The Irish Independent reports that Dublin stocks suffered losses for the fifth day on the trot as sentiment continued to weigh heavily on the market.

There was a short rally in the morning, but investors see these as more of a cue to start selling than any strength in the market.

"The sentiment is still very, very bad. Investors use brief recoveries like we've seen this morning to reduce their positions," said Thomas Radinger, fund manager of European stock at Pioneer Investments.

CRH

The Dublin market put in a one-hour rally this morning as investors were cheered by strong results from CRH, which reported full year results in-line with forecasts, if slightly disappointing. CRH stock reacted with a reasonable 1.4pc gain, closing up 33c at €24.03.

Financial stocks were sold again, however, with Bank of Ireland dipping below the €9 mark at €8.91, and AIB down 3pc to €13.02 -- the main culprits in dragging the ISEQ Index 87.83 points lower to 6202.97 by the close. This brought its losses for the week to 450 points.

Apart from CRH, there were few bright spots, but Paddy Power gained over 4pc after posting a good set of results on Monday. The stock closed well bid up 88c at €22.53.

In London, the FTSE 100 Index suffered its fifth successive losing session as lower banking stocks and fears over higher oil prices heaped pressure on shares. The unease over the banking sector came amid downgrades for Citigroup, sent the banking giant's share price to nine-year lows.

At the close, the Footsie was 50.9 points down at 5767.7. The benchmark index has now lost more than 300 points, or 5pc, in the past week.

Banks

HSBC and Halifax Bank of Scotland weighed on blue-chip stocks after a downgrade for the former from Goldman Sachs. It saw HSBC hand back gains seen on Monday after it posted solid full-year results with annual profits up 10pc to £12.2bn. The stock was down 21p to 769p after Collins Stewart and JP Morgan both reduced their price targets for the UK's biggest bank.

HBOS was off 14.5p to 543.5p as the recent negative sentiment over the stock persisted, while Alliance & Leicester also fell 12.5p to 513p.

Insurance

The worst performer in London's top flight was insurance firm Admiral despite a 24pc rise in full-year profits to £182.1m for the Diamond and Bell owner. Shares tumbled almost 16pc, or 157p to 845p, as spooked investors focused on the performance of Confused.com, which struggled to maintain share in a competitive market.

The gloom spread to other insurers and life firms. Friends Provident was down 3.4p to 123.6p, Royal & Sun Alliance lost 3.9p to 125.3p and Legal & General dropped 2.7p to 120.1p.

All of the 30 economists polled by Thomson Financial News and Agence France-Presse said they expected the ECB to keep its main refinancing rate at 4pc.

Most expect that the slowdown in eurozone growth will force the central bank to start cutting rates in the months ahead, following ECB president Jean-Claude Trichet's acknowledgement of risks to the growth outlook at the central bank's February 7 news conference.

"Latest data and survey evidence indicate that the activity is struggling early in 2008," said Howard Archer of Global Insight. "Markedly softer eurozone growth and a strong euro are expected to lead the ECB to start cutting interest rates by mid-2008."

But continuing inflation worries are making the ECB reluctant to consider cutting rates just yet. Eurozone inflation reached 3.2pc in January, the highest rate recorded since the launch of the euro, and the central bank is keen to ensure that this does not lead to inflationary wage deals.

Bundesbank president Axel Weber said recently that market expectations for interest rate cuts "clearly underestimate" eurozone inflation risks and are out of line with the ECB's thinking.

The Irish Times reports that a new seed capital fund to help high-tech start ups will be launched in the North next month.

Northern Ireland Economy Minister Nigel Dodds has revealed that Invest NI, the economic development agency is currently creating the fund which will be linked to Queen's University Belfast and the University of Ulster.

The Minister announced details of the fund at InterTradeIreland's seventh private equity conference which was held in Belfast yesterday.

Mr Dodds told hundreds of delegates at the all-island conference that stimulating entrepreneurship was an important challenge for the North's government.

"The global economic environment is becoming increasingly competitive and Northern Ireland's future prosperity depends on our ability to develop a high value-added internationally competitive, export-led economy."

