Financial uncertainties drag banks to new lows

DUBLIN REPORT:ON A DAY of dismal economic forecasts, the Irish market closed at -89.76 points, or 3.6 per cent, to finish down at 2,431.59 yesterday.

Financials remained weak, with continuing uncertainty over the terms of the planned recapitalisation of the banks leading both AIB and Anglo Irish Bank to new lows.

The banks were also likely affected by some technical selling ahead of their removal from the FTSEurofirst 300 index today.

Anglo, AIB and Bank of Ireland will all be excluded, due to their reclassification as midcap stocks.

AIB lost 8 cents, or 4.4 per cent, to finish the day down at €1.76, while Anglo fell by 7 cents, or 18 per cent, to fall back to €0.32. Bank of Ireland was also weak on the day, losing 10 cents, or 12 per cent, to decrease to €0.76. Irish Life Permanent remains the best of the bunch. It rose 1 cent, or 0.7 per cent, to €1.47. Elan is the fourth Irish stock to be removed from the FTSE index and it also fell back, losing 29 cents, or 6.1 per cent, to close at €4.45.

Ryanair, which is to be included in the FTSE index, had another strong day on the back of oil, which fell to $38, its lowest level since 2004. It advanced by 18 cents, or 6.2 per cent, to finish at €3.08.

Aer Lingus said it would break even in the second half of 2008 after it agreed cost savings with workers, but its share price still fell back, losing 2 cents, or 1.4 per cent, to close at €1.42, marginally above Ryanair's €1.40 offer level.

Elsewhere, sterling's ongoing decline continues to affect Irish stocks. Construction stocks CRH and Kingspan were hit, with CRH losing €1.46, or 7 per cent, to close at €19.31 and Kingspan dropping 31 cents, or 9.7 per cent, to fall back to €2.90.

Drinks group CC lost 5 cents, or 3.7 per cent, to €1.32, after agreeing a stock issue worth as much as €18.4 million to fund a pay package for its new chief executive officer and two managers.

Settlement date: December 23rd