IRISH gilts slipped into negative territory in thin trading as uncertainty over the currency kept traders' thinking-caps firmly on. "With the recent rumours about a revaluation in the currency and the unit falling below 90p sterling this morning, these are nervous times for short-end bonds," one dealer said. "However, trade volume is generally low internationally."
By 1610 GMT, the 6.5 per cent bond, due 2001, fell 16p at Pounds 102.59 to yield 5.79 per cent while the 8 per cent bond, due 2006, fell 5p to Pounds 110.95 to yield 6.37 per cent.
Yields against German bonds widened slightly from Monday's close to 156 basis points over in the five-year bond, and 93 over in the 10-year bond. "The curve has flattened today, with the 10-year bond performing in line with German bonds and the five-year under performing by about three basis points," a dealer said.
Looking ahead to tomorrow's release of the Irish inflation figures for June, one dealer stressed the strong RPI figures from Britain had raised worries about the Irish rate. Dealers said the Irish bond market would continue to track movements around the currency until fresh economic data gave direction.
Equities were mixed but the leaders were propped up by the financials. Upbeat AIB surged 8p to 562p. Bank of Ireland almost did as well with a 5 1/2p gain to the then sterling equivalent of 780 1/2p. Dealers reported good demand for the banks.
Anglo-Irish inched upwards with a gain of almost 2p to 88 1/2p. Irish Permanent added an extra 8p at 640p and Irish Life was not left out as it managed a 10p gain at 358p.
However, some of the main industrials were weaker. CRII shed 5p to 692p, Smurfit fell 1p to 192p while Waterford Wedgwood, in a number of deals, ended unchanged at 87p.
Waterford Foods, which is being courted by Avonmore Foods, strengthened 3p to 143p. Avonmore remained quiet and didn't move.
Irish Continental was brighter - probably relieved that it will not be lumbered with a restructured Bell Lines - and added 10p to 765p but later shed 7 1/2p of that gain.
