More than €1.3 billion (£1 billion) was wiped off the value of the Irish stock market as a number of leading shares met with heavy selling.

The ISEQ index of shares closed nearly two per cent lower, dragged down by weak performances from the financial stocks and from Eircom in particular.

The banks were hurt by a combination of overseas weakness and some concerns about a report from Moody's Investors Service about the outlook for the financial sector.

Although the report said the long-term prospects for Irish banks were generally good, it warned of the uncertainty surrounding the short-term prospects for the Irish economy. AIB shares lost nearly 4.5 per cent of their value to close at €12.82 (£10.10), Bank of Ireland shed 2.6 per cent to €8.20 (£6.46) and Irish Life & Permanent lost close to five per cent to finish at €9.90 (£7.80).

Eircom was another victim of the market, losing more than four per cent in value to close at €3.95 (£3.11).