THE two main banks moved sharply lower in Dublin as weaker bond prices hit the financial sector. Bank of Ireland and AIB both lost ground as sharp losses in the US bond market were mirrored throughout Europe.

Sliding bond prices, dealers said, brought many sellers into the market, dragging the banks' share prices lower.

In fairly thin trading, the two banks both lost 4p, bringing Bank of Ireland down to close at 453p while AIB drifted from 336p to 332p, with dealers predicting further weakness again today.

Irish Life and Irish Permanent, however, managed to buck the downward trend.

Irish Life gained a penny to 255p, having drifted in line with other financials earlier in the day while Irish Permanent closed unchanged at 382p.

Industrial stocks also finished weaker, with Smurfit and CRH both closing lower.

Smurfit. which announced the appointment of Mr Patrick Wright as the group's president and chief operations officer, dropped a penny to 172p in thin trading.

CRH also eased, closing at 577 1/2p, down 2 1/2p.

Among the second-liners, stronger sentiment in the construction industry pushed Grafton Group to its all-time high, with the share dealing up 10p to 600p on the day.

Waterford Wedgwood also achieved its highest levels in five years, putting on 1/2p to close at 75p. In the food sector, Avonmore moved lower, dropping 3p to 145p, while Fyffes gained a penny to 110p.

In the bond market, weakening US Treasury bonds dragged Irish Government bonds lower. The 8 per cent bond due in 2000 closed down 75p from previous levels of £103.85p to yield 6.83 per cent.

The 8 per cent bond due in 2006 was down 125p from £102.10 to yield 7.55 per cent.