IRISH stocks dropped for a third day in four, led by the big two banks AIB and Bank of Ireland, on concern about the effects of falling stock prices on Europe's financial-services industry.

The Iseq Irish Overall Index declined 38.43 points, or 0.9%, to 4307.67. Fourteen stocks fell, 14 rose and 32 were unchanged.

AIB declined 41 cents, or 2.9%, to 13.83 and Bank of Ireland fell 22 cents, or 2%, to 10.60 on concern tumbling stock prices are eating into investments at European banks and insurers. Fortis, Belgium's largest financial services company, posted a record third-quarter loss of 1.7bn.

Arnotts, the operator of Ireland's biggest department store, rose 31 cents, or 3.4%, to 9.40. Retail sales at Irish department stores jumped 5.1% in August from a year earlier, the Central Statistics Office said.

Dunloe Ewart climbed 2 cents, or 4.7%, to 45 cents. The company will hold a shareholders' meeting next month to vote on a proposal from two investors to oust chairman Noel Smyth.

IAWS rose 12 cents, or 1.6%, to 7.82. Shares in the company, which is expanding into convenience foods, will join the Dow Jones Stoxx 600 Index on 23 December, Stoxx said.

Paddy Power climbed 10 cents, or 2% , to 5.10, bringing its gain in three days to 8.1%.

On Wednesday it won licences to open four betting shops in London and is applying for a fifth to expand in the UK.

Ryanair jumped 25 cents, or 3.2%, to a record 8.05 after rival low-cost carrier Virgin Express said net income surged 51% in the third quarter. Separately, Ryanair named Emmanuel Faber, the chief financial officer of France's Groupe Danone, and Klaus Kirchberger, chief executive ofGerman asset management company Thurn und Taxis, as non-executive directors.

European stocks were poised for a second consecutive weekly gain after companies including Philips and ING forecast higher sales or said cost cuts will help earnings to improve.

The Dow Jones Stoxx 50 lost 4.09 points, or 0.2%, to 2680.82 after rising to a 10-week high on Thursday. The benchmark climbed 3.5% last week, extending the previous week's 3.2% advance.

Stocks have rallied in the past six weeks as investors bought shares of companies such as Philips that have taken steps to cut costs in anticipation of an economic recovery next year. The Stoxx 600 index has gained 17% since reaching a five-and-a-half-year low on 9 October It rose 0.2% on Friday.

Philips, Europe's largest consumer electronics maker, added 3.4% to 21.30, bringing its gain last week to 18%. Optimism about earnings was constrained on Friday, however, by a report that showed France's economy grew at the weakest pace in almost a year in the third quarter, as companies scaled back investment and reduced inventories.