With international stock markets tumbling on war and recession fears, Irish shares took another hammering yesterday with the ISEQ Overall Index down almost 2.6 per cent.

Yesterday's fall means that the Irish market has now fallen almost 17 per cent since the September 11th attacks on New York and Washington and €14 billion has been wiped off the value of the Irish market in that period. Dealers said that there is little sign of any recovery in the short-term and that share prices are likely to fall a good deal further before the market recovers.

And yesterday's falls were not confined to stocks exposed to the American economy or the aviation and tourism sectors. There was broad-based selling across the range of sectors and even the defensive food and pharmaceutical shares fell heavily.

While there were heavy losses across the board, the main impact yesterday was on the major financial shares. The ISEQ Financial Index was down almost 9 per cent at one stage before the tentative recovery after the rebound on Wall Street left the financial shares off almost 6 per cent on the day.

Shares in Allied Irish Banks at one stage were down more than €1.25 before they recovered to close down 86 cents on €9.40. As a result of the slump in its share price, AIB has scrapped its scrip dividend offer.

Instead, AIB shareholders are being given cash but are being offered a special facility with Goodbody Stockbrokers where they can reinvest their cash dividend in AIB shares at the current price in the market. The original scrip dividend was based on an AIB share price of €12.54, the market price in early August when the dividend was announced. AIB shares have now fallen 19 per cent since September 11th and by 25 per cent since AIB set the price of the scrip dividend.

The heaviest trading was in Bank of Ireland where 4.6 million shares dealt as the stock fell as low as €7.80 before recovering to end the day on €8.07, a fall of 38 cents.

There were also heavy falls in most of the major industrial shares although most stocks managed to regain some ground after the heavy early falls. Despite having no transatlantic services, Ryanair shares have fallen since September 11th. Probably the biggest losses on the Irish market have been suffered by luxury goods group Waterford Wedgwood whose shares have fallen almost 44 per cent since the bombings.