Eircom's disclosure yesterday that it was in talks with British group Vodafone Airtouch about the possible sale of all or part of its mobile phone subsidiary, Eircell, supported the ISEQ index on a day when financials, industrials and pharmaceuticals lost ground.

The former State monopoly gained 29 cents, or 11.8 per cent, to close at €2.75, although the news led to a 4 per cent drop in Vodafone's stock, one of Britain's largest, on the London exchange.

The benchmark ISEQ index lost 0.68 per cent in a 38.68-point drop to close at 5,680.12, with financials, which lost 1.5 per cent, bearing most of the losses.

Banks in particular were hit by negative sentiment in Britain, where shares on the benchmark FTSE 100 index dropped 2 per cent due to worries about losses in financial stocks and the possibility of interest rate rises in the US.

The Republic's largest banks lost ground, although mortgage lender Irish Life & Permanent gained two cents to finish at €11.52 despite losses early in the day. AIB, which settled its DIRT liability with the Revenue Commissioners last week, finished 22 cents weaker at €11.68. Bank of Ireland lost 15 cents to close at €8.05.

Elan, the drug company, yielded some of its recent gains to close €2.25 weaker at €64.25. CRH, the building materials company, finished a cent stronger at €17.91.

Property group Dunloe Ewart, which has deferred a decision on a buyout by its management, gained a further cent to close at €0.49.