World stock markets tumbled today as fresh concerns about the banking sector and a US recession drove investors to safe-haven gold and government bonds.
In Dublin the Iseq index of Irish shares was down just under 2 per cent or 116 points at 2pm on 6,299. The main fallers were construction and banking stocks.
Elsewhere emerging markets took a beating as investors dumped risky assets, while the cost of corporate bond insurance rose after last week's weak US confidence data.
The FTSEurofirst 300 index was down 1.7 per cent on the day, while the MSCI main world equity index fell 1.3 per cent to hit a one-week low.
HSBC shares fell more than 1 per cent before turning positive, while the broader bank sector index was down 1.8 per cent on the day in Europe, dragging down broader indices along with technology and insurer shares.
HSBC announced bigger-than-expected bad debts of $17.2 billion due to problems in the US housing market. The global banking sector is expected to suffer a total of $300-400 billion write-downs from the credit crunch, threatening to derail growth in the broader economy.
Also souring sentiment, billionaire investor Warren Buffett told CNBC he was no longer offering to guarantee $800 million of municipal bonds backed by three large US bond insurers.
Uncertainty over the fate of these bond insurers has spooked investors for weeks as potential downgrades of their ratings due to their exposure to US subprime mortgages could set off a wave of forced selling and lead to more losses by banks.
US stock futures slipped half a per cent, indicating a weaker opening on Wall Street after major indexes ended the month in the red for the fourth month in a row.
Agencies