Financial shares took a battering on the Dublin market in response to the slump on continental markets and the barely-concealed warnings about interest rate rises by both the Bundesbank and the Bank of England. But leading industrials went the opposite direction with strong demand driving both Smurfit and CRH to new highs.

Smurfit benefited from an enthusiastic "buy" recommendation from Wall Street investment house Paine Webber, which has just begun coverage of the shares. Paine Webber has set a target share price of 280p for the share, which closed up 2p on 232p in Dublin yesterday after hitting 235p in earlier trading.

In New York, Smurfit ADR's - equivalent to 10 ordinary shares - were up $11/4 on $331/4 as the Irish market closed. JS Corp was up 19 cents to $19.06.

With overseas institutions now holding 35 per cent of the shares - compared to 22 per cent two years ago - and with domestic institutions down from 55 per cent to 46 per cent, Smurfit is thought to be happy that it has got an appropriate shareholding mix.

Elsewere in the industrials, CRH bucked the trend in the UK and gained 7p to a new high of 752p, Kerry was 8p higher on 680p, Kingspan gained 10p to 900p, although Ryanair lost 18p to 360p as the market further digested the first quarter results.

It was all red ink, however, for the financials after the inflation and interest rate warnings in the UK and Germany.

The benign inflation scenario indicated by the American producer price figures failed, however, to reassure the market.

AIB lost 12p to 604p, Bank of Ireland was 16p lower on 820p, Anglo Irish lost 3p to 98p, Irish Life lost 9p to 341p while Irish Permanent closed down 5p on 663p. Volatile trading is expected to continue today ahead of American consumer prices figures for July and June business inventories figures.