Market report:The Iseq suffered a setback yesterday, losing 1.16 per cent of its value as investors reacted nervously to news of a reduced growth forecast for the economy.

Davy Stockbrokers announced yesterday that it expects a 7 per cent decline in the volume of housing activity this year. This news, combined with concerns over weakening European and US markets, sparked a wave of sell-offs across the Irish market.

The banking sector was particularly affected as speculators "pulled back their horns", one trader noted. Allied Irish Bank was hardest hit, losing 68 cent - more than 3 per cent - from its share price to finish the day at €21.28.

Anglo Irish Bank was also affected, dropping by 32 cent, almost 2 per cent, to €15.95. Bank of Ireland did not escape either, falling by 26 cent, or 1.61 per cent, to €15.89.

Meanwhile, news of soaring oil prices upset the aviation sector. Aer Lingus closed down 1.54 per cent, or five cent, at €3.20.

Ryanair was heavily traded, with more than 2.7 million shares in the airline changing hands yesterday. Its share price tumbled to €5.70 at one point but regained ground to finish up by two cent at €5.85.

The shining light of the day was Greencore, which continued to feel the benefit of the recent settlement reached with staff over severance terms, and it added another five cent to its share price yesterday, bringing it to €4.45.

CRH inched up by 0.19 per cent, or six cent, to €31.45. Even this was a notable achievement on a day when most UK and European construction stocks fell by more than 1 per cent.

Grafton Group was not as fortunate, dropping by 23 cent, or 2 per cent, to €11.27. Kingspan was also a loser, falling by four cent to €19.96.