Some relief yet concerns continue over credit

DUBLIN REPORT:VOLATILITY REIGNED on the Iseq index yesterday as credit crunch concerns continued to abound.

However, there will have been tentative sighs of relief when the Iseq managed to close up 3 per cent, recovering the bulk of the losses sustained amid the St Patrick's Day chaos.

Anglo Irish Bank swung from €6.15 to €7.28 before eventually closing down less than 1 per cent at €6.90, shedding just 5 cent on the day. But this was on a day when European banks bounced more than 6 per cent after Monday's massacre.

Anglo's performance meant it failed to claw back any of the 15 per cent drop in value that its stock suffered on Monday - an "irrational" share price decline, according to Davy Research analyst Emer Lang.

The bank was cursed by the general lack of trust in the banking sector, fears that deposits were walking out the door and rumours that troubled US investment bank Lehmans was placing a 2.4 per cent stake in the company with a third party.

Even, as one dealer said, if there was "probably not" any truth in any of it, the sickness in the financial system following the collapse of Bear Stearns is enough for investors, from institutional giants to small-time fund managers alike, to cut Anglo out of the picture, while hedge fund managers took the opportunity to short the stock.

One dealer said it was difficult to see where a catalyst for confidence would come from.

Yet it was a better day for the other banks, with Irish Life & Permanent leading the pack, adding 6.7 per cent to finish at €10.56, up 66 cent.

Elsewhere, CRH bounced more than 9 per cent on light trading volumes to close at €24,75, up €2.09, while Smurfit Kappa, Dragon Oil and Greencore were among the fallers.