The Irish stock market sustained heavy losses yesterday as billions of pounds were wiped off the value of European shares after the crisis in Russia deepened.
The overall ISEQ index fell by 138 points to 4754, a drop of 2.82 per cent, as fears about the world economy increased among investors.
Traders said the plunge in Dublin was solely triggered by the international climate, which may worsen next week. The air strikes on Afghanistan and Sudan have added to the nervous mood.
"While the fundamentals in the Dublin market are sound, it is impossible to ignore some of the more alarming signals internationally at present," said a dealer.
"The general crisis in Asia and Russia now seems to be affecting emerging markets like Latin America and that is alarming many people," he added.
Some of the largest stocks on the market took a hammering, with the worst damage coming after Wall Street slid downwards from the opening. The sell-off in Dublin was said to be taking place in "reasonably serious volumes".
AIB, which has been strong in the last fortnight after announcing bumper interim results, fell by 32p to 1115p, while Bank of Ireland shed 50p to close at 1230p. The overall financial index fell by more than 3 per cent.
Apart from the two largest stocks, losses elsewhere were significant. Irish Permanent was down 45p at 825p, Irish Life, shed 14p at 620p, while CRH lost 25p to finish at 870p.
While some second line stocks held their value, others like Irish Continental Group, down 40p to 980p, and Ryanair, down 20p to 495p, were not so lucky.
Dealers said apart from reluctance to buy on behalf of domestic investors, overseas investors pulled out of the market in large numbers. "Few of them are prepared to venture into non-domestic markets with the uncertainty around at present," a dealer said.
The first part of the week was good for the Dublin market with the ISEQ rising by 65 points on Wednesday. However, by Thursday night Wall Street started to falter on the back of a series of negative corporate news announcements from some of the leading technology stocks in the US.
Despite yesterday's slippage, most analysts in Dublin remain confident about the next few months.
"I firmly believe this is part of a temporary correction, the strength of Western economies should mean the problems in Russia and South America can be off-set," said the head of equity research at Davy Stockbrokers, Mr Robbie Kelleher.
A recent forecast from Goodbody stockbrokers said that the ISEQ index will end the year at about the 5,300 level, which would be an annual rise of about 8 per cent.
