The Irish stock market has fallen heavily once again to its lowest level for almost six months with more than £700 million wiped off the value of shares.
The decline was recorded as Russia joined Asia as the focus of market concern with the local exchange plunging in value in what Russian television dubbed "Black Thursday".
The Russian central bank stepped in to protect the rouble and the banking system amid calls for a devaluation. Moody's Investors Service cut the credit ratings of several Russian banks and Standard and Poor's said it was reviewing the government's debt rating. The Prime Minister, Mr Sergei Kiriyenko, said there were no financial grounds for the markets' movement and said it belonged in the "realm of psychology".
Speaking by telephone from his holiday home, President Boris Yeltsin instructed Mr Kiriyenko to "steadfastly fulfil the plan of action" the government had agreed with the International Monetary Fund, which has called for aggressive tax-raising measures and sharp spending cuts.
Mr Nicholas Stern, chief economist at the European Bank for Reconstruction and Development, said yesterday's dramatic price movements were on the back of thin volumes and exaggerated the depth of the financial crisis.
For its part, Dublin fell back even though international markets were recovering from early weakness. Wall Street was only modestly lower in its opening session but ultimately ran out of steam again, closing more than 1 per cent down.
Trading volumes in Dublin were again relatively small, but financial shares again took the brunt of the selling pressure with the ISEQ financial index down more than 3.1 per cent while industrial shares were 1.6 per cent lower. Overall, the ISEQ Index was down 2.27 per cent or 112 points to 4845.09. This compared with a 1.1 per cent fall in London, a 0.9 per cent fall in Frankfurt, a fractional gain in Paris and a 0.5 per cent fall in New York by the time the Irish market closed. Later, the Dow closed down 93.46 to 8459.5.
Markets opened unsteadily after heavy overnight falls on Far Eastern markets where Hong Kong stocks plunged to a new five-year low on growing fears that speculators would take advantage of a long weekend to mount an attack on the local currency.
But the Japanese yen continued to recover against the dollar on continuing rumours that the Bank of Japan would intervene forcibly to support the currency.
However, it was events in Russia that had the main impact on markets yesterday, following financier George Soros's public call for a devaluation of the rouble.
Multi-billionaire Mr Soros who almost single-handedly drove sterling from the European Exchange Rate Mechanism turned up the heat on Russia's ailing financial markets by stating that the "best solution" to the present banking liquidity crisis would be to introduce a currency board after a "modest" rouble devaluation of 15 to 25 per cent.
But Mr Soros's call for a devaluation was flatly rejected by the Russian central bank. Bank deputy chairman, Mr Denis Kiselyov, said that devaluing the vulnerable Russian currency by the 1525 per cent suggested by the Hungarian-born investor would merely give a green light to speculators to prey further on the Russian currency.
Russian shares lost 6.5 per cent after initial drops of 15 per cent, although trade was minimal.
But the higher opening on Wall Street pulled European stocks out of a slump in afternoon trading after a bruising morning.
The London stock market recovered from an early 112-point fall and the FTSE index gave up 62.7 points or 1.1 per cent on the day to end at 5399.5 points as investors worried about the situation in Asia and Russia.
