Allianz and UBS led declines by financial companies. Anglo American, the world's second-largest mining company, paced a retreat in mining shares as copper prices fell on speculation a slump in homebuilding will reduce demand in the U.S.

"Aversion to risk is stronger, " said Salah Seddik, a fund manager who helps oversee about $5bn at Richelieu Finance in Paris.

"With the restriction of credit, there's a faucet of liquidity that's closing."

About $1.53 trillion in European mergers and acquisitions helped send the Dow Jones Stoxx 600 Index to a six and a half-year high on 1 June. The gauge has lost 6.9% since on concern losses in the US mortgage market will cut earnings for financial companies.

Chrysler and Alliance Boots failed on Wednesday to find buyers for $20bn of loans to pay for their buyouts, leaving banks holding the debt.

The pan-European Stoxx 600 dropped 5.1% this week, the most since the five days ended 2 March, All of the measure's 18 industry groups retreated. The Stoxx 50 slipped 4.9%, while the Euro Stoxx 50, a gauge for the 13 countries using the euro, lost 4.5%.

Shares of Volvo and Scania, Sweden's largest truck makers, declined after the companies reported earnings that missed analysts' estimates.

National benchmarks fell in all 18 western European markets. Germany's DAX decreased 5.4% and France's CAC 40 retreated 5.3%. The UK's FTSE 100 tumbled 5.6%.

The risk of owning corporate bonds soared on Friday to the highest on record in the US and Europe, according to creditdefault swap traders. More than 40 companies worldwide reorganised or abandoned borrowing plans in the past month as investors balked at extending credit.

Allianz, Europe's biggest insurer, lost 8.3%, while Axa, the second-largest, fell 10%, leading the Stoxx 600 Insurance Index to its biggest drop since September 2003.

"Sub-prime fears have moved along the credit spectrum, " Citigroup analysts including Darren Brooks wrote in a report sent to clients on Friday.

"This is a liquidity and sentiment sell-off. Leveraged investors could contribute to further damage."

UBS, the region's largest bank, decreased 6%. Shares of Credit Suisse Group, Switzerland's secondbiggest bank, retreated 7.2%.

Higher borrowing costs and a "virtually closed" primary market for corporate bonds are "erasing the dream that leveraged buyouts are set to continue, " Societe Generale equity strategists led by Alain Bokobza wrote in a report sent to clients on Friday. Financial stocks are "bearing the bulk of the rising equity risk premium".

Sales of new homes in the US declined 6.6% last month, the most since January and more than economists predicted, a government report showed on Thursday.

Depfa Bank, Europe's second-largest provider of public finance, was the best performer in the Stoxx 600, rallying 9.4%. Hypo Real Estate Holding offered 5.7bn for the German bank.

Hypo Real Estate on Monday agreed to pay 6.80 in cash and 0.189 of each new share for every Depfa Bank share.

Milestones Numbers Card sharps Phil Laak and Ali Eslam have beated the Polaris arti"cial intelligence machine in a two-day game of Texas hold 'em in Canada. This evens things after chess master Gary Kasparov lost to IBM's super computer in 1997.

.DUBLIN ISEQ 8,357.40 Down 7.42% on week
.EUROPE DJ Stoxx 50 3,720.33 Down 4.85% on week
.OIL Brent = $76.36 Down 0.99% on week
.LONDON FTSE 6,215.20 Down 5.63% on week
.NEW YORK DOW 13,267.59 Down 4.21% Nasdaq 2,562.24 Down 4.66%
.EURO/DOLLAR 1 = $1.364 Up 1.29%

Equity movers

IRISH SHARES

GAINERS
Qualceram Shires 2.00 2.56
ICON 33.25 1.22
Trintech $4.54 0.87
Readymix 2.23 0.45

LOSERS
Siteserv 0.59 22.37
Thirdforce 0.185 15.91
Petroceltic 0.155 13.89
Blackrock 0.46 13.21
Petroneft 0.76 11.63
Fyffes 0.81 10.00
C&C 7.91 9.63
McInerney 4.98 9.62
DCC 21.11 9.55
AIB 18.20 8.98

INTERNATIONAL GAINERS

Company price + %
IBM $116.80 1.78
AT&T $39.97 1.08
P&G $62.72 0.93
Apple $144.17 0.31

