Gilts weaken in thin trading as German bonds suffer a setback

GILTS weakened in thin trading on the Dublin market as German bonds suffered a setback after news of strong money supply growth.

Most of the weakness was in the medium maturity stocks, with long dated gilts actually closing higher after the National Treasury Management Agency announced that there would be no long gilt auction between now and the end of the year.

Five year gilts closed down 27p to produce a yield of 6.01 per cent, ten year stocks were down 32p on a closing yield of 6.63 per cent while long dated gilts closed fractionally higher on a yield of 6.92 per cent.

The NTMA's decision not to hold a long gilt auction is the result of a comfortable funding position with the authorities under absolutely no pressure to fund.

Share prices drifted lower in thinner trading than of late with few highlights. Among the financials, Bank of Ireland which has been given a "hold" tag by Riada was 1p lower on 496p. Riada is expecting £400 million profits and earnings per share of 51.8p in 1996/97 with EPS growth being held back by the impact of the higher charge following the sale of First NH.

AIB was also lp lower on 387p as was Irish Life on 264p while Irish Permanent was 2p lower on 478p. Among the industrials Smurfit stood still on 165p while there was some selling pressure on CRH which closed down 3p on 614p.

Among the second liners, there were few highlights although In dependent lost 15p to 295p Greencore was 2p firmer on 357p, Avonmore was 2p lower on 170p as Northern Foods disclosed poor results from its British milk business while once again there was some dealing in the market's least valuable share Tribune at 1p.