Around €3 billion was wiped off the value of Irish shares today as the Dublin market went into freefall.
The Iseq index of Irish shares tumbled through the landmark 4,500 level, closing nearly 6 per cent, or 271.81 points, down at 4,414.80.
Banks were among the biggest fallers as global financial stocks took a hammering on the back of concerns over the capital position of US mortgage originators Fannie Mae and Freddie Mac.
Investors on both sides of the Atlantic were rattled by reports that the US government was considering taking over the home finance providers.
“Irish banks took an extra hit because of general negative sentiment towards the Irish economy,” said one broker.
International investors have taken the view that there is no good news going to come out of the Irish economy for at least a year, said another.
“The guys in London and New York have made up their minds,” he said.
Among the financials, AIB was the biggest casualty with nearly 10.5 per cent wiped off the value of its shares. It eventually closed the day 86 cents weaker at €7.35.
Irish Life & Permanent shares dropped by 8.9 per cent, or 42 cents, to €4.30, while Anglo Irish Bank was 8.7 per cent weaker at €4.428. Bank of Ireland lost nearly 5.9 per cent of its value as it shed 29 cents to €4.65.
Other headline stocks tumbled. Ryanair was hammered as oil prices spiked again and the stock eventually closed the day more than 5 per cent weaker at €2.53.
Drinks company C&C endured a miserable day as it revealed that the company’s four months trading to June was down 8 per cent. The stock traded down 20 per cent at one stage before eventually closing 11 per cent weaker at €2.42.
The Irish market was the worst performing in Europe by a long way, but other European markets suffered as European stocks fell, sending the Dow Jones Stoxx 600 Index to a three-year low, as record oil hurt automakers and airlines and concern deepened Fannie Mae and Freddie Mac are short of capital.
The MSCI World Index and the UK’s FTSE 100 Index entered bear markets today.
National indexes retreated in all western European markets except for Norway. France’s CAC 40 slid 2.5 per cent and Germany’s DAX slipped 2.1 per cent, with tiremakers Michelin & Cie and Continental AG retreating.