LOSERS
Company price - %
Wyeth $48.80 12.21
Siemens 93.69 11.78
Marathon $54.06 11.54
Debenhams 119p 10.53
Standard Life 290.25p 10.28
Babcock & Brown
AUD28.68 10.09
Axa 28.21 9.99
Aviva 670.5p 9.33
Allianz 152.97 8.59
Statoil NoK170 7.86

The week ahead
MONDAY Bank of Ireland publishes 'Wealth of the Nation' report Results: HSBC, ABN Amro, Statoil TUESDAY Petroceltic AGM Central Bank credit data; NCB manufacturing PMI German unemployment Eurozone in"ation, unemployment, business and consumer con"dence US new construction, personal income and spending Results: Ryanair
WEDNESDAY Results: AIB, HBOS, Sanofi-Aventis, Starbucks, Time Warner
THURSDAY Bank of England and ECB rate decisions NCB services PMI Euroland producer prices Results: Barclays, Trinity Mirror, Unilever
FRIDAY Unemployment US non-farm payrolls Results: RBS/Ulster Bank, British Airways

The week that was

BANANA REPUBLIC

IT'S just one thing after another for publicly-quoted Irish companies, innit? Last week the carnage spread well beyond the construction and financial stocks you'd expect to get a spanking, with even Davy's Robbie Kelleher now being put on Taoiseach suicide watch for being decidedly gloomy in public about employment in the housing sector and its spillover effects on growth elsewhere (see next item).

But would you really have guessed this time last week that an extra banana skin would be allegations of a banana conspiracy that would cause one of the biggest selloffs of the week? Fyffes was formally accused by the European Commission of being part of a banana pricing cartel in northern Europe. If the charges are proven, Fyffes could be liable for a "ne of up to 10% of turnover. Should it come to that, the question will be: 10% of what?

Fyffes spun off Total Produce and Blackrock Land last year as separate companies. The Commission alleges misdeeds before the demerger, which would mean the fine levied could be up to 260m . . . based on the total turnover at the time. Traders didn't want to wait for the next scene in this conspiracy thriller.

They dumped the stock and lopped more than 10% off the price. Wasn't all bad news, however. The banana boys did score a win on Friday when the Supreme Court overuled the High Court and said that, yup, Fyffes was indeed a victim of insider trading at the hands of DCC.

HOUSE OF CARDS

WE'RE sure that Davy's impression last week of the Doomsday Priest, shouting that the end is nigh for 35,000 jobs in the house-building sector, has nothing to do with a newfound sense of independence that comes from no longer being owned by the bank that also happens to be Ireland's biggest mortgage issuer.

(NO) FEAR OF A BLACK PLANET

DIAGEO boss Paul Walsh ruled out selling off Guinness last week while speaking to reporters, though presumably it won't stop them from evacuating St James's Gate. He pointed to Africa as Guinness's biggest opportunity . . . a region that could see lots of increased sales of the black stuff. Sales in Ireland are, if not in freefall, still headed in one direction. But outside of Ireland, Guinness sales were growing 4-5%, Walsh said. Walsh also decided to kick his rival C&C while they're underwater, with Britain's flooding helping to depress Magners cider sales in the UK. Cider is merely the new Smirnoff Ice, in this view. It's a fair point . . . there's no guarantee that consumers won't desert cider for another cold, sweet beverage. But at least he's not kidding himself into thinking that they're ripe to return to Guinness.

AIB ON THE BLOCK

MERRILL LYNCH moved AIB to the top of its list of "Most Likely to Be Bought""European banks last week. Observers noted that AIB is trading at a priceto-earnings ratio not seen since the immediate aftermath of the John Rusnak scandal . . . and has fallen 16% this year and 22% from previous highs.

More intriguingly, AIB was moved up the list based on criteria including a willingness to sell on the part of shareholders and management. Rumours surfaced of sniffing around by, amongst other suspects, Iceland's Landsbanki. But given the global credit crunch, it may be that AIB may stay Irish because of a lack of cheap finance for a potential buyer, no matter what the management and shareholders may wish.

RYANAIR CRIES WOLF ONCE TOO OFTEN?

MICHAEL O'LEARY is famous for talking down expectations about future results, as he did at the year-end in June, warning that yields are likely to fall and costs rise. Analysts get grumpy about the game but as long as expectations are beat, the price goes up and fund managers are happy. Unless fund managers believe the doomsaying. Last week, ahead of Tuesday's Ryanair results, Fidelity sold 320m of its Ryanair stake, taking them under 9%, down from just under 13%.