More than €1 billion was knocked off the value of shares yesterday as the Irish stock market followed other world markets lower amid continuing accounting worries.
The ISEQ index of shares lost nearly 2 per cent of its value as investors continued to fret about the reliability of corporate earnings.
"We're still in an environment where you have terrorism, a continual lack of confidence in US corporate balance sheets and you've got corporate profits that are a problem," said Mr Matthew Johnson, managing director of trading at Lehman Brothers.
"All three of those things are contributing to the sell-off."
Investor concerns about corporate credibility were reignited after a newspaper report on Vivendi Universal raised questions about the Franco-American media giant's accounting practices.
A report in French daily Le Monde said Vivendi had tried to flatter its 2001 accounts to the tune of €1.5 billion as part of highly complex transactions involving the shares of BSkyB.
Fears of a possible terrorist attack in the US on July 4th, the Independence Day holiday, also sidelined many investors.
After falling sharply in early trade, the Dow closed at 9,007.75, down 1.12 per cent. The Nasdaq remained weak, however, closing 3.27 per cent lower at 1,357.85.
In Dublin, beleaguered drugmaker Elan led the fall, losing nearly 30 per cent of its value after it said that its business recovery plan and a drop in the value of its investments would result in significant charges.
Irish technology stocks also took a pounding as they suffered with their international peers.
Iona lost 13 per cent of its value, Riverdeep dropped by 18 per cent while Horizon gave up 15 per cent.
In Europe, French shares were particularly hard hit by the Vivendi news, losing more than 4 per cent.
In London, £33 billion sterling (€51 billion) was wiped off the value of blue-chip shares as banks, drugs and oil stocks were all hit by failing investor confidence.
Mobile phone giant Vodafone was among the biggest losers, sliding 6.3 per cent, as media and telecom stocks were hit by panic over Vivendi's future. - (Additional reporting by Reuters)
