Decline of almost 3.5% wipes out recent gains

Iseq: 4,399.18 Settlement date: September 15thFINANCIAL TROUBLE at US investment bank Lehman Brothers weighed heavily yesterday on the Irish stock market, which finished down almost 3.5 per cent, underperforming the major equity indices across Europe.

The large banking stocks all suffered heavy losses, with AIB falling 7.4 per cent, Bank of Ireland down 6.4 per cent and Anglo Irish Bank down 6 per cent.

The decline wiped out the gains made during Monday's short-lived rally.

The share price falls in the financial sector were offset by the positive effects of a stronger dollar, which rose in a choppy trading session despite uncertainty over Lehman.

Irish stocks with significant business in the US did better than the rest, with major stock CRH climbing 5 cents to €18.75.

Food group Kerry also made gains of 2.5 per cent, helped by "buy" recommendations following strong summer trading figures from McDonald's. Kerry is a supplier of ingredients to McDonald's in the US and a supplier of sliced cheese in Europe.

Smurfit Kappa was also lifted 2 per cent by news from the paper and packaging sector, following the shutdown of capacity by a handful of competitors, and the easing in oil prices.

Falling oil prices, however, were bad news for Dragon Oil and it plummeted 10 per cent, as it was also affected by an earthquake in the region of Iran in which it operates.

It was the ex-dividend date for Independent News Media, Kingspan and Glanbia, prompting some selling pressure on these stocks.

Glanbia only slipped 1 cent, but Independent News Media sank 8.75 per cent to €1.46, while Kingspan fell 5.4 per cent to €7.85 on what was overall a bad day for the market.