More than €1 billion (£860 million) was pared from the market value of Irish shares as Dublin succumbed to the weakness infecting international equity markets. Irish companies quoted on the US Nasdaq market also suffered heavy falls.
Despite a positive start on the first day of trading after the New Year holiday, Irish share prices failed to remain immune to the general gloom and closed 1.5 per cent lower.
Concern about rising interest rates in the US, Britain and Europe hit the financial sector hardest, with shares in this sector losing more than 2.3 per cent in value.
Dealers said, however, that with many institutional investors still away from their desks, trading in Dublin was light and scrappy and mainly concentrated in the two leading banking stocks.
Both AIB and Bank of Ireland fell sharply, the former losing 3.5 per cent of its value while the latter ended 1.6 per cent lower. "The banks have taken a battering. Interest rate speculation is bad for them," one dealer noted.
Although industrial stocks did not fare as badly, they too lost ground while Irish firms trading on the Nasdaq suffered as the technology market fell more than 2.5 per cent in the first minutes of trading.
By the close of business in Dublin, Iona Technologies was down nearly 10 per cent, Baltimore had shed more than 8 per cent while Trintech had lost more than 7 per cent. By the close last night in New York Baltimore was down 8 per cent to $76.5, Iona had lost 9.8 per cent to $47 and Trintech had fallen 5.8 per cent to trade at $50.