Invest NI and InterTradeIreland had previously joined forces to create a £10 million (€13 million)investment pot for potentially high growth businesses.

To date the Halo Business Angel Partnership has delivered £1 million in early stage funding to businesses that in turn have leveraged an additional £3 million of capital investment.

According to Liam Nellis, InterTradeIreland's chief executive, there is no lack of funding for entrepreneurs and new start-ups north or south. "We provide a lot of support and help to companies and individuals through our Equity Network Initiative.

"The initiative helps start-ups raise their game by putting it all together - from the management team to the business plan - then they can go and look for investment and this often makes the difference," Mr Nellis added.

He said InterTradeIreland's seedcorn competition has raised more than £42 million in private equity for companies - £5 million of which went to firms in Northern Ireland.

One of the speakers at the conference did have a word of warning for start-ups and entrepreneurs.

Liam Casey, chief executive of PCH International, the supply chain management company which is based in China, said venture capitalists and entrepreneurs both needed to respect each other's different perspectives.

The Ernst and Young Entrepreneur of the Year said: "Venture capitalists and entrepreneurs need to take a long-term view and they need to align themselves to what is in the best interests for both the entrepreneur and the VC [venture capitalist].

"If a VC is looking for a quick kill then this is not in the best interest of the entrepreneur - they need to be in it for the long term."

The Irish Times also reports that online hostel booking company Web Reservations International (WRI) is examining the possibility of a trade sale of the firm as an alternative to a flotation of the business in turbulent stock markets.

Newly-installed chief executive Feargal Mooney said the firm would engage in a transaction or reorganise its shareholder base "as soon as the right opportunity presents itself", but he declined to specify a deadline for any deal or name companies that might be approached if a sale process went ahead.

Established in 1999 by entrepreneur Ray Nolan, WRI operates the hostel booking websites hostelworld.com and hostels.com and the travel search website boo.com.

While a share restructuring valued the business at some €400 million in 2006, sources close to WRI believe the €450 million valuation mooted recently is conservative, and fails to take account of its expansion since then.

Mr Mooney declined to quantify WRI's sales or profits last year, but said the growth in sales and profits in 2007 was "in line with" their expansion in 2006.

Sales grew 25 per cent to €27.23 million in 2006 and pretax profits grew by 30 per cent to €16.62 million.

The extent to which online travel firms such as Expedia, Travelocity and Priceline would be able to fund an approach for WRI is unclear at present.

WRI is understood to have spurned an unsolicited approach from a trade bidder within the last 18 months on the basis that price on offer significantly undervalued the business.

"We are, and have always been, examining options for liquidity for our shareholders. We have in the past provided liquidity opportunities and we'd hope to do so again in the future," Mr Mooney said.

Options open to the company include a trade sale, other capital market events or other corporate reorganisations, he said. "They're all on the table."

He said it was not true that the company has hired Davy Corporate Finance to advise on a flotation. He said a number of investment banks were advising the company, declined to name them and said the company has not signed any letter of engagement with any bank.

"We signed an engagement letter with Goldman Sachs in 2003 which we terminated in 2004. We haven't signed an engagement letter since."

Asked whether the exceptional volatility on stock markets meant that it would be difficult to develop an initial public offering, he said: "The markets the way they are at the moment, they wouldn't be ideal and any company hoping to go to the market, they'd like to have more favourable conditions."

However, he said there would always be an interest in attractive companies with good prospects in difficult markets.

"Does that mean that a trade sale is more or less likely? I don't know.

"Trade sale opportunities are determined by the appetite of potential purchasers," he said.

"My mandate is to execute the business plan, grow the business by increasing traffic on our websites, increase the number of properties that we work with, and look to expand into international markets, particularly Asia and South America."

The Irish Examiner reports that Premier Group, the Cork-head quartered recruitment firm, has tabled a €59 million bid for British rival Imprint.

Premier's offer trumps the cash and share bid for Imprint by Hydrogen, another London-quoted recruitment company.

