The Irish Independent reports that house prices are falling rapidly across Ireland, the latest house-price index reveals.

Only the capital is holding up in the property market and prices in the commuter-belt counties around Dublin plunged 1.8pc last month alone.

House prices in this region were down 3.6pc in the first four months of the year, which would represent an annual fall of 11pc.

Fears of a slump in the property market grew yesterday after the permanent tsb/ESRI house price index showed prices nationally fell 1.3pc in the first four months. This was combined with a small increase in Dublin prices and a 1.5pc fall in the rest of the country - with the biggest drop in Dublin's commuter belt.

A house in the counties of Louth, Meath, Kildare and Wicklow was worth €12,000 less than last December, according the the indes, at €332,000.

Dublin house prices reached an average cost of €429,754, while the average house nationally dropped €2,500 in value in April and, at €306,619, was worth €4,000 less than in December

Niall O'Grady of permanent tsb said the price reduction is across the board, with the exception of Dublin homes and new homes, which have shown little or no growth.

"Prices nationally have returned to levels seen in August last year," he said. "Clearly the uncertainty around stamp duty was still a factor in April and, together with recent and likely future ECB rate rises, is impacting on demand."

However, an affordability index from EBS building society and DKM economic consultants said that, despite rising interest rates, mortgage costs for the average first-time-buyer working couple has actually fallen back slightly.

Prices for first-time and second-time buyers were reduced by 0.8pc and 0.9pc, bringing the average cost to €277,617 and €343,670 respectively. However, average prices over the last year were still 5.1pc higher than the price paid in April 2006.

The EBS/DKM index found that net mortgage payments remained steady at 25pc of income throughout March, April and May, compared with 26.4pc at the end of 2006.

The Irish Independent also reports that Eircom and O2, two of Ireland's largest phone companies, announced plans to let go 1,350 employees yesterday.

Eircom told its 7,025 employees yesterday that 900 of them would be asked to leave the company between now and the end of 2010. O2 said it planned to outsource 450 jobs but stressed all employees would be entitled to jobs with the company which wins the outsourcing tender.

The company said it hoped to achieve the headcount reduction through "natural turnover and voluntary leaving". A spokesman for the company declined to comment on whether it would seek compulsory redundancies in the event sufficient numbers did not apply for a voluntary package.

Inefficiencies

The job cuts will not have come as a surprise to Eircom's employees, who have seen their numbers fall from about 12,000 when the company was first privatised in 1999. Last March, Pierre Danon was reported as saying that he would seek to cut 700 jobs. There were, he said, "inefficiencies" at the company equivalent to about 10pc of the workforce.

Although Eircom has now firmed up that number, it has not yet given any details of the redundancy package which will be offered to employees.

Eircom was purchased by Babcock & Brown Capital, an Australian private equity house, for €2.4bn, last August. The job cuts are part of a two-prong strategy aimed at maximising returns at the company, the second part being an application to ComReg, the telecoms regulator, for a price increase.

In a letter sent to all Eircom employees yesterday, Mr Danon said the company planned to cut 400 of the 900 jobs by the end of 2007. He said: "We as an organisation must continually adapt the way we do our business; greater productivity and lower costs are key elements of our changing business.

"Initially, the programme will be focused on Central Services, which comprises Resource Business Unit, finance, ARC, human resources, pricing, regulation, property, legal and communications. The Retail and Wholesale Networks divisions will also be affected, and it is expected that the restructuring plan in these divisions will begin later this summer."

O2, which employs 1,600 staff, is outsourcing its network management division. Five companies will be invited to tender for the contract. They are Ericsson, Nokia, Accenture, IBM and Fujitsu .

In a statement yesterday, the company said: "Following a strategic review of the business, O2 Ireland has decided to explore the possibility of outsourcing its technology function and will soon issue an RFP (Request For Proposal) to a number of potential suppliers. It is important to point out that, should O2 go ahead with outsourcing, all roles concerned would transfer to the selected partner in line with TUPE legislation (Transfer of Undertakings, Protection of Employment Regulations)."

