The rally by Irish financials yesterday ran out of steam in early Dublin trading and by lunchtime most of the main banking stocks were in the red.
At 12.41pm the Iseq was down 1.5 per cent at 5,336.
Yesterday's announcement of a capital raising plan by Barclays had seen Irish banks enjoy a brief respite but that ended today with a research note on Citigroup from Goldman Sachs that suggests the bank may face $8.9 billion of second-quarter write-downs.
European and Irish banking stocks fell after the report was published. Irish Life & Permanent shares were 4.3 per cent lower at €8.49 while Anglo Irish was off 4.2 per cent at €6.65.
Bank of Ireland gave up almost half its gains from yesterday and at the midway point was trading down 2.1 per cent at €6. AIB shares were also down 2.1 per cent at €9.74.
Market heavyweight CRH was also in negative territory, shedding 2.5 per cent to €18.40 while Ryanair and Aer Lingus both slipped to €2.91 and €1.55 respectively.
Despite a relatively positive statement from insurer FBD today which included an expectation that insurance premium rates are likely to harden, the stock was under pressure today. FBD said financial market volatility and weakness in the UK commercial property sector would impact on first half pre-tax.
At 12.41pm its shares were down 8.6 per cent at €18.90 with around 18,000 shares traded.
Among the gainers Elan continued its recent good run with a 2.8 per cent rise to €21.83 while Fyffes enjoyed a bounce of 1.5 per cent after it reaffirmed its full-year guidance in a trading statement. Its shares were trading at €0.64 at 12.41pm.
European stocks and US index futures fell on concern credit losses will reduce bank earnings, while slowing economic growth curbs profits for broadcasters and technology companies.
Fortis tumbled 11 per cent on plans to raise $2.4 billion of equity and cancel a dividend to boost solvency, while Citigroup Inc. declined after Goldman Sachs Group Inc. recommended selling the shares, predicting $8.9 billion more in writedowns for the bank.
Oracle Corp. dropped after its forecast signaled a slowdown in growth. British Sky Broadcasting Group Plc retreated to the lowest in almost four years after JPMorgan Chase & Co downgraded the stock, citing a "poor" economic environment.
Europe's Dow Jones Stoxx 600 Index lost 1.3 per cent to 292.08 at 12.05pm in London, bringing this year's decline to 20 per cent. Futures on the Standard & Poor's 500 Index fell 0.4 per cent.
