Investors look to Dow for clear buy as rate fears dominate

IRISH stocks slipped slightly in line with most European markets. Volumes were light with most participants on the sidelines. Despite the slight rise in volumes over the last couple of days many investors are still waiting for a clear buy signal from Wall Street.

Fears that the US may be set for a series of interest rate rises which would undermine stock markets still predominate and traders say it is unlikely the Irish market will move ahead before the Fed's intention becomes clear.

Most activity was in the banks which gained on the back of a rise in the banking sector in Britain. Much of the interest was from foreign institutions, traders noted. However, they questioned whether this would be sustained if bond markets continue to decline. Banking stocks traditionally move in line with bond yields.

AIB and Bank of Ireland both made some ground with AIB closing up 4p at 439p and Bank of Ireland closing up just over a penny at 627p after a sterling close the previous day of 597p. Irish Permanent put on 2p to 595p while other financials lost, including Irish Life, which slipped 2p to 328p.

Smurfit saw some selling after releasing results in line with expectations. However, traders pointed out that many investors were disappointed that the downturn in US paper prices could last as far as the third quarter of the year. It closed down 6p at 162p.

CRH made a little headway, closing up 1p at 635p. Traders said the stock had been oversold and was now good value.

Golden Vale put on 3p to close at 57p after posting slightly better than expected results. However, reaction was fairly muted with traders pointing to exceptional items and stock selling which helped boost the numbers.

Bond prices also weakened slightly with the heavy volumes of earlier this week falling off. International investors had bought the Irish market on Monday after comments which suggested that the German Finance Minister, Mr Theo Waigel had softened his stance on the entry criteria for monetary union.

Dealers said investors appeared to have stepped back. There is a question whether the market is in a bear phase or whether renewed optimism about the single currency and hence further convergence trades would come to the rescue.

The NTMA announced that it would auction £150 million of 8 per cent due 2006 on April 15th. Any renewed optimism about monetary union would help that auction, dealers said.

The market is now looking ahead to inflation data tomorrow and to March US retail sales figures on Friday.

The 6.5 per cent bond due 2001 was down to 101.63 to yield 5.975 per cent from 5.966 per cent a day earlier. The benchmark 8 per cent bond due 2006 was up to 108.04 yielding 6.69 per cent from 6.699 per cent.