Bank shares took a hammering on the market yesterday, falling more than analysts expected, as investors reacted to Friday's mortgage rate cuts.
"The banks took a bad beating," said one trader as AIB and Bank of Ireland suffered heavily after dropping their mortgage rates below 4 per cent in reaction to Bank of Scotland's arrival in the market.
On the day, AIB lost 50 cents, finishing at €11.45 (£9.02), although the share's price fell at one stage to €11.20 (£8.82). Bank of Ireland lost 55 cents, finishing at €8.00 (£6.30).
Irish Life & Permanent, which started the day at €10.00 (£7.88), dropped 40 cents to finish at €9.60 (£7.56). Anglo-Irish, meanwhile, was 3 cents weaker at €2.45 (£1.93). First Active was down about 4 per cent and, given its exposure to the mortgage market, some traders feel it could fall further. Shares in the lender dropped by 15 cents, to finish at €3.00 (£2.36).
Prices in Dublin were not helped by weak performances on international markets. London slipped by 22 points, dogged by interest rate nerves, and New York was down in early trading after record gains on Nasdaq last week. Overall, the Dublin market finished 2.32 per cent lower at 4,807.33 with financials stocks bearing the brunt of a 113.75 fall. Weakness in financials helped bolster CRH and Smurfit. In heavy trading, CRH rose 17 1/4 cents to €20.07 1/4 (£15.81), while Smurfit, which started the day on €2.88 (£2.27), finished at €2.92 (£2.30). Eircom, which dropped to its lowest level on Thursday since its flotation in July, held steady after stabilising on Friday, gaining half a cent to finish at €4.08 (£3.21).