The Premier bid is equivalent to 115 pence (150 cent) per Imprint share. Premier said the offer was a premium of 8.2% to the closing price of Imprint yesterday.

However, Premier's bid is nearly 30% less than the offer for the company by its management last year.

But the Irish company said it is looking for Imprint's board to recommend the offer to shareholders.

Pat Fitzgerald, chief executive of Premier, said the combination of the two firms would create a market leading financial recruitment business in Britain and Ireland.

“Imprint represents an excellent strategic and geographic fit with our existing operations and provides Premier with a significant entry point to the Asia-Pacific region. We believe that an all-cash offer of 115 pence per share represents an excellent opportunity for Imprint Shareholders to realise certain cash value,” said Mr Fitzgerald.

Premier was founded by Mr Fitzgerald in 1988 and has operations in Ireland and Britain with a turnover of about €90m. The company employs 350 people across 18 offices.

The Financial Times reports that leading investment bankers are proposing new guidelines on pay and bonuses in the financial sector as they seek to head off a growing political backlash against what were seen as excessive rewards for bankers whose risk-taking helped cause the credit crunch.

In particular, the Institute of International Finance, a global association of banks, is seeking to create a code of best practice, which would discourage banks from giving incentives to traders to take excessively risky bets while failing to censure them if these turn sour.

The idea, which will be privately discussed at an IIF meeting in Rio today, marks the first time that the sector has attemp­ted to create any voluntary code.

The discussions about compensation principles – which are at an early stage – are part of a much wider set of reform initiatives being prepared by the IIF.

“We [at the IIF] are discussing this issue [of compensation] right now,” said Josef Ackermann, head of Deutsche Bank, who also chairs the IIF. Charles Dallara, head of the IIF and a former US regulator, said: “Executives need to take a very hard look at compensation structures.”

Ideas being floated include bonuses being deferred until the full impact of bankers' strategy is clear to prevent them benefiting from short-term high-risk bets that subsequently turn sour.

Another variant would see those who lost money for their businesses having to earn it back before they secured new bonuses. However, the concept is likely to prove highly controversial, particularly among investment bankers in London and New York. “It does not sound workable,” said a senior Wall Street executive, who argued that it was highly unlikely Wall Street banks would agree to any kind of uniform compensation rules for fear of giving up a competitive advantage.

The issue of banking pay is becoming particularly controversial because salaries in the financial industry have exploded this decade relative to other sectors of the economy. However, some sectors with the biggest pay-outs in recent years – such as complex credit – are in the storm of the current credit turmoil. Meanwhile, the banks are still paying high bonuses to many employees, in spite of a swath of writedowns.

This is triggering growing criticism of compensation structures among policymakers and some investors. “At present, compensation incentives are asymmetric . . . This encourages employees to take excessive risks,” says Philipp Hildebrand, vice-chairman of the Swiss National Bank.

But many senior bankers say it is hard for individual banks to change their pay structures, since they are in a competitive market place. “Compensation is [bankers'] incentive for taking risks – that's really what risk management has to change,” said Mr Ackermann.

“The big problem with compensation is how do you create a culture where people suffer jointly and win jointly? Unfortunately, competitors do not allow that.”

Nevertheless, some bankers hope an IIF code could pave the way towards a broader industry shift and they warn that the sector risks a serious clampdown if it does not take proactive steps.

The IIF was expected to produce a wide-ranging set of proposals for banking reform this week. However, the compensation issue threatens to delay that.

A London-based board member of one major global firm said: “The issue should have nothing to do with the public unless they are shareholders, and the low valuations that investment banks now trade on show how shareholders have voted on the issue.”

The FT also reports that Schroders, the UK-based asset manager, on Tuesday warned that fund managers faced tougher times because investors were becoming more cautious in the wake of the subprime mortgage meltdown in the US.

Its comments underline the gloom surrounding the prospects for the industry this year, raising fears of cost reductions, swingeing job losses and bonus cuts for long-only fund managers.

Schroders said the subprime crisis was taking its toll on investors' risk appetite and pointed to sharp falls in retail flows across the industry. “We expect these volatile market conditions to persist through much of 2008.”

