Shares in Irish banks fell sharply today after a global financial institution warned of risk to earnings presented by the Irish commercial property market.
The Iseq index fell 145 points to 6,615 in afternoon trading, losing 2.16 per cent. Earlier today, the index lost as much as 3 per cent.
AIB, Anglo Irish Bank and Bank of Ireland all fell throughout the session, after UBS downgraded the financial stocks.
"We believe there is a circa 30 per cent downside risk to commercial property values in Ireland to get yields back to historic levels, and that pre-supposes that rents are able to be maintained at current levels," analyst Ross Curran said in a report. "This presents a significant risk to earnings over the next two years for the Irish banks."
By 1630, AIB had fallen more than 4.5 per cent to €15.25, while Bank of Ireland was down almost 2.6 per cent to €9.81. Anglo Irish shed more than 4.5 per cent to €9.43.
Other stocks also felt the pinch, with McInerney Holdings falling more than 2.5 per cent after it revealed in a trading statement earlier today that housing completions had halved in Ireland during 2007. Ryanair also suffered some losses, shedding over 4 per cent to €
3.73. On the world markets, US stocks fell as a larger-than-expected decline in new home sales in December added to worries about the impact of a weak housing market on the economy.
The Dow Jones industrial average was down 90.31 points, or 0.74 per cent, at 12,116.86. The Standard & Poor's 500 Index was down 8.02 points, or 0.60 per cent, at 1,322.59. The Nasdaq Composite Index was down 18.24 points, or 0.78 per cent, at 2,307.96.
Meanwhile European shares shed over 2 per cent, falling to their lowest point of the day after the US data exacerbated fears about the extent of the economic slowdown. Banks were the worst peforming sector in Europe, where the fallout from the trading fraud at France's Societe Generale plagued financial stocks.
HSBC fell by more than 3 per cent, while SocGen shares lost 5.7 per cent and Banco Santander lost 2.9 per cent.
By 1507 GMT, the FTSEurofirst 300 index of top European shares was down 2.2 per cent at 1,300.31 points, having fallen by as much as 2.3 per cent after the US government said sales of new homes fell 4.7 per cent in December to their lowest rate in nearly 13 years, missing forecasts.
London's FTSE 100 index lost 2.7 per cent, while Frankfurt's DAX fell 1.6 per cent and Paris' CAC 40 fell 2.1 per cent.
(Additional reporting by Reuters)
