The Irish stock market fell by 1.4 per cent as US political and economic concerns cast a shadow over international markets.

However, dealers stressed that volumes were light as the approach of Christmas and the prospect of the introduction of the euro dampened activity. Dollar weakness amid jitters about developments in the impeachment process of President Clinton hit Wall Street and had a knock-on effect on European markets.

In Dublin, most of the big stocks closed lower while activity in second-line shares was light. "All it takes is for a few of the larger shares to come back and that is enough to drag the index down," one dealer said.

Financial shares bore the brunt of the weakness, with the financial index losing 1.6 per cent compared to a drop of 1.1 per cent on the general share index.

AIB closed 14p lower at £10.33, Bank of Ireland shed 35p to £13.55, Irish Life was down 4p at 600p while Irish Permanent ended 10p lower at 975p.

In the industrial sector, CRH closed 13p down at £11.35.

Dealers welcomed the announcement from Elan, which issued a further report on the status of certain nicotine patch studies and also reported trial results for its pain treatments. However, the US share price was unchanged at $59.25 when Dublin closed.

Dealers said IWP shares were heartened by the announcement that chief executive Mr Joe Moran purchased 1.25 million shares on Friday at 170p. The stock gained 5p on the day to close at 180p. Another chief executive expressing faith in his company was Waterford Wedgwood's Mr Redmond O'Donoghue, who elected to take shares in lieu of cash. Mr O'Donoghue bought 806 shares at a price of 62p each. Waterford Wedgwood shares closed 1p lower at 56p yesterday.