European shares ended sharply lower for a second straight day as investors worried about the fate of a $700 billion financial sector bail-out plan the US is trying to push through Congress.
The Dublin market ended at a new five-and-a-half-year low with big losses in banking shares being partly blamed on the ban of 'short selling' of financial stocks, which was announced last week. Traders said the ban prevents speculators from balancing out investment risks and resulted in far fewer people willing to buy bank shares as a result.
But US markets were slightly higher as the chairman of the Federal Reserve and the Treasury Secretary stressed the urgency of implementing their plan to help the US financial system. The Dow Jones was up 35 points at 11,051 and the Nasdaq was 10 points higher at 2,189.
Dublin's ISEQ index slumped 237 points (6%) to 3,739. Shares in Anglo Irish Bank plunged by 13% to at €4.08, while Bank of Ireland tumbled 13.7% to €4.05. Irish Life & Permanent also lost 5% to €6.06, but AIB gained slightly. Building stocks were also weak, with CRH down €1.39 to €15.50 and Kingspan falling 70 cent to €6.35.
London's FTSE lost 100 points (1.9%) to close at 5,136, with HBOS tumbling almost 14% to 190p. In Paris, the CAC fell 2% to 4,140 while in Frankfurt the Dax shed 0.6% to finish at 6,068.
In Asia earlier this morning, Hong Kong shares dived 3.9%, Sydney shed 1.9% and Shanghai dropped 1.56%, while Japan's markets were closed for a public holiday.
