Dublin report:An uncertain outlook at Irish Life & Permanent, compounded by negative sentiment in the United States, drove the Dublin market down yesterday. The index ended over 3.8 per cent down, having dipped below the 7,000 threshold at one stage.

Most of the activity took place among the financials, which were unsettled on both counts. The sector was off 4.1 per cent in Dublin, with all the banks losing ground. Irish Life & Permanent was 12 per cent off at one stage before recovering some ground following an afternoon conference call to close 90 cent or 6.7 per cent weaker on €12.46.

Expectations of lower mortgage borrowing, alongside uncertainty regarding the cost of funds in 2008 as a result of the credit crunch, overshadowed a reasonably upbeat assessment of 2007 performance.

Volumes were heavier in Bank of Ireland, Anglo Irish and AIB, but that was little comfort as they lost 4 per cent, 4.4 per cent and 3.5 per cent respectively.

Construction stocks continued to struggle and Grafton was hit particularly hard following a trading statement from UK rival Travis Perkins. Indications that Travis Perkins had eaten into Grafton's market share in the UK alongside an uncertain outlook from the British group served to undermine sentiment and send Grafton 44 cent, or 7.2 per cent, weaker to €5.68. Homebuilders McInerney and Abbey and building materials groups CRH and Kingspan all shed between 2.3 and 3.8 per cent.

Worst performer was Elan which gave up 9.3 per cent on news that US partner Biogen Idec had decided not to seek a suitor, to end on €15.31.