Shares on the Dublin market have recovered slightly after falling over 3 per cent this morning and extending five straight days of losses that have seen some €8 billion wiped off the value of Irish shares.
The Iseq index of shares was down 7,096.72 or 1.27 per cent this afternoon having been as low as 6,961 earlier.
The slump was mirrored in other European markets and came on the back of heavy falls in Asia and New York overnight as credit fears intensified, and concerns over soaring oil prices and a weak dollar plagued investors.
Some €3 billion was wiped off the value of the Irish market yesterday, with the Iseq index falling 3 per cent to end the day at 7,188, its lowest closing price since July 18th, 2006.
World stocks hit a two-week low today, pushing safe-haven government bonds higher as Wall Street tumbled on a fresh series of negative news on the US mortgage and financial industry.
Wall Street fell almost 3 per cent last night as an investigation of the home loan industry drew in top US mortgage finance firms.
Washington Mutual, the largest US savings and loan company, warned the housing slump will extend into 2008. Furthermore, Morgan Stanley said it suffered a $3.7 billion loss from its US subprime exposure, while General Motors posted its largest quarterly net loss ever.
The credit crunch of the past three months, stemming from the fallout in US subprime mortgages, has hit consumer sentiment and threatened to weaken corporate profits and derail growth in the world's largest economy.
European shares have lost 4.5 per cent already this month amid growing fears that the extent of credit market problems stemming from the banks' exposure to risky or subprime US mortgages is not fully known.
Today across Europe, Britain's FTSE was down 1.1 per cent, Germany's DAX down 0.6 per cent and France's CAC 40 down 1.5 per cent.
Earlier Japan's Nikkei average fell 2 per cent to log a two-month closing low after exporters such as Honda Motor were battered by a strong yen.
The broader Topix index was hit even harder, dropping more than 3 per cent at one point.