World stock markets plunged today after a sell-off was sparked by the biggest one-day drop in China's stock market in a decade, amid fears Beijing is planning action to control the speculation that had driven stocks to a record high this year.
Germany's Dax index and France's Cac closed down around 3% and in London the FTSE closed down 2.2%, or down 148 at 6,286 points.
In Dublin the ISEQ closed down 348 points at 9,536 this evening - a 3.5% fall which erased €4.4 billion off the value of Irish shares.
There were big losses in all the heavyweights with CRH down 79 cent at €32.45, AIB down 65 cent at €22.80 and Bank of Ireland down 47 cent at €17.93.
The selling in European and US shares was also exacerbated by US government data showing a 7.8% drop in orders of durable goods.
Fears that share valuations on China's main equity index have become overextended sent Wall Street shares lower and prompted investors to dump the shares of companies that rely heavily on Chinese demand.
US stocks suffered their worst one-day slide in more than eight months with the Dow Jones down 199 points, or 1.58%, at 12,433 and the Nasdaq was down 57 points, or 2.31%, at 2,446, around two hours before the close.
Speaking on RTE radio this evening, business journalist Enda Brogan says the plunge in Chinese stocks was due to institutional investors profit taking ahead of government policy on interest rates and taxation that could rein in the market, and also a possible investigation of the inflow of illegal funds in the stock market.
He says some experts are playing down the fall as an inevitable minor re-adjustment, and that all the fundamentals are still there that indicate a strong Chinese economy, such as 8% GDP.
Kevin McConnell, Head of Research at Bloxham Stockbrokers, says that there is usually two corrections in a market every year, and the ISEQ has gone nine months without slowing down.
Earlier Chinese stocks plunged nearly 9%, erasing about $140 billion of value in their biggest fall for a decade.
The tumble came a day after the main index jumped to an all-time high, bringing its gains for this year to 14%.