The Irish Times reports that the European Commission is set to reject Ryanair's proposed acquisition of Aer Lingus, a move that could prompt Michael O'Leary to take a legal challenge to the decision.

A final recommendation might now be given to EU commissioners at their meetings on either June 20th or June 27th, according to informed sources.

A deadline of July 4th had been set for a decision to be presented to the full commission.

It is understood the competition department of the European Commission has conducted detailed "market tests" and found Ryanair's proposed "remedies" would be insufficient to allow a takeover. It is believed to have questioned whether a new entrant would enter the market in Dublin airport if Ryanair acquired Aer Lingus.

The two airlines currently operate the majority of traffic through Dublin.

It is understood the competition department's draft prohibition decision has been circulated to the 27 EU member states for consideration by their national competition bodies.

The mergers division of the Competition Authority in Ireland is thought to be weighing up the draft decision before making any observations to Brussels.

It is not clear if Ryanair will be given another opportunity to offer "remedies" to the competition department's draft decision.

Ryanair has already made three submissions to the commission, offering a variety of concessions in the hope of getting the green light for its unsolicited, proposed takeover, which was originally valued at €1.48 billion.

A decision by the commission to prohibit a takeover is rare. It has happened just 20 times in more than 3,000 cases reviewed by the European Union's executive arm since 1990.

The decision runs to more than 300 pages in an effort to deal with issues that may end up in court, according to sources.

The commission's competition spokesman Jonathan Todd declined to comment on the investigation.

A spokesman for Ryanair said the airline was maintaining its policy of not commenting on the process.

No comment was available from Aer Lingus.

The EU regulator said in a confidential charge sheet, known as a statement of objections, in March that it was concerned about the deal's impact on competition, especially at Dublin airport.

It noted Aer Lingus and Ryanair were head-to-head rivals and the number of routes on which they competed had risen to 37 from eight in the past six years, driving prices down.

Ryanair, whose bid lapsed automatically when the commission launched an in-depth investigation of the deal in December, said in a confidential offer it would make space for a new rival to base as many as six aircraft at Dublin airport.

Ryanair also offered to sell Aer Lingus's slots at London's Heathrow airport. The commission considered that would not solve the problem.

Shares in Ryanair fell by 12 cent or 2.25 per cent in Dublin yesterday to close at €5.21. Aer Lingus was unchanged at €2.94.

Even if the commission had approved the Ryanair deal, it would encounter problems as the Government, which owns 25 per cent of Aer Lingus, has opposed the transaction, along with employees and other shareholders.

The European Commission has also laid the legal groundwork to force Ryanair to sell some or all of its 25 per cent shareholding in Aer Lingus, which Mr O'Leary has said he intends to keep.

The Irish Times also reports that Independent News & Media has moved to fortify its defences against a possible bid by Denis O'Brien by buying more of its own stock and making efforts to empower its directors to withhold dividends from investors who do not provide information on the ownership of their shares.

The Sir Anthony O'Reilly-controlled group said shortly before the market closed last night that it had spent €4.36 million buying 1.15 million of its own shares at €3.795 per share.

After buying 1 per cent of its own shares last Friday at €3.77 per share, the move brought to €32.36 million the group's expenditure on its own stock in the past week. The shares closed down 5 cent at €3.78 last night.

The group has proposed sweeping changes to its internal rules on disclosure of beneficial interests in the business. Subject to the approval of an extraordinary general meeting (egm), investors will be obliged to inform the group within 14 days of reaching a shareholding threshold of 0.25 per cent of its issued capital or any multiple of that stake.

This is seen by stockbrokers as an attempt to closely monitor any effort by Mr O'Brien to increase his 7 per cent shareholding.

In addition, the group's directors would have the right to restrict payment of dividends and voting rights on shares if an investor does not comply with a request for information on the beneficial ownership of shares.