Michael Dobson, chief executive, said: “The fallout from subprime will take a while to work through. It is having an effect on fund flows and we can't buck that trend.”

The group has enjoyed net fund inflows this year following record inflows into funds in the last quarter of 2007. These inflows were better than some analysts expected and Schroders shares rose sharply.

However, Mr Dobson said the inflows were “already slowing”. Asked if he expected net redemptions for the whole of 2008, he said: “Who can tell? The markets are highly volatile.”

The comments follow Henderson's downbeat outlook last month when it warned of fragile investor confidence in 2008.

Henderson plans to cut costs to combat the effect of falling assets and revenues on profit margins. Analysts expect other fund managers to follow suit as the downturn settles in.

The uncertainty over 2008 contrasts with the strong 2007 enjoyed by most fund managers. Many boasted record gains in the first half of last year. But the outlook darkened in the autumn as the subprime crisis took hold.

Mr Dobson said: “It is a very different environment from early 2007.” Schroders' assets under management rose 8 per cent to £139bn in the year to December.

Strong sales of its retail funds in Asia and the UK offset outflows from its European funds. Total retail funds under management were £56.2bn ($111.5bn), up from £42.5bn.

Institutional fund outflows reached £10.6bn, cutting total institutional funds under management from £77.4bn last year to £73.2bn.

Pre-tax profits on private banking rose from £26.9m to £41.3m, taking total pre-tax profits up 35 per cent to £392.5m.

The New York Times reports that the chairman of the Federal Reserve, Ben S. Bernanke, urged mortgage lenders and investors on Tuesday to reduce the principal on loans for many people whose homes are no longer worth as much as the amount they still have to repay.

Noting that delinquency and foreclosure rates have soared over the last year, and that housing prices have not stopped falling, the Fed chairman warned that efforts by the government and by industry to prevent foreclosures had not gone far enough.

“Although lenders and servicers have scaled up their efforts and adopted a wide variety of loss mitigation techniques, more can, and should, be done,” Mr. Bernanke said in a speech to a conference of community bankers in Florida.

Though the Fed chairman did not explicitly endorse a new government rescue effort, he stepped up public pressure on the industry to take more drastic measures to keep people from walking away from homes when their mortgages exceed the value of their property.

“When the mortgage is ‘underwater,' a reduction in principal may increase the expected payoff by reducing the risk of default and foreclosure,” Mr. Bernanke said. The Fed chairman warned that a large and growing number of recent home buyers now owe more than the value of their homes and may have no incentive to keep making payments.

His comments, with an implicit call for banks to give up some of their income from mortgage loans to forestall defaults, contributed to a day of declines on Wall Street. But stocks pared their losses in the final hour of trading. The Dow Jones industrial average, down more than 200 points early in the afternoon, closed off 45.10 points at 12,213.80.

Mr. Bernanke stopped well short of calling for a government-mandated rescue operation, and delivered his recommendations mainly in the form of suggestions for what would be in the self-interest of lenders and investors.

But the Fed chairman's remarks were at odds with the position staked out in recent days by Henry M. Paulson Jr., the secretary of the Treasury.

Mr. Paulson, who has pushed the industry to freeze interest rates for at least some subprime borrowers whose low teaser rates are about to expire, drew a clear distinction between helping people who could not keep up with rising monthly payments and helping people who, because of falling house prices, had no equity in their homes.

“While these equity considerations clearly impact homeowners' financial situation, they are not the primary concern in the effort to prevent avoidable foreclosures,” Mr. Paulson said on Monday.

Mr. Bernanke, speaking on Tuesday, said some of the Bush administration's efforts to address the problem thus far had been a “step in the right direction.” But he suggested that the government should take additional steps as well.

Though he noted that Congress and the administration are weighing proposals to expand the authority of the Federal Housing Administration to help refinance subprime mortgages, he suggested that “going beyond current proposals” would allow the F.H.A. to help more people.

He also encouraged Fannie Maeand Freddie Mac, the government-chartered mortgage companies, to raise additional capital in order to expand the number of mortgages they can guarantee and securitize.

