Elan Corporation, whose shares fell more than 20 per cent on Wednesday after an article in the Wall Street Journal critical of its accounting policies, came in for renewed selling yesterday on the New York Stock Exchange. Trading remained heavy with more than 12 million shares trading by lunchtime in New York.

New York is the primary market for Elan shares and, in the opening session, the shares fell $2.25 to $27 (€31.40), wiping out some of the late recovery on Wednesday evening. At the close on Wall Street, the shares were down $1.16 on $28.09. Dealers said that, despite Elan's detailed rebuttal of the charges in the article, negative sentiment to virtually every stock with question marks over its accounting meant the shares were unlikely to recover much ground in the short-term.

Traders say that, in the wake of the collapse of US energy giant Enron, the markets are unforgiving of any question marks over accounting at other companies such as Elan. The company has angrily rebutted any comparisons with the Enron affair.

"This is an Enron witch-hunt, and any company that has received any type of question mark from the SEC over the last three years can expect a de-rating in this market," said Mr Kevin McConnell, head of research at Bloxham Stockbrokers.

"I doubt this is going to end in the short term, because the bitter pill that Enron has proved to be in the market is probably just too great to take at this stage. It robs the market of the foundation it bases its decision-making on.

"Whether it's new news or old news, the market is punishing stocks for not being 100 per cent visible in the way they are recognising revenues. That visibility isn't going to land in Elan's accounts overnight," Bloxham said.

For the second day in a row, Elan publicly defended its accounting procedures and rejected "the one-sided allegations" in the Wall Street Journal.

"We firmly believe the issues raised are simply a rehash of old news about matters that have been fully discussed," said Elan chairman Mr Donal Geaney.