Asked whether this was designed to thwart Mr O'Brien, a spokesman for Independent said the changes were proposed to keep the group in line with other public companies and with the Companies Acts.

However, the renewed accumulation of shares and proposed changes to the group's disclosure requirements were characterised by a stockbrokers as evidence that Sir Anthony was preparing for a possible bidding war against Mr O'Brien.

"Without question, battle lines are being drawn," said one senior figure.

International corporate governance research firm ISS said in a note yesterday to its 1,600 clients that investors should vote against changes to Independent's disclosure requirements.

"Shareholders who fail to report changes to their shareholdings may have their voting and economic rights suspended for a period of several years, which ISS considers to be a shareholder-unfriendly practice. We also disapprove of a shareholding disclosure requirement of 0.25 per cent," the firm said.

"It is noted that the majority of Irish companies has a limit of 3 per cent. A lower level also requires a greater number of shareholders to disclose their ownership, causing a greater burden to shareholders and to the company."

The egm will take place immediately after the group's annual general meeting (agm) in a hotel near Belfast on June 13th. Also before the egm is a resolution to reduce the maximum number of group directors to 20 from 25 and others on the repurchase and issuance of shares.

These were endorsed by ISS, but the firm said in a note on the agm that investors should vote against the reappointment of group directors Peter Cosgrove, Joseph Davy, Senator Maurice Hayes, Liam Healy, Dr Ivor Kenny and Cameron O'Reilly.

ISS said the group's board did not contain the required number of independent non-executive directors as set out in the Combined Code for corporate governance in Britain. "The 26 per cent board independence does not meet our standards for a majority independent board," it said.

ISS provided its reports to The Irish Times after a request to the organisation.

The Irish Examiner reports that nearly €1 million has been paid out by yacht owners to the Revenue Commissioners for not paying VAT on imported vessels.

The Revenue has been conducting checks at ports across the country for a number of years and the amount of penalties being imposed on owners has increased despite the taxman repeatedly highlighting that imported boats are subject to VAT.

Revenue staff carried out 89 inspections in 2006 at ports including Bantry, Cork, Dublin, Limerick, Tralee and Waterford, up from 48 checks in 2005. The inspections resulted in the recovery of €998,770 in VAT and penalties. The amount recouped is two-thirds more than in 2005, according to the Revenue Commissioners annual report for 2006.

“This is an ongoing operation to ensure compliance with EU Community VAT law governing payment of VAT on new yachts and boats acquired by State residents and imported into the State. The operation involves Revenue and the visits by Revenue officials to ports, yacht clubs and marinas to ensure that VAT has been paid on all of the vessels concerned,” the Revenue said.

Over the last five years nearly €3m has been recovered by Revenue in unpaid VAT and penalties.

However, the number of inspections has declined from the high of 1,000 checks carried out in 2002.

Boat owners have three days to pay the tax on new vessels that have been imported to Ireland VAT-free from abroad. The Revenue liaise with their counterparts in other countries so that sales are notified to the Irish authorities.

A handful of boats have been seized by Revenue in recent years pending the payment of VAT from their owners.

Meanwhile, according to the annual report a 2006 incentive to SSIA holders to put money into personal pension plans seem to have met with little success.

Since June 2006 anyone with an SSIA who put the money into a pension would receive a tax credit of €1 for every €3 invested, up to a maximum of €12,500. However, just 5,417 people had availed of the credit at the end of last December.

The Financial Times reports that mortgage lending growth in the 13-country eurozone has slowed to the lowest for more than three years as higher interest rates begin to bite, according to European Central Bank figures.

The steady deceleration in lending for house purchases over the past year will cheer the ECB, which has been wary of the damaging effects of a possible abrupt correction. At 8.6 per cent in April, down from 8.9 per cent in March, the annual growth rate was the lowest since November 2003.

Ken Wattret, economist at BNP Paribas,said banks were also reporting declining demand for home loans, “reflecting a major deterioration in housing market prospects”. Evidence from countries that have seen the fastest growth in house prices also points to a gradual slowdown.

