Europe stocks slip on Ireland downgrade; banks fall

* FTSEurofirst 300 down 0.4 pct;

* Ireland’s downgrade hits Irish banking stocks

* U.S. July new home sales, durable goods data in focus

By Harpreet Bhal

LONDON, Aug 25 (BestGrowthStock) – European shares fell by midday on
Wednesday, adding to hefty losses a day earlier, with Standard &
Poor’s cut to Ireland’s credit rating weighing on sentiment and
as fears persisted over the outlook for the global economy.

By 1111 GMT, the FTSEurofirst 300 (.FTEU3: ) index of top
European shares was down 0.4 percent at 1,015.43 points, after
closing at a one-month low in the previous session as
disappointing U.S. housing data underscored concern over the
pace of economic recovery.

The index has lost nearly 6 percent over the past three
weeks, but volumes remain thin during the summer holiday period.
Volumes on the index were at just 25 percent of its average
90-day volume by midday.

Irish banking stocks were under pressure, with Allied Irish
Banks (ALBK.I: ) down 5.1 percent and Bank of Ireland (BKIR.I: )
down 2.8 percent after ratings agency S&P downgraded its credit
ratings on Ireland and assigned the country a negative outlook,
citing substantially higher costs to support its struggling
financial institutions. [ID:nLDE67O0D7]

The cost of protecting Irish government bonds from default
rose and the premium investors demand to buy Irish debt rather
than German benchmarks climbed after the downgrade.

“The Ireland downgrade was not too much of a surprise but it
is still weighing on sentiment. The theme so far has been one of
better company earnings, but that has been weighed down by
uncertainty over the economy,” said Joshua Raymond, market
strategist at City Index.

The market will closely monitor data from the across the
Atlantic later in the day, including July’s U.S. durable goods
orders at 1230 GMT and new home sales data for the same period
at 1400 GMT, for fresh clues on the health the world’s largest

“There is a big focus on economic data now that we’ve come
through the earnings season. People are expecting very slow
growth at the minimum but there is still a potential for a
double dip and investors are looking towards economic data to
help paint the picture for the potential for that.”

Across Europe, Britain’s FTSE 100 (.FTSE: ), Germany’s DAX
(.GDAXI: ) and France’s CAC-40 (.FCHI: ) lost 0.3 to 0.6 percent.
The Thomson Reuters Peripheral Eurozone Countries Index
(.TRXFLDPIPU: ) fell 0.9 percent.


Providing some support for the index following Ireland’s
credit rating downgrade, data from the Munich-based Ifo think
tank showed German business morale rose to its highest level in
more than three years in August. [ID:nLDE67O0OB]

The unexpected increase suggests Europe’s largest economy
will continue to steam ahead even if the pace of growth may
slow, and highlights the divergence in growth prospects within
the euro zone.

Germany’s DAX is down 0.7 percent so far this year,
outperforming a 5.2 percent drop year-to-date in Britain’s FTSE
100 and a 11.8 percent decline in France’s CAC-40.

Among individual movers in Europe, BHP Billiton (BLT.L: ),
which has made a $39 billion hostile bid for Potash Corp
(POT.TO: ), fell 0.6 percent after posting a 47 percent rise in
second-half profit, but said it was cautious on the short-term
global outlook. [ID:nSGE67O017]

Tullow Oil (TLW.L: ) shed 5.9 percent after the oil explorer
said the development of its Ugandan oil fields will be delayed
due to a spat between the government and the firm’s former
partner Heritage Oil (HOIL.L: ). [ID:nLDE67O06B]

On the upside, Belgian insurer Ageas (AGES.BR: ) rose 2.8
percent after reporting a surge of cash coming into its business
in the first half, particularly in Asia, and strong earnings
from its life insurance business. [ID:nLDE6420IC]

(Editing by Erica Billingham)

Europe stocks slip on Ireland downgrade; banks fall