Record 13% drop in Dublin market

Monday, 29 September 2008

Shares in Irish banks plummeted today as a series of US and European bank failures sparked fears that the US's massive bail-out plan may not be enough to deal with the problems in the sector.

The ISEQ index suffered a record one-day fall, ending down 493 points, or 13%, to 3,292. Shares in Anglo Irish Bank were down more than 45% at one stage, while Irish Life & Permanent fell by more than 30%.

Other European shares dropped to a three-and-a-half year closing low. London's FTSE ended down 270 points (5.3%) at 4,819, with Royal Bank of Scotland falling 16.8%. In Paris, the CAC tumbled 5% to 3,953 and in Frankfurt the DAX shed 4.2% to 5,808.

On Wall Street, markets plummted after the US House of Representatives voted against the government's financial bail-out plan. The Dow Jones was 505 points lower at 10,639 just after the vote while the Nasdaq was off 143 at 2,040. In Asia earlier this morning, Tokyo's Nikkei 225 index closed over 1% lower at 11,744.

The falls came after news of a government bail-out of financial giant Fortis by the Belgian, Dutch and Luxembourg governments. The UK authorities also announced that they were nationalising troubled buy-to-let lender Bradford and Bingley, while German bank Hypo Real Estate was granted a multi-billion euro credit line from a consortium of German banks.

Meanwhile, the world's central banks have again joined forces to provide funds to financial markets.

The Federal Reserve said it was increasing its swap lines with other central banks - including the European Central Bank and Bank of England - by a total of $330 billion dollars to bring the amount available to $620 billion.

The move came as part of a coordinated effort by global finance authorities to make credit available in dollars and ease strains in markets amid a freeze in lending among commercial banks.