Dublin report: Almost €2 billion was wiped off the Irish market again yesterday as sharp declines in all the banks pushed the Iseq index of Irish shares down 1.6 per cent.

Together, the four main financials account for 44 per cent of the index's total share capital.

Dealers blamed the decline in part on a profit warning from UK mortgage lender Northern Rock. However, they added that, in the current environment, it does not take much to knock stocks, particularly financial ones, in a downwards direction.

Northern Rock said its 2007 earnings would rise by only 15 per cent, and not the 17 per cent being forecast by analysts, blaming the rise in interest rates.

Anglo Irish Bank was the biggest loser, dropping 4 per cent, or 62 cent, to €14.88. As many as 7.2 million shares changed hands.

Dealers said it was somewhat surprising that Anglo suffered the most, given that Bank of Ireland and AIB are more exposed to the UK market, but they attributed this to the fact that Anglo is the best performer among the banks so far this year and as a result has further to fall.

Bank of Ireland fell 3.2 per cent, or 49 cent, to close at €14.80, while AIB closed 1.9 per cent, or 40 cent lower, at €20.30.

Volumes were decent, with 4.2 million Bank of Ireland shares trading and 5.1 million AIB shares.

Irish Life & Permanent fell 1.8 per cent, or 33 cent, to €18.34.

Elsewhere, drinks group C&C continued its recent decline, dropping a further 1.3 per cent, or 13 cent, to €10.08. At 3.8 million, though, volume was lighter than in previous days.

The reaction to news that Ryanair's proposed takeover of Aer Lingus had been blocked was muted, with Aer Lingus falling 2.7 per cent, or five cent, to €2.55 and Ryanair slipping just 0.6 per cent, or three cent, to €4.97.

Settlement day: July 2nd