THIS WEEK IN THE MARKETS

THE week began with nervousness in the wake of the IRA bombing of Canary Wharf, but initial fears failed to be realised and the ISEQ index ended the week up slightly.

Most of the activity during the week was in the large bank stocks.

AIB results in mid week provided a focus and the bank put on 7p over the week to close at 358p a share.

Mr John Conway, food and banks analyst at Bloxham Stockbrokers, noted that AIB is closing the share price gap on Bank of Ireland.

Last week, one domestic institution was moving out of Bank of Ireland into AIB while another was moving out of AIB into Bank of Ireland, he said.

But the switch into AIB was sustained and, as a result, the share price gap has narrowed to 80p from 100p at the beginning of January.

However, AIB is going ex dividend on Monday which will widen the gap to around 90p, he said. There was little activity in other financial stocks.

In the food sector, Greencore and Golden Vale have provided the main focus. Greencore closed at 565p in Dublin and 583p sterling in London, from 552p a week earlier.

"The shares have suddenly started moving after a long period in the doldrums," said Mr Conway. "It could be the market anticipating a share scrip at the end of the month."

Golden Vale weakened early in the week. However, by yesterday it had put on 5 per cent to close at 72p.

News that Kerry Co operative Society is close to reducing its 52.2 per cent stake in Kerry Group boosted the group's share price by 5p over the week to close at 520p.

The main question is whether the shares are placed locally or overseas," said Mr Conway.

"An overseas holder would be preferable but there must be a question mark over whether any oversees buyer would pay the high price/earnings ratio Kerry is on.

Kerry Group is trading at a p/e of 17 times 1996 earnings, Mr Conway said "which is very high for any food stock, particularly an Irish one".

Activity was more muted on the bond front. International bond markets were "soggy" all week and Ireland was swept up in the weakening drift from the US and Germany, said Mr Dermot Brien, economist at NCB Stockbrokers.

In addition, the Irish market was looking expensive and international players stayed away, he added.

"In the last few weeks, spread plays between Britain and Ireland and Denmark have boosted liquidity," said Mr O'Brien. "The market will have to cheapen up a little, before we see a return to that.

Participants are also nervous as yields are around the levels last seen towards the end of 1993, just before global bond markets lost substantial amounts.

Mr O'Brien is confident that the different economic situation this time, with low inflation in the US and Europe, should stave off another fall. But, nevertheless, bad memories persist, he said.