Monetary union could spell the end of national stock exchanges, a senior pension fund manager has said. Speaking at a Hibernian Investment Managers pension fund seminar, manager Mr Dara FitzGerald warned that pension funds were likely to create a pan-European equity index after the creation of the single currency.

He also predicted that the affect on the Irish equity market would be negative-to-neutral, while the outlook for Irish bonds was negative. The prospects for the property market were "unexciting", he added.

According to Mr FitzGerald, European stock exchanges were likely to merge, resulting in a computer-driven, pan-European stock market.

While local bourses may continue to exist, they would mainly contain smaller stocks traded by local investors.

For the Dublin market, this However, this would also be offset by other European pension funds spreading their investments and possibly buying Irish stocks.

Nevertheless, it was likely that the overseas buyers would focus on the larger, more liquid stocks and that many small companies would suffer.

Mr FitzGerald said that Irish bonds would only be bought if they offered a significant yield premium over that available from the larger more liquid markets.

Overall, however, the outlook for European equity markets was likely to be positive.

Economic growth was likely to be stable while efforts would be made to control inflation and budget deficits.