Iseq joins equity sell-off

The Irish market joined in the equity sell-off again today as the escalating European debt crisis, and concerns over the global growth outlook, spurred on a "flight to safety".

"It was a very ugly day on markets," a Dublin trader said. "Everything was getting toasted."

The Iseq index held its ground during the morning session but nosedived once US markets opened. The S&P 500 touched a new low for 2011 after fresh data showed the US services sector grew more slowly than expected. While the Irish benchmark remained above its lows for the year, it has undergone a correction of almost 13 per cent from highs recorded earlier in 2011.

Paper and packaging group Smurfit Kappa sank another 7.5 per cent, or almost 48 cent, to €5.91. One broker noted that highly leveraged stocks such as Smurfit have suffered the steepest losses of late because of expectations of a tighter credit environment in the future.

Drug manufacturer Elan took a break from its recent good run of form, declining almost 10 per cent, or 77 cent, to €7.25, with brokers attributing this to profit-taking.

The Iseq’s largest component, CRH, has struggled in recent sessions because of its significant exposure to the United States. However, it performed well today relative to the rest of the market, shedding less than 1 per cent to close just below €12.57. A broker said investors now feel the stock has reached a level where much of the bad news has been priced in.

Overall the Iseq shed more than 2.5 per cent to 2,639.15. National benchmark indexes fell in all 18 western European markets. The UK FTSE 100 lost 2.3 per cent, France's CAC 40 slid 2.1 per cent and Germany's DAX plunged 2.3 per cent.

Additional reporting - Bloomberg