The Irish stock exchange was down nearly 2.7 per cent or 150 points at 5,470 at 4.30 pm as financial and construction stocks bore the brunt of a sell-off.
Reflecting overnight losses on Wall Street, the market started the day weak and was down 1.50 per cent at mid-day but the carnage continued into the afternoon with what one broker called "indiscriminate selling" being the main feature.
Financial stocks were among the hardest hit as worries about the credit crisis persist and on the back of concerns about new capital requirements in a report from a US stock broker and investment bank Keefe, Bruyette & Woods Ltd. It said Bank of Ireland and Anglo Irish Bank have lower Tier 1 capital, a measure of financial strength, than most European banks.
By 4.30, Bank of Ireland's share price had slumped by more than 5 per cent to €6.62 with more than 3 million shares traded. Anglo Irish was down nearly 3 per cent to €6.96 as 6 million shares changed hands. AIB shed 51 cents to €10.69, while Irish Life & Permanent was under pressure ahead of its first-half pre-close statement tomorrow. It also fell back considerably as it shed 47 cents, or around 5 per cent, to €8.88.
Construction stocks fared no better as they took their lead from the UK and European markets. CRH, which had traded as high as €19.40 at one stage, bore the brunt of the sell-off and by 4.30pm it was 4.8 per cent weaker as it shed 92 cents to €18.38. Among the other construction stocks, Kingspan slipped back 6 cents to €6.60, McInerney was 3 cents weaker at €0.69, while Readymix shed 5 cents to €1.07.
Smurfit was also under pressure, dropping 17 cents to €5.10 on the back of profit warnings from two of Europe's biggest papermakers, Stora Enso and UPM-Kymmene Oyj.
Among the few positives on the day was biotech group Elan. Its shares continued to surge on the yesterday's positive Alzheimer's drug trial data and by 4.30 its share price was up 5 per cent, or 92 cents to €19.10. Shares in clinical research, pharmaceutical and biotechnology company Icon also surged following the company's announcement of plans to double its capital through a bonus share issue and was nearly 8 per cent stronger at €47.50.
European stocks fell for a second day this week on speculation that the worst of the financial market turmoil isn't over as the slowing economy and more writedowns drag on profits.
National benchmark indexes fell in all of the 18 western European markets except Iceland. The UK's FTSE100 slid 1.8 per cent, Germany's DAX slipped 1.1 per cent and France's CAC40 retreated 1.5 per cent.