World markets dropped sharply today and oil has rose to record highs above $78 a barrel as conflict in the Middle East escalated.
The European falls were led by miners and carmakers after markets fell sharply in Asia and the United States and the Bank of Japan raised interest rates.
The pan-European FTSEurofirst index of 300 leading shares was down 0.9 per cent this morning at 1,281.8 points, as Israel stepped up attacks on Lebanon.
"Stock market investors are still on edge over worries about growth, high oil prices and the prospect of further central bank tightening," said Bear Stearns International in a note.
In Dublin, the Iseq was down 114.21 points to 7,349.44 down at 3.44pm. Britain's top shares opened sharply too, a day after their biggest fall for a month.
By 8.23am the FTSE 100 index was down 36.1 points to 5,728.9, adding to the 96-point fall yesterday. Without a big turnaround later in the session the index is on course for a loss of around 155 points or 2.6 per cent on the week.
Oil surged to its new record highs as geopolitical storm clouds gathered, with supply disruption in Opec-exporter Nigeria and tensions across the Middle East driving crude into unchartered waters.
US crude for August surged $1.37 to $78.07 a barrel by 8.10am, hitting a $78.40 high as gains came after yesterday's $1.75 rally.
London Brent was $1.26 up at $77.95, also breaking a record at $78.03 after yesterday's $2.30 jump.
Escalating conflict between Israel and Lebanon and fresh supply fears in the world's eighth-largest exporter, Nigeria, took centre stage, taking prices in New York 1.8 per cent above yesterday's close and above $80 a barrel for fourth-quarter delivery contracts.
Iran's nuclear stand-off with the West, North Korea leaving talks with South Korea, and falling crude stocks in the world's top oil consumer, the United States, continued to bolster prices.
Oil in New York is up around 28 per cent in 2006, rallying from below $20 in January 2002 amid rising demand led by the United States and the second-largest oil consumer, China, together with a series of real or potential supply disruptions.