Dublin Report:Irish shares cut their losses in afternoon trade yesterday as the Iseq finished 0.7 per cent lower, having been down by as much as 1.4 per cent earlier in the session.

A rally on Wall Street on the back of stronger than expected US housing data, as well as a rebound in London, helped the Irish market to recover some of the ground lost in the morning.

But it still underperformed its European peers as the banks proved a particular drag on the index. Dealers noted that Irish financials ended the day more than 1 per cent lower, faring far worse than their UK and European counterparts.

Despite announcing a new joint venture in the asset management area, Bank of Ireland shares posted the sharpest loss. They closed 29 cent, or 2 per cent, lower at €14 as persistent worries about rising interest rates gnawed at investor sentiment toward the sector.

Irish Life & Permanent also shed 29 cent, or 1.6 per cent, to €18 ahead of what is expected to be a positive trading update on Friday, while AIB drifted down by 11 cent to €18.28 and Anglo Irish Bank gave up six cent to €11.14.

Outside the financial sector, the picture was mixed. CRH lost eight cent to €25.21, but managed to hold onto most of Monday's gain of 4.9 per cent. But shares in Kingspan and Grafton remained under pressure, losing 1.2 per cent and 0.6 per cent respectively.

Elan shed 3.1 per cent, or 41 cent, to €12.88 in Dublin as it gave back much of Monday's rise of 5 per cent.

DCC was one of the few news stories on the day, adding 10 cent to €18 in the wake of the buyback of 1.29 per cent of its shares, at a total cost of €18.8 million. Analysts welcomed the announcement, which should boost earnings and underpin the stock in the current volatile trading environment.

Otherwise, trading was light in the absence of much news. Ryanair added eight cent, or 1.1 per cent, to €7.20 as a summer seat sales boosted online bookings.