More than €1.2 billion was wiped off the value of Irish equities yesterday as European stock markets tumbled to six-year lows.
Growing worries about war with Iraq, a fresh accounting scandal at Dutch food giant Ahold and soaring oil prices drove edgy investors out of stocks and into safer havens like bonds.
"Markets are driven by fear and greed at the extremes and we are in an environment where fear is totally in the ascendancy," said Mr Nigel Cobby, managing director of European Equities at JP Morgan.
"There is fear about a war in Iraq, fear about a double-dip recession. There is almost, without looking to over-exaggerate, a general fear about the viability of this business of ours."
Investor anxieties were heightened by the decision of the US, Britain and Spain to submit a new draft resolution to the United Nations Security Council on Monday. The resolution said Baghdad had missed a "final opportunity" to disarm peacefully and avoid war.
In Dublin, the stock market lost more than 100 points, or nearly 2.7 per cent, as it followed European shares lower.
AIB and Bank of Ireland led the way, hit by a dismal performance by the UK banking sector after concern that insurer Prudential might cut its dividend triggered fears that others in the sector might take similar action.
In London, the FTSE lost 2.2 per cent of its value while in Paris the CAC index of leading French shares was down nearly 3.7 per cent and German shares lost 3.3 per cent.
In early evening trade, the FTSE Eurotop 300 index was 3 per cent down at 753.66, a level last seen in mid-January 1997.
Meanwhile, Dutch retailer Ahold came under renewed pressure, extending its 63 per cent slide on Monday, as concerns about accounting irregularities continued to weigh on the stock.
The US open brought little relief to beleaguered European markets. The Dow Jones Industrial Average was 1.1 per cent lower by mid-session, rattled by a report showing consumer confidence fell an unexpectedly sharp 15 points in February, to its lowest level since October 1993. But late bargain hunting drove the market up to close 0.65 per cent stronger while the technology-oriented Nasdaq gained 0.5 per cent.
