per cent.

Daimler added to index woes after the carmaker issued a forecast indicating profit growth will come to a halt this year falling 1.8 per cent to €72.45.

Healthcare stocks were the worst performing with Novo Nordisk down 6.5 per cent after results, the biggest weight on the Stoxx.

Elsewhere in Europe, the Cac 40 in France slipped 0.5 per cent.

NEW YORK
The dollar eased and global equity markets edged higher on Thursday as a note of caution over rising interest rates and high stock valuations dampened investors’ appetite for risk assets after a euphoric January in markets.

A fresh slide in drugmakers and a plunge in PayPal shares offset gains in Facebook, AT&T and eBay, which shot up almost 15 per cent.

Lazard posted adjusted fourth-quarter profits that beat Wall Street estimates, as strength in its asset management business helped offset a decline in advisory fees. While adjusted profits beat expectations, the Bermuda-based firm also reported a one-time charge of $420 million related to the new US tax law. It’s share price fell more than 2 per cent in morning trade to below $59, but retraced losses and was up about 1 per cent at around noon. – Additional reporting: Reuters/PA/Bloomberg

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