TRADING in Dublin was described as "soggy" yesterday, with the market lacking direction and subdued by gloomy sentiment in London, where shares closed lower after a newspaper report sparked fears of changes to pension tax rules in an upcoming budget.

It's a featureless day newswise, and with the FTSE extending losses, Irish investors are hanging back," one dealer said.

The main financial shares attracted little interest. Allied Irish Banks closed down 2p at 518p, and Bank of Ireland also dropped 2p to end on 718p. Irish Life rose 1p to end at 350, while Irish Permanent dropped lp to close on 622p.

Analysts said a mini profits warning in Britain from National Westminster Bank had dampened enthusiasm in the sector. Hibernian fell back 6p, closing at 370p. Analysts said that because traders were already familiar with Smurfit's new head of European operations, Mr Pat Barrett, his appointment yesterday did not cause any ripples. Shares in the company held their gains of last week which were spurred by predictions of paper price rises, closing yesterday unchanged at 198p.

CRH showed strength ahead of its trip for analysts to the US this week, closing up 11p at 685p while Ryanair saw profit taking, dropping almost 8p to close at 325p.

In the food sector, Kerry Group fell during the day but rose again to close unchanged at 655p, Waterford Foods, still the subject of a merger bid by Avonmore, also stayed unchanged at 137p.

Greencore dropped 2p to end trading at 343p, and Fyffes eased 1p, closing at 95p.

Industrial holdings company IWP, which last week announced a 1996 pre tax profit of £22.4 million and said it had acquired 80 per cent of Constance Carroll Holdings for £38.5 million sterling, saw its share price remain unchanged at 325p.

Waterford Wedgwood saw some interest, closing up 1p at 88p, Clondalkin fell 3p to 342p, Ardagh climbed 5p to 135p, and Jurys fell 2p to end the day's trading at 360p.