“With few alternative mortgage channels today, such action would be highly beneficial to the economy,” the Fed chairman said.

The NYT also reports that Sanford I. Weillbuilt Citigroupinto one of the world's largest banking companies. Now, Vikram S. Panditis watching Mr. Weill's creation wither in the stock market.

Reflecting a punishing yearlong decline, Citigroup's stock price plummeted on Tuesday to its lowest level since 1998, when Mr. Weill formed the financial conglomerate through the merger of Travelers and Citicorp.

The shares sank 99 cents, or 4.3 percent, to $22.10, as concern spread that new multibillion-dollar losses might force Citigroup to go hat in hand to foreign investors once again. The market tumble left Citigroup shares down 56 percent in the last year, the worst showing among the 30 stocks that make up the Dow Jonesindustrials.

For now, executives say they are confident that the company is financially strong. On Tuesday evening, Mr. Pandit told employees on an internal conference call that Citigroup was “well capitalized,” according to a person close to the company.

The bank has no plans to seek funds from outside investors, another person close to the company said. Since November, Citigroup has raised about $30 billion from investors in Asia and the Middle East, as well as from the public.

But those investments may not be enough to shore up Citigroup, some investors fear. Sameer al-Ansari, the head of Dubai International Capital, a government-controlled investment fund, told Reuterson Tuesday that Citigroup might need “a lot more money.”

Adding to the gloom, two new analyst reports on Tuesday forecast that Citigroup would remain mired in red ink this quarter. Merrill Lynchpredicted that Citigroup would take $15 billion in write-downs because of bad mortgage investments, leaving it with a net loss of $1.66 a share. Goldman Sachsestimated Citi's loss at $1 a share.

Since becoming chief executive in December, Mr. Pandit, 51, has rejiggered Citigroup's sprawling structure but has not made the radical overhaul many investors called for. On Monday, for example, he announced a reorganization of the company's wealth-management business.

But investors and analysts say Mr. Pandit needs to take far bolder steps to turn around the bank, which has been pummeled by the turmoil in the credit markets. Some have urged him to break up the company, saying Citigroup has become too unwieldy to be managed effectively. Mr. Pandit, like his predecessor, Charles O. Prince III, has resisted that step.

Mr. Pandit now confronts growing doubt about his leadership and management team at a time of uncertainty in the financial markets and the economy. “There are a lot of balls in the air for Vikram Pandit,” said David Hendler, a financial services analyst at CreditSights in New York. “Pretty soon, that 100-day honeymoon is going to be over. In the meantime, they may have to act.”

Citigroup's capital levels came under scrutiny in October when Meredith A. Whitney, now a banking analyst at Oppenheimer, issued a scathing report saying the company's weakening finances would force it to cut its dividend, sell assets and issue new stock. At the time, Citigroup executives brushed off those ideas. By the end of 2007, they were heeding Ms. Whitney's advice.

On Tuesday, the person close to Citigroup said the company was strong enough to maintain its dividend, which costs the company about $6 billion annually. Still, that leaves open the possibility that the board may elect to cut the dividend.

Citigroup says it has more than enough capital to meet regulatory guidelines and its own internal benchmarks. The bank is in the process of raising several billion dollars by selling assets from several smaller fringe businesses and has pulled back from some domestic and international markets. It will also free up several billion dollars as the number of loans on its books shrink.

Citigroup executives have said the bank is strong enough to withstand more shocks, including a further decline in the value of subprime mortgage investments and buyout loans, potential downgradings of bond insurance companies and big consumer-loan losses.

“The exposures to these areas were stress-tested against an economic downturn with a variety of severity levels,” Gary L. Crittenden, the chief financial officer, said in a conference call with investors in January. Taking all the factors together, he said, the company had addressed a potential capital shortfall.

Still, many analysts question whether Citigroup has the earnings power to withstand the heavy losses that might come with a severe economic slump.

“They might as well fess up and admit they need to raise a big chunk of money,” said Christopher Whalen, managing partner of Institutional Risk Analytics. “The issue with Citi is all the coming consumer credit losses.”