Dublin report:"Complete carnage" was how one Dublin dealer described the Irish market yesterday as the Iseq index of Irish shares significantly underperformed its European peers.

The index fell as much as 3.3 per cent, before recovering some ground to close down 1.7 per cent, a loss of €1.6 billion on the day. The other major European indices all finished the day in positive territory.

Dealers said there was nothing specific to Ireland, although news that AIB had pulled a €1 billion covered bond sale did not help sentiment. They said there was simply an aversion to everything Irish at the moment.

AIB fell as much as 5.1 per cent before recovering some ground to close down 3.2 per cent, or 45 cent, at €13.61. Bank of Ireland too closed off its daily low, at €9.83, after trading as low as €9.59. The loss on the day was equal to 1.5 per cent, or 15 cent.

Irish Life & Permanent was the worst performer among the financials, closing down 4.4 per cent, or 58 cent, at €21.65, while Anglo Irish Bank held up well, falling just 0.2 per cent, or two cent, to €9.15.

Dealers reported decent volumes in all the banks.

Drinks group C&C was a rare gainer, though the climb was minimal given the significant declines seen in the stock lately. The shares ended up 0.7 per cent, or three cent, at €4.18.

CRH was also a climber following a big drop on Monday. Its shares rose 0.6 per cent, or 14 cent, to €23.04.

Elsewhere, homebuilder McInerney was trading down as much as 18 per cent at one point, before clawing back some of the losses to close down 7.5 per cent, or nine cent, at €1.11. Dealers said the company was suffering as a result of the large amount of negative talk about the housing markets in both Britain and Ireland.