STRONGER than expected credit growth figures from the Central Bank are expected to continue to depress bond prices today after a difficult day's trading yesterday.
Irish bonds fell sharply against a background of falling prices on European bond markets and a US market that opened weakly and was then further depressed by stronger-than-expected figures from purchasing managers.
The long-dated 10-year Irish government bond, which had opened at £109.10, closed at £107.90, a fall of £1.20 on the day. Reflecting the fall in the price, the yield rose from an opening level of 6.58 per cent to 6.74 per cent.
Dealers said that the latest strong credit growth figures from the Bank, increasing the possibility of a rise in interest rates, are likely to put further pressure on bond prices.
Against a background of falling share prices throughout Europe and the US, the Irish equity market was fairly quiet, recording only a marginal fall on the day.
The index fell just 0.56 points from the new year end high reached on Tuesday and lost only 0.02 per cent in value terms after Tuesday's 1.37 per cent gain in value. Dealers said the market was flat after the strong rise on Tuesday and reflecting the fall in the Dow Jones.
Against the general trend Kerry put on 10p to close at 610p. Bank of Ireland closed 2p higher at 540p, after an 8p rise on Tuesday. One dealer attributed yesterday's rise to the inclusion of the share in an international business magazine article on fund managers share choices for 1997.
Greencore was 2p better at 380p with dealers attributing the rise to "pent-up demand". Clondalkin put on 12p to close at 480p, while DCC rose 4p to 262p.
CRH lost some of Tuesday's gains, slipping 3p to close at 609p, but dealers said volume was light. Again in small volume, AIB fell 43 3/4p to 391 1/4p.
Mary Canniffe
:quality(70)/cloudfront-eu-central-1.images.arcpublishing.com/irishtimes/VR3765MFOBH2NMV2QNICYDF67M.png)