Market Report:The Irish market took another battering yesterday, dropping 2.5 per cent and wiping a further €3 billion off the value of the Iseq index of Irish shares.

While one dealer said it was simply a continuation of the negative sentiment seen on Tuesday when €2.6 billion was wiped off the index's value, another said the already negative sentiment had been exacerbated by the ECB's decision to raise interest rates and news that Irish mortgage lending had fallen 19 per cent in the first quarter.

"Any stock that is related to property in anyway - however loosely - was particularly badly hit," said one trader.

As a result the banks all ended the day substantially lower despite AIB releasing what was viewed to be a pretty upbeat trading statement.

Irish Life & Permanent was the biggest loser amongst the financials, falling 4.2 per cent, or 84 cent, to end the day at €18.98.

Bank of Ireland, meanwhile, dropped 2.9 per cent, or 45 cent, to €15.15, while AIB closed down 2.8 per cent, or 61 cent lower, at €21.18. Anglo fell 2.1 per cent, or 37 cent, to €17.02.

C&C was particularly badly hit, dropping 5 per cent, or 55 cent, to €11.30, though dealers could find no specific reason as to why the stock was so out of favour.

Elsewhere it emerged that Denis O'Brien had further increased his stake in Independent News & Media to 8.35 per cent. The stock yesterday closed down 2.7 per cent, or 10 cent, at €3.60.

FBD looked to be the worst hit by the market's declines, ending the day down 12.7 per cent, or €5, at €34.50, but in fact the stock was ex-dividend yesterday and as a result the price was adjusted to take account of the €5 dividend related to the return of capital announced recently.