MarketsShares in London and across Europe were punished hard yesterday as investors' long-held fears of a new wave of terrorist attacks became reality.
Markets clawed back some of their losses as the day progressed, however, as buyers stepped in to seek value and US stocks were seen to hold their ground.
In Dublin, the market mirrored performances elsewhere, plunging by as much as 4 per cent as soon as reports of the attacks emerged and then recovering as the afternoon approached.
"Everything tried to recover towards the latter end of the day," said one Dublin dealer last night.
"There was the initial knee-jerk reaction and then people saw value", said another. "People saw it as a buying opportunity."
The Iseq finished 1.21 per cent lower, although some stocks suffered more because of particular exposures. Ryanair, for example, closed nearly 3 per cent lower as the market nervously considered the likely impact on oil prices.
In London, the FTSE 100 fell by 1.4 per cent, or 71.3 points, to 5,158.3, its largest one-day fall since last August.
The FTSE had earlier touched low of 5,022.1 - a drop of 207.5 points or 4 per cent. This was its biggest intra-day fall since March 12, 2003 at the start of the invasion of Iraq, when the market benchmark tumbled 4.8 per cent.
The leisure, beverages, consumer and hotels sectors suffered the greatest falls, but shares rallied sharply from intra-day lows. Among the biggest falls were British Airways (down 4.2 per cent), Diageo (down 4 per cent) and Dixons (down 2.2 per cent).
The FTSE Eurofirst 300 Index of leading European shares also fell, closing down 1.36 per cent or 21.09 points at 1136.12.
Earlier in the day it had tumbled to a low of 1107.49.
On Wall Street at midsession, the S&P 500 index was down 0.7 per cent to 1185 while the Dow Jones was 0.7 per cent down at 10,194.80.
"You get the impression they don't seem too bothered by this," said a Dublin dealer of the US reaction to the London attacks.
Strategists pointed out that the longer-term market impact of the blasts might be muted, pointing to a rebound in European shares following the Madrid terrorist attacks last March, after an initial sell-off. They added that markets had been coming to terms with the threat of terrorism.
Equity markets have also been bolstered by expectations that the blasts might add pressure for interest rate cuts in Europe, particularly in the UK.
Dublin dealers said they were expecting many of London's market players to take a long weekend today, thus slowing volumes on the Iseq.
