Debt fears drag markets down

European stocks fell by the most in two months on the back of mounting concerns about the euro zone debt situation, particularly in Greece.

The Dublin market tracked the European trend, closing down 1.7 per cent in line with other markets.

All eyes were on Ryanair as the company posted full-year results. While the airline posted a solid set of figures for 2010, reporting a 26 per cent rise in profit, it remained cautious for 2011, and its results slightly disappointed some in the market.

There was heavy selling of stock early on in the session, though this rallied somewhat as the trading day progressed. The stock finished off 5.3 per cent though analysts noted that this reflected a weak day for airline stocks across the board due to the latest volcanic ash cloud in Iceland.

The Iseq's other airline stock, Aer Lingus, finished off 7 per cent on the day.

Elsewhere, IFG continued to blossom, as the financial services company confirmed it had received a second approach. The stock was one of the few names to make gains, advancing close to 9 per cent to close at €1.90.

Greencore also finished the session in positive territory ahead of its interim results tomorrow, closing up 3 per cent at €1.20.

Building material group Readymix fell 6 per cent to €0.16 after it reported a widening of its pre-tax loss to €4.2 million for the first quarter of this year.

On the bond markets, the borrowing costs for the euro area's most indebted nations rose.

Yields on 10-year Greek debt rose to a euro-era record, while the yields on 10-year Irish government bonds hit more than 10.5 per cent.

Meanwhile, the euro continued to fall against the dollar, slipping below $1.40 for the first time since March.