SHARES IN food group Greencore fell by 21.1 per cent yesterday, as Icelandic food manufacturing group Bakkavör disposed of its 10.9 per cent stake in the firm.

The sale of the shares accounted for over 50 per cent of all activity on the Irish market, and led to the share price falling back by € 0.31 to € 1.49.

In April of this year, Bakkavör announced that it had built up a stake of over 22 million shares in Greencore through contracts for difference (CFDs), spurring speculation that the group would launch a bid for the Irish company.

It is likely that the firm sold its stake in the Irish food company yesterday due to problems in the Icelandic banking market.

Icelandic financial institution Exista controls 39.6 per cent of Bakkavörs shares.

Icelandic banks are hovering on the precipice of a market meltdown and yesterday, trading in financial instruments issued by all of the islands main banks and financial firms, including Exista, was suspended.

In addition, banks have agreed to decrease their activities abroad and sell assets.

Icelandic Prime Minister Geir Haarde said that the banks would shrink foreign involvement. "The banks have agreed to decrease their activities abroad and sell assets," he said.