AIB fraud disclosure triggers wave of panic share selling

Market Report: It was without a shadow of doubt one of the most extraordinary days on the Irish market, with dealers having to get to grips with the implications of the biggest ever corporate fraud involving an Irish company.

Once Mr Michael Buckley finished his early morning interview on RTÉ, AIB shares were hit by a wave of panic selling with the situation exacerbated by the involvement of index funds in heavy short-selling of AIB shares. This pushed AIB down to €10.50 before some cherry-picking brought the stock back to a close of €11.35, down €2.27 on the day in turnover of 21 million shares. The pattern was the same in London where almost 32 million AIB shares traded.

Other financial shares suffered from some heavy early selling, but both Bank of Ireland and Anglo Irish recovered strongly to limit their losses on the day. Bank of Ireland - now the market's top company - fell to a low of €10.50 before rebounding to close just 16 cents lower on €11.16. Anglo Irish fell to an early low of €4.25 before ending down 13 cents on €4.70 in turnover of almost 4.2 million shares.

In contrast to the near 8 per cent fall in the financial index, industrials were generally firmer with CRH up 18 cents on €18.38 while Elan staged a sturdy recovery from its recent horrendous depths and was up €1.95 in Dublin on €17.95. Later on the NYSE, Elan continued its recovery and was almost 8 per cent higher on $15.10 an hour before the close.

Independent was five cents weaker on €1.85 but the stock was well-offered at that level with dealers reporting two large sell orders on the stock. IAWS was one cent lower on €8.29 as Fidelity - the second-biggest shareholder after IAWS Co-op - disclosed that it had increased its stake from 8.2 per cent to 9.3 per cent, indicating that it has bought an additional 1.3 million shares.

Kerry hit a new trading high of €16 before ending the day a cent higher on €15.81 in unusually large turnover for such an illiquid stock - some 1.24 million shares. Ryanair was five cents easier on €6.15 as the roadshow for the 30 million share placing continues. The placing will be priced on Friday.