MARKETS sank around the globe yesterday while yields in traditionally safe government bonds rose, after US Federal Reserve chairman Ben Bernanke said on Wednesday that the world's biggest economy may phase out fiscal stimulus.
US stock prices fell for the third day in a row while European stocks saw their biggest weekly slide in 13 months. Political instability in Greece and China's worsening cash crunch added to downward sentiment.
Yields on 10-year US treasury notes rose above 2.5pc for the first time since August 2011 as investors fled US debt while rates on German bonds touched a 14-month high.
"Markets in both the UK and US initially opened in positive territory. However, the fall back into the red is a sign that the negative feelings from Wednesday's Fed meeting haven't dispersed just yet," said IG analyst Chris Beauchamp.
Ireland rode the trend, with the ISEQ Overall Index down by 6.45 points or 0.17pc to close at 3884.01. Of the 44 share prices listed, 11 were up while 20 were down and 13 remained static.
Petroceltic saw the biggest losses of the day, down €1.63. INM shed 5.5pc following recent gains while Abbey was down 5.4pc to €8.18. Bank of Ireland dropped 3.3pc to 15c as the Central Bank announced that the number of mortgages in arrears for 90 days or more has risen by 0.4pc to 95,554.
Permanent TSB saw the biggest gains of the day, closing up 15.4pc to 3c. Russian-focused oil and gas explorer Petroneft added 8.3pc to its share price closing at 4c, while Newry-based financial technology firm First Derivatives was up 3.7pc to €7. The company reported a 22.5pc increase in annual sales this week.
Meanwhile, national benchmark indexes fell in 14 of the 16 western European markets open. The UK's FTSE 100 slipped 0.7pc and France's CAC 40 lost 1.1pc, while Germany's DAX tumbled 1.8pc.
Greece's ASE Index slid 6.1pc, its biggest loss since October, as Greek Prime Minister Antonis Samaras lost one of his two coalition partners, the Democratic Left party. The National Bank of Greece fell 11pc to €3.25.
The composite Stoxx 600 Index fell 1.2pc to 280.4. The equity benchmark has retreated 3.7pc this week, its fifth weekly decline and its longest streak of losses in two years.
Danone rallied 2pc to $56.23. JPMorgan Chase raised the stock to overweight from neutral, with analyst Celine Pannuti predicting earnings-per-share growth of 10pc from next year.