Market Report:Almost €2 billion was wiped off the value of the Irish market yesterday as the four main banks, which together account for 44 per cent of the exchange's total share capital, all made significant moves downwards.

The negative sentiment was not confined to Ireland, although one dealer did describe the Irish situation as "complete carnage".

While banks across Europe all fell as a result of rising bond yields and a higher oil price, the Irish situation was exacerbated by a trading update from Irish Life & Permanent, which said that the bank expected €800 million less in new mortgage lending this year, compared to 2006.

AIB was the worst hit, falling 2.9 per cent, or 62 cent, to end at €21.15. Bank of Ireland was not far behind, closing 2.7 per cent, or 43 cent, lower at €15.15.

Anglo Irish Bank was the busiest of the banks, with 7.2 million units changing hands. Its shares dropped 2.4 per cent, or 38 cent, to €15.55.

Irish Life & Permanent fell 2.4 per cent, or 46 cent, to €18.82. Dealers said that, apart from the mortgage-related comments, the trading update was positive and they would not have expected such a significant decline in the bank's share price.

Several of the index's other main components added to the 1.7 per cent decline in the overall index, with building materials group CRH dropping 1.4 per cent, or 54 cent, to €37.11. Drinks group C&C closed down 2.1 per cent, or 24 cent, at €11.40.

Irish Continental Group was quiet after heavy trading earlier in the week prompted by Eamonn Rothwell increasing his stake. The stock closed 1.7 per cent, or 40 cent, lower at €22.60.