MARKET REPORT - Iseq: 3,784.77 (-41.41).IRISH AND European shares dropped yesterday as lingering uncertainty over the US government's $700 billion bailout package for its troubled banking sector cast a shadow over markets.

Despite a small-scale rally late in the afternoon, the Iseq index of Irish shares closed down 41.41 points, or 1.082 per cent, to 3,784.77. The Iseq is now down 20 per cent since the start of the month.

Bank stocks had a mixed day in some choppy trading, with one broker saying there seemed to be neither rhyme nor reason behind some of the share price moves.

Anglo Irish Bank endured a volatile day, swinging between an 8 per cent gain and an 8 per cent loss at various points before finally settling at €4.276, a gain of 11.2 cents or 2.7 per cent. Volumes, however, were relatively light. Bank of Ireland also closed the day in positive territory as it eased forward one cent to €4.10.

AIB's recent good run came to an end and the stock gave up some of its recent gains, shedding 40 cents, a drop of 6.25 per cent, to €6. Irish Life Permanent also lost out on the day as it fell 2.5 per cent, or 15 cents, to €5.75.

After a slow start to trading, CRH again outperformed as it finished 11 cents better off at €16.95, despite its sector closing down on the day. Kingspan dropped 15 cents to €6.55, while Grafton's share price fell by 4.67 per cent as it lost 16.9 cents to €3.45.

CC was again under pressure, with the stock trading down at the €1.91 level at one stage, before recovering slightly in the afternoon. Nevertheless, by the close of business it was still 4.76 per cent weaker at €2, a fall of 10 cents.

Despite oil prices falling back about $3, Ryanair failed to benefit and its stock hit lows of €2.39 during the day before eventually ending up just two cents weaker at €2.50.

Settlement date: October 1st