Markets fear recovery may be on the wane
Investors fretted that economic recovery might be slipping from the grasp of the world's industrialised nations, with commodity stocks suffering as they shed holdings in favour of what are perceived to be safer havens.
Confidence was also knocked as ratings agency Moody's said the UK could lose its gold-plated AAA rating if growth there remained weak and if the government didn't meet budget deficit reduction targets.
That came as rival agency Fitch said the United States wouldn't be able to retain its AAA sovereign rating if it even suffered a "technical" default on debt due to be repaid in August. However, Fitch added that it believed American politicians will successfully raise the maximum level of permissible US debt and thereby avoid default.
The ongoing European debt crisis also continued to put pressure on markets. All of the major European indices notched up losses, including the ISEQ Overall Index, which shed 29.65 points, or just over 1pc, to finish the session at 2,895.10.
The biggest gainer of the day was travel software firm Datalex. The stock market minnow gained 9.7pc to close at 34c. There have been persistent rumours that the company, which currently has a market capitalisation of €24.3m, could become the subject of a takeover bid. Investment group Pageant Holdings recently boosted its stake in the business, while financier Dermot Desmond also owns nearly 29pc of the company, having been an investor in it since 2003.
Irish Life and Permanent lost 9.5pc, just under 1c, to close at 8.6c, valuing the company at just €23.4m.
Kenmare Resources, which has an ilmenite mine in Mozambique, declined 5.6pc, or 3 cent, to exit the session at 50c. It fell as major commodity players were also stung in yesterday's trading.
National benchmark indices declined in all but one of the western European markets yesterday. Germany's DAX lost 0.6pc, while the UK's FTSE-100 retreated 1pc and France's CAC-40 slid 0.9pc.
The Stoxx Europe 600 Index fell 1.1pc to 269.01. Europe's benchmark measure has fallen 7.6pc since this year's high on February 17.
"It looks like this correction will continue for some time until we have better macro news out of the US and more certainty on Europe's debt problems," said Matthias Fankhauser, a fund manager at Clariden Leu in Zurich.
US Federal Reserve chairman Ben Bernanke gave no hint that a new round of stimulus will be introduced to boost economic recovery.