World stock markets fell sharply today as fears about the US financial system escalated.
The Irish market was one of the worst affected by the fall-out from the emergency sale of US investment bank Bear Stearns.
Dublin's ISEQ index closed down 278 points, or 4.6%, at 5,722. This was its lowest close for more than three years and wiped almost €3 billion off the value of shares.
Financial stocks were worst hit, with shares in Anglo Irish Bank falling by more than 20% at one stage. It was down 16% at €6.88 in late trading.
In London the FTSE closed down 217 points, almost 4%, at 5,414.
In Paris the CAC 40 fell 3.5% while in Frankfurt the Dax lost more than 4%.
US markets were also lower, with the Dow Jones down almost 1% and the Nasdaq off almost 2%.
Bear Stearns
The latest fall in stock markets came in the wake of last night's emergency sale of US investment bank Bear Stearns after its financial position worsened last week.
Any prospect of a sleepy St Patrick's Day trading session on Dublin's stock market was shattered as stockbrokers called staff into work to cope with a massive sell-off.
US President George W Bush insisted the challenging times facing the US economy will be manageable, and he has backed the Federal Reserve's move to ease the financial crisis.
He was speaking after a scheduled meeting with economic advisers, a day after the Federal Reserve announced emergency measures to stem the growing global financial crisis.
The latest falls have been sparked by the emergency sale of US investment bank Bear Stearns, whose financial position deteriorated dramatically last week.
Last night it was sold at a knockdown price to rival JP Morgan Chase.
JP Morgan is paying just $236m for Bear Stearns, which is the fifth largest investment bank in the US.
The bank will pay just $2 for shares which were once worth a hundred times that amount. The shares traded for $30 on Friday.
Bear Stearns was hit by the crisis on world credit markets, which means banks have become more wary of lending to each other. The fear is that this could affect the wider world economy.
The US Federal Reserve last night cut one of its interest rates in an attempt to keep markets working normally.
Adding to the difficulties, oil prices touched a new record of almost $112 a barrel earlier this morning, while the euro hit a new record of $1.59.
Euro
The euro hit new record levels against sterling and the US dollar today as fears about the health of the US economy escalated.
The euro struck a new peak of $1.5905 in Tokyo this morning, before slipping back to $1.5760 in Europe this afternoon.
Meanwhile the euro hit 79.12p against sterling. The weaker sterling is more bad news for Irish exporters, as it makes Irish goods more expensive for UK buyers.
