Iseq: 3,766.63 (-92.52) Settlement date: September 23rdTHE ISEQ index of Irish shares closed at 3,766.63, yesterday evening, a drop of 92.52 points or 2.40 per cent on a day that one trader described as "absolute carnage".

Once again the financial stocks bore the brunt of the sell-off as speculation continued about the viability of US investment banks as stand-alone entities.

The announcement of the establishment of a $180 billion fund to provide liquidity to markets by six of the world's largest central banks took some time to be digested by the Irish market.

The backlog of deals booked overnight drove Bank of Ireland down as much as 8 per cent in the first hour of trading, but by lunchtime the price recovered almost 1 per cent higher to €3.99. The rally was shortlived, however, and it closed at €3.78, a fall of 4.55 per cent.

Allied Irish Bank was another to suffer from really aggressive selling, driving it down 13 per cent to €5.22.

Irish Life Permanent was the only one of the banks to close in positive territory, up 4.1 per cent to €5.10. On a day where the ISEQ Financial index fell 6.14 per cent Anglo Irish Bank's drop of 1.14 per cent to €4.35 seemed like a strong performance.

Although there was little hard news about the sector, traders said the rumour mill was in full effect with speculation about Irish banks' exposure to Lehman Brothers and also about possible mergers in the local market.

Positive guidance about future performance at Ryanair's agm drove the stock up by as much as 8 per cent at one stage during the day, but by the end it was down by 1.56 per cent to €2.52.

It was the second tier of shares that performed best on the day, albeit on low volumes. Grafton Group added 19 cent to close on €3.74 while Kingspan gained 29 cent to €7.24.