Brokers are reporting a “contracts for difference capitulation” on the Dublin market today as a negative economic assessment from the ESRI led to a spate of selling.
At 12.20pm the Iseq index of Irish shares was 1.6 per cent lower at 5,308.
Analysts said hedge funds were among the big sellers today and stocks held under contracts for difference (CFD) were among the worst hit.
"CFD clients would be on a margin which means that they have to sell at a certain level which is exacerbating the problem," said one.
"It is as bad as we have seen and unless you get some sort of bounce in the US it is hard to see it ending. Volumes also look very reasonable, which is worrying. It means people are jumping ship", he added.
Only five of the 64-listed stocks were in positive territory this afternoon as some of the main banking stocks endured another difficult day.
Bank of Ireland hit 8-year lows this morning, falling 4.6 per cent to €5.77, while Anglo Irish Bank has shares rebounded from earlier falls to reach 12.20pm at €6.56, off 2.75 per cent.
AIB shares are down 2.5 per cent at €9.65 while Irish Life and Permanent is off just under 2 per cent at €8.55.
With oil prices remaining firm and weaker consumer spending forecasts from the ESRI there was little joy for airline stocks this morning with Ryanair down 4.7 per cent at €2.82 and Aer Lingus off 1.3 per cent at €1.54.
Other stocks under pressure today were Paddy Power and McInerney, both of which have large CFDs. At the midway stage Paddy Power stock is off over 4 per cent at €20.80 while McInerney shares have fallen 9.5 per cent to €0.625.
In Europe stocks have fallen for a fifth day as higher oil prices and weakening consumer confidence in Germany weighed on carmakers, airlines and retailers, while a drop in mortgage approvals pushed UK homebuilders lower.
US index futures and Asian shares dropped. Daimler AG, the world's second-largest maker of luxury cars, and Ryanair declined after oil rose for a third day.
Kesa Electricals Plc dropped as the electronics retailer refrained from announcing a stock buyback after profit growth weakened. Taylor Wimpey slumped as mortgage approvals in the UK declined in May to the lowest since at least 1997.
