Shares on Dublin market fell again today, ending a two-day rally, as positive market sentiment following Government moves to shore up the financial sector evaporated into renewed fears surrounding the extent of the recession in the global economy.
The Irish Iseq of shares was down 191 points or more than 6 per cent by 4.12pm to 2831.8.
Bank of Ireland was down 14 per cent, Irish Life & Permanent was down 3 per cent, AIB was down 2.6 per cent, while Anglo-Irish Bank rose 7.5 per cent.
European shares also headed lower today with the FTSEurofirst 300 index of top European companies down 2.8 per cent at 939.10 points, after gaining a record 10 per cent on Monday and 3 per cent yesterday.
This morning, banks were the top weighted sectoral losers, with Standard Chartered falling 6.6 per cent, Societe Generale shedding 3 per cent, HSBC down 3.2 per cent and UBS down 4 per cent.
KBC fell 13.7 per cent. The Belgian banking and insurance group said it expected a third-quarter loss of up to €930 million ($1.3 billion) after Moody's cut the credit ratings on a number of structured investment products that KBC had invested
in.
Recession fears returned after trillions of dollars pledged for bank bailouts from Europe to Asia helped allay fears of an imminent financial meltdown.
"After the colossal gains achieved at the start of this week, it would seem that the hangover has kicked in and investors have sobered to the reality that recession is here," said Andrew Turnbull, senior sales manager at ODL Securities.
EU leaders meet in Brussels just days after stumping up €2.2 trillion ($3 trillion) to rescue European banks and jolt frozen money markets - at the heart of worst financial crisis since the Great Depression - into life.
European leaders will press for an overhaul of the world's financial structures after Asia joined western bastions of capitalism in bailing out banks to avert a financial meltdown.
Southeast Asian nations backed by Japan, South Korea, China and the World Bank were the latest to join the global rescue effort, agreeing on Wednesday to create a multi-billion fund to buy bad debt and help banks.
The United States yesterday offered to take $250 billion worth of stakes in nine top banks.
But concerns remained that the rescue would come at a huge economic cost and do little to repair the damage already done by a 14-month credit crunch, which has slowed the economy.
Commodity shares also fell, tracking losses in metals and crude oil prices.
Oil fell 1.3 percent to trade below $78 a barrel, a far cry from all-time highs of around $147 hit earlier this year. BP, Royal Dutch Shell, gas producer BG Group and Tullow Oil shed between 0.1 and 5.9 per cent.
Weaker metals prices dragged down mining shares, with BHP Billiton, Anglo American, Lonmin, Kazakhmys, Xstrata and Antofagasta falling between 2.6 and 13 per cent.
Yesterday saw a volatile day’s trading with the Irish market climbing as much as 6 per cent at one stage, before it dropped back in the afternoon to close up by 80.4 points, or 2.7 per cent, at 3,022.9.
Reuters