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Sterling recovers as concerns about Brexit soften

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Sterling recovered somewhat on Tuesday on the back of a softening about the likelihood for a Brexit deal.

Dublin

Shares in AIB ended the day up almost 1 per cent after earlier surging when the bank eased concerns it will have to set aside further provisions for an industry-wide, tracker-mortgage scandal.

“The bank released a third quarter trading statement, which read relatively well, and the stock held onto gains following a very decent run for the past week or so,” said an analyst with Davy.

After a good start to the day, Bank of Ireland had a poor close and finished down 0.75 per cent.

Elsewhere, building materials company CRH enjoyed a relatively strong performance on Monday but gave back some of those gains on Tuesday, finishing the day down 0.75 per cent.

In food, Swiss-Irish baked goods group Aryzta was up 2.3 per cent after it agreed to sell its La Rousse Foods brand to the Musgrave Group for an undisclosed sum thought to be in the region of €30 million.

Glanbia was up 1.5 per cent on the day following recent pressure, while Kerry Group hit an all time high, rising 1.8 per cent to break the €90 barrier for the first time. “They had results out a week ago and momentum still exists in the stock,” said the analyst.

London

Britain’s main share index gave up early gains to close slightly lower, as sterling picked itself up from a session low on the back of timid optimism about a Brexit deal.

The FTSE 100 index ended the session 0.2 per cent lower at 7,327.50 points. While a weaker pound initially supported the index, the currency later cut losses to trade just slightly lower, which put pressure on Britain’s blue chips.

With no certainty over whether the UK and the European Union will be able to make a breakthrough on a divorce settlement, the pound is likely to continue to fluctuate and weigh on shares.

Elsewhere, supermarkets were by far the best FTSE performers, with Tesco and Sainsbury rising by 3 per cent and 2.7 per cent respectively. Goldman Sachs raised its rating for Tesco to “buy” and said margin pressure in the UK grocery market was easing.

Europe

Euro zone bond yields crept lower after the European Central Bank released its latest bond-buying data and confirmed a front-loading of asset purchases before the end of the year.

Increased buying by the ECB, a winding down of new bond supply and further signs of strength in the euro zone economy all provided a favourable backdrop to regional debt markets, especially lower-rated ones in southern Europe, analysts said.

Euro zone bond yields were flat to 2 basis points lower on the day, with benchmark German 10-year government bonds 1.5 bps down to 0.32 per cent. Italy’s 10-year government bond yield edged lower to 1.71 per cent.

The gap over benchmark German Bund yields was around 138 basis points. It earlier narrowed to the almost 136 bps hit last month, the lowest since October 2016.

Germany’s Dax was up 0.2 per cent and the Cac 40 in France dropped by 0.3 per cent.

New York

The tech-heavy Nasdaq recovered from a two-day sell-off on Tuesday but other US share indexes were mixed as investors assessed changes to the Senate’s version of a tax overhaul that could reduce gains for companies.

Technology stocks gained about 0.9 per cent led by gains in Microsoft, Amazon and Apple.

Shares of Twenty-First Century Fox climbed about 2 per cent after a report that Walt Disney was in the lead to acquire much of Fox’s media empire, though rival suitor Comcast remained in contention.

Disney shares fell 2.4 per cent, and Comcast also slipped 1.2 per cent. McDonald’s rose 1.75 per cent, providing the biggest boost to the Dow, after Jefferies upgraded the stock with a “buy” rating.

– Additional reporting by Bloomberg and Reuters

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