The ECB has increased interest rates seven times since 2005. However it will remain concerned by the still-fast growth in M3, the broad money supply measure it watches closely. At 10.4 per cent in April, the annual growth rate in M3 was lower than the 10.9 per cent reported in March but still close to the record since the launch of the euro in 1999 and considerably above the 4.5 per cent rate that, officially at least, the ECB regards as consistent with price stability.

Unlike other central banks, the ECB gives money supply data a prominent role in its interest-rate decision-making. In recent months the internal debate on their usefulness appears to have intensified with Christian Noyer, the French central bank governor, calling into question their reliability in the context of increasingly complex financial markets.

But Axel Weber, president of Germany’s Bundesbank, said in an interview with the Financial Times published earlier this week that by using a “monetary pillar” together withconventional economic analysis in decision-making “one avoids the mistake of taking a too narrow view of the data”. Ensuring the most accurate inflation projections required “a mix of monetary and economic information”, he added.

Jean-Claude Trichet, ECB president – who has denied that the ECB’s governing council is split on the issue - is likely to cite the rapid pace of M3 growth next week, when the central bank is expected to lift its main interest rate by another quarter percentage point to 4 per cent.

Recent data suggests that eurozone growth remains robust, despite a weakening in the US. Economists said the latest money and credit figures strengthened the case for higher borrowing costs, and financial markets generally expect further interest rate rises in the second half of the year.

The FT also reports that Google will announce an initiative on Thursday that will take its applications beyond the web and challenge Microsoft on its home turf of the computer hard-drive.

The internet company is launching Google Gears, an open-source technology for creating offline web applications.

A key differentiator of Microsoft applications is that they can be used without an internet connection. They are launched from the computer’s hard drive and files created can be stored and accessed on that drive.

Google Gears will enable its own applications to have the same capabilities. Google Reader, a news reader, will be offline-enabled from today and other applications would be expected to follow.

“With Google Gears, we’re tackling a key limitation of the browser in order to make it a stronger platform for deploying all types of applications,” said Eric Schmidt, Google chief executive.

Google says Gears will work with all main browsers on all main platforms – Windows, Mac and Linux. But while it says the Firefox and Opera browsers welcome Gears, it made no mention of Microsoft or its Internet Explorer web browser.

Of additional concern to Microsoft will be Google’s decision to “open source” its technology. Google hopes Gears will move the industry towards a single standard for offline capabilities, potentially enabling thousands of applications to compete with Microsoft software.

“Microsoft is either going to have to support this or do something like it,” says David Mitchell Smith, analyst with the Gartner research firm.

The New York Times reports that the stock market yesterday clawed back to where it was seven years ago during the heady days of technology and the Internet boom — and it had to overcome an overnight sell-off in China to get there.

Stocks, which struggled for much of the day after markets fell in Asia and Europe, received a midafternoon boost from the minutes of a Federal Reserve meeting that indicated that policy makers had become somewhat more upbeat about the economy. The tone of the minutes, if not the substance, heartened investors, who sent the Standard & Poor’s 500-stock index, the most widely followed benchmark of American stocks, past a level last reached on March 24, 2000.

The index — a weighted measure of the biggest American companies, from Exxon Mobil to Google — gained 0.8 percent, or 12.12 points, to 1,530.23, surpassing the record of 1,527.46.

The S.& P. climbed past the record early last week, too, but failed to hold onto the gains until the end of regular trading as it did yesterday. The Dow Jones industrial average, which has been breaking records with some regularity in the last several months, closed up 111.74 points, or 0.83 percent, to 13,633.08, another record.

The Nasdaq composite index rose 20.53 points yesterday, or 0.8 percent, to 2,592.59. The Nasdaq has yet to come close to regaining the levels reached during the Internet boom. It is down 49 percent from its March 2000 high.

