IRISH shares fell yesterday after buoyant Chinese growth raised fears that governments across the globe will lift interest rates to calm inflation combined with disappointing company results.
By the close of trading the ISEQ Overall Index was down 2.34pc, or 67.92 points, at 2,825.95.
It was a bad day for the index from the opening bell, which slipped into negative territory from the off, although it did not drop below the 2,850 mark until the last hour when heavy selling sent the market plunging.
China's growth accelerated to 9.8pc in the fourth quarter as industrial production and retail sales picked up, adding pressure on policy makers to keep raising interest rates.
Losses were spread across a wide number of stocks. The airlines had a particularly bad day after EasyJet said its first half losses may double, driving losses amongst Ryanair and Aer Lingus. Ryanair plunged 6.48pc to €3.49 on the back of those results, while Aer Lingus dropped 3.7pc as the ongoing dispute over a new roster caused the cancellation of more flights. The national carrier closed on €1.04.
Mining company Kenmare Resources was the biggest loser on the day, slumping 18.42pc to 31c amid profit taking after yesterday's gains and worries that Chinese action might slow demand.
The number of stocks gaining ground on the ISEQ could be counted on two hands yesterday, as red ink overwhelmed the board. Norkom added 0.24pc as traders continued to look to the agreed takeover by BAE Systems while Worldspreads had a very strong day, jumping 7.58pc to 71c.
The Chinese speculation weighed heavily on markets across Europe. National benchmark indexes retreated in 13 of the 18 western European markets. Germany's DAX dropped 0.8pc and the UK's FTSE 100 sank 1.8pc. France's CAC 40 declined 0.3pc. The Stoxx Europe 600 Index lost 1.2pc.
"Equity markets are being affected by concern of further tightening in China," said Giorgio Mascherone, chief investment officer at Deutsche Bank in Milan. "2011 had an explosive start that justifies some profit taking."
Automakers had the second-biggest drop among 19 industry groups in the Stoxx 600, sliding the most in three weeks. Fiat sank 3.8pc as JPMorgan Chase downgraded Italy's biggest carmaker. Preferred shares of Volkswagen, Europe's largest automaker, lost 4.6pc.
Rio Tinto and Fresnillo dragged basic-resources stocks to the largest industry decline, falling 3.2pc and 5.9pc, respectively, as copper, lead and zinc retreated.
EasyJet tumbled 16pc, the biggest drop since 2004.
Air France-KLM Group, Europe's biggest carrier, retreated 4.2pc while British Airways slid 1.7pc