Market resists worst of downward pressure on foreign stocks

The Irish market managed to resist the worst of the downward pressure on international stock markets after the 10 per cent overnight fall in Hong Kong. Major European markets fell by between 3 and 5 per cent, but Dublin fell by just over 0.75 per cent with most of the losses being notched by the major financial shares.

But dealers said that, while the share closed down 12p on 585p, there was strong support for AIB from a US investor at the lower levels. Dealers estimated that this investor bought over two million shares yesterday. Bank of Ireland came under stronger selling pressure and closed down 17p on 855p in a sterling-denominated deal.

Other financials were also weaker with Anglo Irish 4p lower on 111p, Irish Life off 13p on 365p while Irish Permanent lost 15p to 650p. Overall, the financial sector lost almost 2 per cent of its value while losses in the industrials were less dramatic.

Where the financials will go from last night's close will largely depend on how Wall Street and the major Asian markets perform overnight. At the close of the Dublin market there were ominous signs that Wall Street was heading for a loss of more than 200 points while, as far as Hong Kong is concerned, there is a view that any market which can fall 10 per cent in one session is capable of anything.

With the FTSE down by three per cent, industrial shares also moved weaker with CRH down 10p to 815p while Smurfit closed down 4p on 222p. Food stocks were generally lower with Avonmore/Waterford off 3p to 262p amid unconfirmed reports that the group is finding it difficult to agree a redundancy package with the unions.

Greencore lost 5p to 312p while IAWS was unchanged on 260p. IAWS's Irish Pride associate has bought a majority stake in Keatings Bakery in Cork for £3 million. Informed sources have played down reports, however, that IAWS is a £70 million bidder for BOCM Paul's, the animal feed arm of Harrison & Crosfield that is up for sale. Kerry was 7 1/2p lower on 837 1/2p, with a growing view in the market that the group will bid for all of Dalgety's Lucas Ingredients business before offloading the Spillers flour milling offshoot to the likes of Greencore.

Fyffes was 3p lower on 102p, Norwich Union lost 11p to 389p, Waterford Wedgwood closed 4p lower on 83p while Tullow was one of the few to gain on the day with a 3p gain to 118p - possibly in anticipation of some good news in next week's half-year results.

Elsewhere Crean lost 5p to 125p, while Green Property dropped 5p to 415p. United Drug fell 7p to 418p, while other stocks to lose ground included DCC, down 5p to 460p and European Leisure which dropped 5p to 145p. Bonds on the Dublin market benefited from the move out of equities but early buying tapered off and price rises were relatively modest. The fact that the Dublin stock market restricted its loss to less than 1 per cent was one factor behind the modest performance by gilts. Yields against German bunds were largely unchanged, varying by between 47 and 52 basis points in the five and 10-year area. Most bond dealers are still betting on a fall in Irish rates in the months ahead in the run up to monetary union.

Overall, however, trading volumes were low. Dealers said that the main buying came early in the session as investors fled from equities, while the strongest performance in Dublin was from the shorter-dated stocks.