The S.& P. breakthrough was set on a day that began with worries about a bubble in Chinese stocks. The stock market in Shanghai tumbled 6.5 percent yesterday after the government in Beijing trebled the taxes on stock transactions in an effort to rein in what has become the world’s hottest stock market.

In February, the Shanghai market precipitated a wave of selling on markets around the world after a similar sell-off. But after a brief period of uncertainty in late February and early March, investors have been pushing American stocks steadily upward. This time, the nervousness was much shorter-lived.

“If we see a 20 or 30 percent decline in the Shanghai index, that will cause investors to sit up and take notice,” Sam Stovall, chief investment strategist at Standard & Poor’s, said yesterday. “Basically, investors say, ‘You’ve got to increase the shock value, not merely replicate it to get my attention the second time around.’ ”

The United States market has been supported by a strong flow of corporate takeovers, companies buying back their own shares and corporate earnings that are proving to be better than expected.

That optimism appears to be overshadowing, at least for now, concerns about the slowing American economy, rising energy prices, a modest increase in interest rates and the troubles in the housing market.

“We have a remarkably positive environment for securities,” said James W. Paulsen, chief investment strategist for Wells Capital Management. “You have 5 percent real world G.D.P. growth right now and you have massive excessive liquidity sloshing around.”

According to minutes of the Fed meeting on May 9, officials seemed to think that the economic outlook had improved somewhat, even as they acknowledged that the housing market and the problems in subprime mortgages would serve as a bigger drag on the economy than they had previously thought.

But the minutes reiterated, as statements from the Fed have for many months now, that policy makers remain concerned that inflation is too high and too unsettled to warrant a change in policy, which has been to leave short-term interest rates unchanged at 5.25 percent. There are also signs that the recent moderation in inflation could be threatened by rising gasoline prices, which have climbed past $3 a gallon for the first time since last summer.

Still, investors appeared willing to look past the Fed’s concerns about housing and inflation, two staple worries that while they have raised eyebrows have not yet sapped corporate profits or the frenzied deal-making on Wall Street.

While the outlook for profits is not as ebullient as it was in the last several years, it remains reasonably upbeat. Low interest rates have also ensured that businesses still have easy access to credit. (The 4.87 percent yield on the 10-year Treasury note, which has risen in the last two months, is still historically low.)

“Until interest rates rise significantly and investors become excessively optimistic, the market is likely to continue upward,” said Bruce Bittles, chief investment strategist at Robert W. Baird & Company, a securities firm.

Yet, some skeptics worry that investors have become too complacent since early March; the S.& P. has risen about 11.4 percent in the period. The rally, they say, does not appear to reflect the rise in interest rates, the slowdown in the economy and the recent increase in gasoline prices, said Robert C. Doll, vice chairman at BlackRock, the asset management company.

“Markets never move in one direction for a long period of time,” Mr. Doll said. “The glass is being viewed as half full, which it is, but there is always another side to the story.”

Still, many market specialists note that even with the recent run-up in the stock market, American companies are cheap compared with the past and with other world markets. The price-to-earnings ratio for companies in the S.& P. is about 18 today, compared with 32.8 in 2000 and a 21-year average of 22.5.

The S.& P., which is up 97 percent since October 2002 when a two-year bear market ended, has lagged behind other stock indexes and markets by a significant margin. By comparison, a Morgan Stanley index that tracks stock markets in developed countries excluding the United States is up 161 percent in that time.

That difference is, in part, a reflection of the huge role played by technology stocks in the S.& P. 500, both in driving it to giddy heights in the 1990s and bringing it down at the start of this decade.

The information technology sector of the index is still down about 60.8 percent from March 2000 and the telecommunications sector, which includes far fewer companies today, is down by about 43 percent. Consider JDS Uniphase, a maker of telecommunications parts and a former stock market darling. Its shares soared by more than 2,500 percent from August 1998 to March 2000. Since then, it is down by 95 percent.

Of course, many technology companies that played a leading role in the market in the last decade are either no longer part of the index or make up a far smaller portion of it. (Since March 2000, there have been 199 changes in the membership of the index.)

