Telecom Eireann shares have continued to trade in large volumes on the Dublin and London stock markets as small shareholders sell their stock to institutional investors. But with the markets weaker after the overnight fall in Wall Street, Telecom shares drifted lower although they are still well-bid at yesterday's closing levels.

In Dublin where Telecom shares were trading for the first time as a component of the ISEQ index, the shares moved from their overnight #4.91 (£3.87) to a low of #4.82 (£3.80) before recovering in later trading to close down 6 1/2 cents lower on #4.845 (£3.82). In London, where more than 15 million shares traded, the shares closed six cents lower on #4.87 (£3.84) having hit a low of #4.78 (£3.76) in earlier trading.

Dealers said Telecom shares seemed to have settled into a relatively narrow trading range between #4.80 and #4.90. "Demand from the institutions is likely to keep the shares above #4.80, but it's difficult to see the shares moving much beyond #4.90. They're already expensive and above #4.90 they're getting towards unsustainable levels," said one dealer.

Even the expected inclusion in the MSCI index is unlikely to move the shares much higher, he said, adding that many index funds had already bought into Telecom in anticipation of the shares being included in the MSCI.