Irish market down a further €1.5bn

A further €1.5 billion was wiped off the value of the Irish market yesterday, although dealers remained upbeat about the index's prospects.

"It's definitely not all doom and gloom," said one Dublin trader, adding that he expected to see things recover within a few weeks.

Others were not quite so optimistic, saying that while fundamentally the Irish story remained strong, the momentum at the moment was coming from overseas and so the Irish angle had little impact.

The Iseq Index of Irish shares fell 1.5 per cent yesterday, adding to the 3.5 per cent plunge it took on Tuesday, and pushing the index back to where it was trading at the start of the year.

Elsewhere in Europe, markets also remained in negative territory despite a recovery in the US, where stocks rebounded as dealers took advantage of the cheap prices.

On Tuesday Wall Street's blue chip stocks suffered their biggest daily loss since the 2001 terrorist attacks.

In Europe stocks fell for their second straight day yesterday, with oil majors and mining shares among the biggest losers.

The FTSEurofirst 300 index of leading European shares closed down 1.6 per cent, its lowest close since January 10th, but slightly ahead of its intraday low.

Britain's FTSE 100 slid 1.8 per cent, erasing this year's gains made before Tuesday's slide of 2.3 per cent. In Germany the DAX was down 1.5 per cent, while the CAC-40 in Paris closed down 1.3 per cent.

Stock prices and global indices have climbed to record levels in recent weeks, prompting concerns that shares may have risen too high, too fast.

While Tuesday's declines took everyone by surprise, it was more of a question of timing and actual size of the drop rather than the fact that markets fell.

According to some traders, Dublin's Iseq was particularly ripe for a fall after outperforming its European peers for the last few years and putting in a stellar performance in the early part of this year.

However, one Dublin dealer dismissed the declines as a correction, saying it was more of a temporary pull-back and one that left many Irish stocks very reasonably priced.

(Additional reporting: Reuters)