THE Dublin market drifted lower, yesterday with Smurfit dominating much of the day's activity, which industrial stocks hit a 12-month high.

Despite fairly thin trading, Smurfit remained in good demand with interest from the US thought to be behind a number of late deals.

Initially gaining a penny to 149p, it was unable to find technical support at these levels and ended the day down 2p at 146p. Brokers say a strong performance by the US sector was mainly behind renewed interest in Smurfit.

CRH was also active and managed to hold on to levels of 475p. Financial stocks, however, lost ground with the two main banks drifting lower, reflecting weak sentiment within the British financial sector yesterday.

Concerns about tight profit margins in the British mortgage market helped to take the shine off Ireland's leading financial stocks, leaving AIB down 5p on the day at 360p while Bank of Ireland eased 2p to 462p. Irish Life also edged lower to close down a penny at 257p. Irish Permanent managed to buck the downward trend, putting on 2p to 408p.

In company news, the Jones group announced a second profit warning in four months, signalling that the out-turn for 1995 will be well below market expectations.

While there was no trading in Jones shares yesterday, Davy stockbrokers had marked the share well down last night, quoting a bid-offer spread of 100p-150p compared with its, previous 170p-200p levels, indicating a sharp fall in its share price when it next deals on the exchange.

In other trading, Fyffes traded up a penny to 111p ahead of preliminary results for the year to the end of last October, due today. Analysts expect the group to report pre-tax profits of up to £42 million over the 12 month period.

Greencore gained 3p to close at 537p while news that Independent Newspapers would not be backing the relaunch of the Sunday Press sent its share price ahead in Dublin yesterday, to close up 15p to 410p.

In the gilt market, Government bonds managed to extend their gains in fairly dull trading. The 8 per cent bond due in the year 2000 was up 30p at £106.05 to yield 6.36 per cent while the 8 per cent bond due in 2006 gained 25p to £104.75, yielding 7.2 per cent.