Global markets had a rocky ride yesterday as European shares fell for the sixth time in seven sessions and US markets zigzagged between negative and positive territory as ongoing concerns about the subprime market sparked yet another sell-off.
The Dublin market was no exception, although its decline of just under 1 per cent was somewhat less than its European peers, meaning that for once, the Iseq was an outperformer.
The momentum again came from across the Atlantic, with a sharp drop in US shares overnight putting a dampener on the opening in Europe.
News yesterday that US bank Bear Stearns had halted redemptions to nervous investors in a third hedge fund after having to wind up two others because of the deterioration in the credit environment added to the negative sentiment and encouraged yet more volatility.
"It's the overnight news from the US which has set the tone for the market all day," said Dresdner Kleinwort strategist Philip Isherwood. "We're really just waiting to see what the actual direction for the US is going to be."
The pan-European FTSE Eurofirst 300 index closed down 1.54 per cent after earlier falling as much as 2.5 per cent, while Britain's FTSE 100 ended the day down 1.72 per cent. In Germany, the Dax fell 1.45 per cent, while France's CAC 40 closed down 1.68 per cent.
At home, the Iseq fared slightly better, closing 0.95 per cent lower, at 8,482.
Still, this equated to as much as €1.1 billion being wiped off the index's value. Yesterday's declines come on the back of gains by most European markets on Tuesday.
Dublin dealers were not alone in being unable to predict an end to the volatility, with analysts saying they do not envisage things settling down until more is known about the extent of the crisis in the US subprime mortgage market - that is, lending to those with poor credit histories. (Additional reporting Reuters)
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