European shares fell sharply today, wiping out more than $300 billion in market value in their biggest one-day slide since September 11, as fears of a US recession sparked a broad-based sell-off.
The Dublin market dropped over 4 per cent, wiping approximately €3 billion off the value of Irish shares as a US package of tax rebates and business incentives, announced last week, failed to stave off recession fears.
The Iseq index fell almost 3.5 per cent in the first thirty minutes of trading today and at the close of business was 4.17 per cent down, or 272 points under Friday's close at 6,261.
The FTSEurofirst index of top European shares closed down 5.3 per cent at 1,286.14 points, having hit an 18-month low of 1,278.79 earlier in the session
Germany's DAX lost 7 per cent, Britain's FTSE fell more than 5 per cent and the French CAC 40 dropped almost 7 per cent.
The slide in these three national blue-chip indexes led to a loss in market capitalisation roughly equal to the combined gross domestic product of Ireland and Romania.
Traders said the US package of tax rebates and business incentives were seen as too little, too late to stave off recession fears.
The white-knuckle ride for Irish banking stocks continued today with AIB down 70 cents to €14.15 and Bank of Ireland down 37 cents at €8.95.
Shares in Anglo Irish Bank were trading near year-lows at €8.65, or down 51 cents. Irish Life and Permanent shares were also among the fallers, shedding 20 cents to €10.20.
CRH, with its heavy exposure to the US market, was also down 98 cents to €22.80.
Last week US President George W Bush called for package of tax cuts and other measures of around $140 billion to $150 billion to shore up the US economy, battered by the subprime mortgage crisis and subsequent credit crunch.
But widespread doubts over the effectiveness of such action sent US stocks reeling on Friday to close out the worst week for the S&P 500 in five years, while Tokyo's Nikkei shed 3.9 per cent on Thursday. US markets are closed today for Martin Luther King Day.
US stock index futures were sharply lower today, pointing to a steep drop at the open tomorrow. S&P 500 futures were down 52 points, far below fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.
Dow Jones industrial average futures dropped 403 points, and Nasdaq 100 futures slid 63.75 points.
In Asia, Tokyo's Nikkei 225 index slid by 3.9 per cent to its lowest close since October 2005, while India's Sensex shed 7.4 per cent.