Irish banking stocks fall sharply on Dublin market

Iseq 3,664 (-278) at 12.30pm:Irish and European banking shares have come under severe pressure today as the US approved bank plan, and bail-outs from other European governments failed to calm market concern.

At 12.30pm the Iseq index of Irish shares was just over 7 per cent down at 3,664 - a fall of 278 points - having earlier fallen by over 8 per cent.

The fall in Dublin was mirrored elsewhere in Europe and Asia where London's FTSE 100 index and France and Germany's main stock markets all sank more than 5 per cent in morning trading while Japan's Nikkei index fell 4.3 per cent to a four-year closing low.

The lack of immediate impact on the availability of credit for banks following the approval of the $700 billion US rescue plan was also contributing to markets being driven downwards.

"It is all bad news today, negative briefing notes from the UK on the housing market, the Icelandic market has been effectively shutdown and the moves by the European government's haven't really worked," said one Dublin-based trader.

"There is also a certain amount of fear following the Hypo bail-out. No one knows how bad the debts really are. So banks everywhere are getting a beating," he added.

Germany has announced a "political commitment" that savers would not lose deposits, Denmark has moved to offer full protection and Sweden has significantly increased the level of protection it offers.

Irish banking stocks, which had enjoyed a stronger recovery than their British and European peers last week following the introduction of the Government's guarantee scheme, were sharply lower today.

Suffering the sharpest fall was Irish Life and Permanent, which reached midday down almost 24 per cent at €4.95, while Anglo Irish Bank shares, which declined over 25 per cent in early trade, rebounded somewhat to reach the halfway point off 20 per cent at €4.06.

Bank of Ireland shares were trading down 14.3 per cent lower at €4.15, at 12.30pm, while AIB was off 10 per cent at €6.75.

"The worries are moving on to the UK banks and the system their government has put in place. Irish banks are getting hit hard but so are banks all over Europe", said one Dublin analyst. Volumes were said to be small.

Concerns over the financial sector weighed on other stocks in Dublin with building-related stocks in particular also lower. Kingspan shares were down almost 7 per cent at €6.15 while Grafton off over 5.7 per cent at €3.09.

Despite the financial crisis sending the oil price sharply lower and pushing the euro to 13-month lows against the dollar, there was little solace for airline stocks today.

Ryanair remains near 8-year lows at €2.19, off over 3 per cent as fears over the depth and length of the recession off-set the falling oil price. Aer Lingus shares were down 3.65 per cent at €1.32. 

Additional reporting Reuters