European stock markets fell back in afternoon trading yesterday as the Dow opened lower. The markets had surged in early trade, as dealers seized on comments by the Federal Reserve Board chief, Mr Alan Greenspan, as signalling an imminent cut in US rates.

But early losses on the US market plunged Europe back into the red, as sellers locked in profits after the initial surge.

The ISEQ bucked the trend, closing up 2.97 per cent at 4297.71, but still below earlier highs.

News that at least one large US hedge fund is in trouble to the tune of at least $2 billion (£1.36 billion) and rumours that others may be in a similar position also dampened sentiment.

By the end of the session the Dow closed down 1.8 per cent at 8001.99, down 152.42.