THE Irish market drifted back slightly yesterday, following the lead of major European markets and lower international bond markets.
Surprisingly weak British May retail sales data briefly saw opening losses reversed before the market drifted back, hitting sentiment in Dublin.
Second liners attracted subdued two way interest. There were mixed views on Golden Vale after the co-op said it had asked Golden Vale plc to begin negotiations over a settlement package with former chief executive Mr Jim O'Mahoney. It closed unchanged at 73p. Avonmore put on 5p to close at 175p.
CRH dropped back 5p to 648p on profit taking, following a very good run where it reached a succession of new records.
The financials were steady although volume was fairly light, traders said. AIB closed up a penny at 334p while Bank of Ireland lost 3p to 434p and Irish Permanent lost 1p to 394p.
Abbey added 10p to 180p while Adare put on the same to 470p.
Bonds were boosted early on by good demand for the 20 year bond auctioned yesterday by the National Treasury Management Agency (NTMA). The £100 million auction was covered 3.75 times, or £375 million of bids were received. The agency also offered £30 million in an uncompetitive auction to the primary dealers which was fully taken up.
The new bond was bought on average for 102.19p to yield 8.01 per cent. The highest price paid was 102.36 to yield 8 per cent.
However, the market later fell back in line with major international markets, as a result of fears about an imminent Japanese rate increase.
The benchmark 6.5 per cent five year bond closed at 97.47p to yield 6.97 per cent from 6.55 per cent a day earlier. The 10 year also rose slightly closing at 101.15p to yield 7.68 per cent, from 7.69 per cent.
The NTMA is also considering the introduction of an index linked bond. This is likely to divert fund money away from equities and also helped sentiment slightly on the market, traders said. The market is looking ahead to Irish inflation data due for release later today. Forecasts are for an annual figure between 1.3 and 1.9 per cent.