Leadership of the stock market has shifted to the energy sector, which is up 150.7 percent since 2000, followed by the materials business, up 84 percent. Both sectors have benefited from the boom in commodities that has been driven by the fast growth of China, India and other developing nations.

There are also signs that many investors have not fully regained the faith in the market that they lost after the end of the technology boom and the terrorist attacks of 2001. In numerous polls during the last several years, Americans have expressed tepid enthusiasm for the stock market and a much stronger faith in housing.

The flow of money into mutual funds that specialize in domestic stocks, a proxy for investor sentiment, has been particularly weak in the last several years.

Even the recent rally in the American market has not been enough to draw many individual investors to American stocks.

Through the second week in May, investors this year have put just $25.3 billion into mutual funds that specialize in domestic stocks. By contrast, they have plowed more than twice that, $56.1 billion, into nondomestic funds, according to AMG Data Services.

“There is no demand push from investor sentiment that is driving these markets to record levels,” said Robert L. Adler, president of AMG Data, a research firm based in Arcata, Calif.

The NYT also reports that in a highly anticipated encounter, Bill Gates of Microsoft and Steven P. Jobs of Apple took the stage Wednesday evening to relive old battles and alliances and speculate about the future of digital culture and technology.

Rivals for three decades, the two executives have rarely appeared in public together and have generally been viewed as bitter rivals, despite occasional partnerships.

In front of about 600 technology executives at the D: All Things Digital conference, which was sponsored by The Wall Street Journal, the two executives attracted the attention usually reserved for rock singers and Hollywood stars.

However, attendees who came hoping for fireworks or a confrontation were disappointed. The mild tone to the session did not take anything away from the event and after discussing the past and present of the computing industry, the two were greeted with a standing ovation.

After the event was over a number of the attendees who are veterans of decades in the computer industry said the joint appearance was the most memorable moment of any of the many conferences they had attended.

Mr. Gates and Mr. Jobs largely pioneered the personal computer industry beginning in 1975 and 1976 and they spent part of the evening sharing memories of those days.

Today "we ship these computers with one or two gigabytes and nobody remembers 128 kilobytes," Mr. Jobs said.

Apple and Microsoft were business partners at the start of the computer era beginning in 1977 when Mr. Gates supplied a copy of the BASIC programming language for the Apple II computer. Later, Mr. Gates made an early bet on writing software for the Macintosh, two years before the computer was introduced in 1984.

Neither was willing to acknowledge the possibility that the personal computer era they helped create would end any time soon.

"The PC has proven to be very resilient," Mr. Jobs said.

At the same time they called themselves believers in the explosion of hand-held communications devices, also known as "Post PC devices."

Mr. Gates said he was sometimes frustrated by the fact that the players in the industry changed so quickly. "I miss it when people come and go. It's nice when people stick around and it gives us some context," he said.During a question and answer period at the end of the session both men were asked to comment on the other's strengths. Mr. Gates singled out Mr. Jobs intuitive aesthetic sense.

"I'd give a lot to have Steve's taste," Mr. Gates said, drawing laughter from the audience. "The way he does things, it's just different."

Mr. Jobs returned the compliment, noting that Mr. Gates skills at building business partnerships were something that eluded him in his first decade at Apple.

Asked to comment on today's computer industry and the youth culture that it markets to, both men pointed to examples of applications of computer technology that had been readily adopted by seniors.

Mr. Gates said that when he showed the Microsoft Surface, the touch computing system introduced on Wednesday to a group of chief executives at his home several weeks ago, he was surprised they were more enthusiastic about the product than he was. The executives, he noted came from a generation that was not comfortable with keyboards. They were particularly interested in a technology that allowed them to control things on a display screen by pointing and moving them directly with their fingers.

Neither man was willing to say harsh things about the other and Mr. Jobs summed up his feelings by quoting from a Beatles song: "'You and I have memories longer than the road that stretches out ahead,' that's clearly true here," he said.