WORRIES about possible increases in interest rates plagued international bond and equity markets this week, leading to sharp falls on most.
The US led the way on New Year's Eve when the Dow recorded its sharpest decline since July pulled back by weak bond markets and a bout of last-minute profit-taking.
Most of the share-price losses came in the last hour of trading after new economic statistics showing that the economy was stronger than expected were read as an indicator of a rise in interest rates.
The higher-than-expected rise in home sales and in the consumer confidence index sent treasury bond prices down sharply, and shares prices fell in tandem.
Although the Dow Jones ended the day with a 1.5 per cent fall, the index ended the year 26 per cent higher.
Markets in Dublin and London had moved ahead on New Year's Eve, with Dublin gaining 1.4 per cent on the day to finish 1996 some 22 per cent higher, and London reaching a new closing record after a last-minute scramble back into positive territory.
The first-liners powered ahead in Dublin with most action centred on the biggest four companies. Bank of Ireland put on 8p to close at 538p while AIB gained 5p to end the day at 396p.
Smurfit climbed 6.5p to close at 179.5p and CRH put on 2p to end at 612p.
Other strong movers included Woodhester, 9p stronger at 218p, Independent Newspapers 7p ahead at 305p.
In Europe the response to Wall Street's New Year's Eve drop came when the markets reopened after the holiday.
lrish bonds fell sharply, with £1.20 wiped off the 10-year stock in nervous trading although the equity market was relatively quiet against a background of falling shares markets around Europe.
In London, where marketmakers had chopped their opening prices in an attempt to stave off large sellers, shares prices fell and the FT-SE lost 1.5 per cent in value on the day.
There was further bad news for the markets later in the day when more US figures - the purchasing managers index - came in ahead of expectations.
The US market reacted violently, losing 85 points in early trading. While the Dow later staged a recovery to close just under six points down on the day it was too late to help struggling
European markets.
In Dublin a number of shares moved ahead against the general trend. These included Kerry, which added 10p to close at 610p, Clondalkin, which was 12p stronger at 480p, Greencore, which added 2p to 3380p and DCC, which rose 4p to 262p.
Bank of Ireland continued to power ahead, adding 2p to close at 540p.
However there was more bad news for the Dublin market late on Thursday when the Central Bank announced higher-than-expected credit growth figures for November.
The new figures were too late to impact on Thursday trading, but they spooked a market already nervous about the direction of the next interest-rate move.
