MARKET REPORT:THE IRISH market was dragged down yesterday by poorly performing financial and construction stocks, falling by 3.7 per cent or 169.71 points to close the day at 4,401.01.

In the US, the announcement from JP Morgan on Tuesday evening that it would write off $1.5 billion in mortgage-backed securities sent financial stocks on a downward slide, leading their European and Irish counterparts to follow suit yesterday.

Worst hit was Irish Life Permanent, which fell by 8.1 per cent, or 50 cent, to €5.66. Bank of Ireland also performed very poorly, falling by 6.2 per cent, or by 38 cent, to close the day at €5.72.

AIB fell by 3.7 per cent yesterday, down by 33 cent to €8.53.

Despite releasing a positive trading statement, in which it declared its earnings would rise by 15 per cent in 2008, Anglo Irish Bank suffered from the overall malaise in the financial sector, shedding 17 cent to close the day down 2.8 per cent to €5.85.

Goodbody Stockbrokers sent Kingspan into a tailspin when it slashed its earnings forecasts for the company for both 2009 and 2010. The stock fell by 8 per cent in early morning trading, but recovered somewhat to close the day down 6.2 per cent, or by 47cent, to €7.13.

Grafton Group also suffered yesterday, dropping by 19 cent, or by 4.3 per cent, to finish the day at €4.20, while CRH fell by 95 cent, or by 5 per cent, to €17.93.

As investors looked to defensive stocks, food stocks performed well. Kerry Group was up by 2.9 per cent, or by 55 cent, to €19.85, while Glanbia finished the day up 12 cent, or by 3 per cent to €4.07 and IAWS closed up by almost 1 per cent, or by 10 cent, to €16, as it benefited from a continued weakening in commodity prices.

Smurfit Kappa also fell back sharply yesterday, declining by 37 cent, or 7.4 per cent, to €4.55.