The selloff in global stocks lost steam today and the euro erased losses as investors took Ireland's ratings downgrade in their stride, but worries about the pace of US economic recovery kept markets cautious.
After a steep fall last Friday, Wall Street looked set to open higher with US stock index futures all trading up between 0.3 to 0.6 per cent ahead of earnings results from companies including IBM.
The Irish index of shares was down by less than half a percent, losing 14.26 points to trade at 2841.26 just before 3pm.
The index had initially dropped below 2830 following the announcement from Moody's that it had downgraded Ireland's debt rating to Aa2. However, the overall index clawed back some of its losses over the course of the session.
Bank of Ireland and AIB were both trading off this afternoon, with Bank of Ireland shedding 3 per cent to just under 67 cent. AIB performed marginally better, losing 1.9 per cent to trade at 86 cent shortly before 3pm.
The National Asset Management Agency today said it had applied a weighted average discount of 48 per cent on the second block of loans it bought from four of the country's lenders.
The agency bought loans from Bank of Ireland at a 38 per cent discount, while AIB's loans had a 49 per cent haircut.
Irish Life and Permanent, which is not involved in Nama, was up 1 per cent this afternoon to €1.60.
Independent News and Media lost almost 2.7 per cent to trade at 66 cent.
World stocks as measured by MSCI edged down 0.2 per cent, having earlier fallen by as much as 0.5 per cent, while its emerging market counterpart lost 0.6 per cent.
In Europe, the FTSEurofirst 300 index recovered from an early fall to be 0.2 per cent higher on the day. Asian stocks excluding Japan fell one per cent.
"There was a bit of a wobble earlier on with BP dragging down the markets, but buyers have been returning with sentiment being helped by M&A talk in International Power," said David Jones, chief market strategist at IG Index.
"I expect the market to gradually claw back gains throughout the day as investors await International Business Machines figures due out after the market close."
However, investors sold shares in Austrian banks because of their exposure to Hungary after the IMF and the EU suspended a review of Hungary's funding programme, meaning it will not have access to remaining funds in its loan package.
Erste group bank fell 0.6 per cent and Raiffeisen international shares slid 1.5 per cent.
BP shares shed 2 per cent as investors fretted about possible seepage from the company's capped Gulf of Mexico well.
Sentiment for the euro was dented after Moody's cut the credit rating of Ireland by one notch to Aa2. However, taking the sting out of the downgrade, the rating agency placed the new rating on a stable outlook.
Traders also said the Irish downgrade did not come as a surprise given Moody's had a negative outlook on the country but the timing did briefly unsettle markets.
Additional reporting: Reuters