The European Central Bank (ECB)must follow the US Federal Reserve and cut interest rates if the worst downturn in Irish equity prices since the early 1990s is to be reversed, according to Pramit Ghose, head of investment strategy at Bloxham stockbrokers.

Kevin McConnell, Bloxham's head of equity research, yesterday said the reason Ireland had been hit harder than its European counterparts was because of an international perception that the market was overly reliant on the property sector. As a result, a cut in interest rates would be good news for the housing market and a relief for investors.

As expected, the US Federal Reserve last night cut its lending rate by 50 basis points, the first cut in four years. Mr Ghose, Mr McConnell and their colleague Alan McQuaid, Bloxham's chief economist, said the ECB must take a lead from the Federal Reserve when it meets to discuss euro-zone interest rates next month.

"The major need is for central bank intervention," said Mr McConnell, adding that there was no credible reason for the Irish market to have been affected so heavily by overseas events.

In recent weeks the Irish market has significantly underperformed its European counterparts, with billions of euro being wiped off its value. It is currently down about 24 per cent from its February high. Mr McConnell said the Irish banks were currently trading at their lowest valuations for 20 years, making them very attractive propositions.

He did not envisage any significant rally in Irish banking shares until the UK banks started performing better.