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Saudi Foreign Minister Saud al-Faisal attends the foreign ministers of the Arab League  meeting ahead of the Arab Summit in Sharm el-Sheikh, in the South Sinai governorate March 26, 2015.  REUTERS/Amr Abdallah Dalsh

Saudi Foreign Minister Saud al-Faisal attends the foreign ministers of the Arab League meeting ahead of the Arab Summit in Sharm el-Sheikh, in the South Sinai governorate March 26, 2015. REUTERS/Amr Abdallah Dalsh

REUTERS

Saudi Foreign Minister Saud al-Faisal attends the foreign ministers of the Arab League meeting ahead of the Arab Summit in Sharm el-Sheikh, in the South Sinai governorate March 26, 2015. REUTERS/Amr Abdallah Dalsh

European shares posted their biggest two-day slump in almost three months as Saudi Arabia's military was drawn into an escalating crisis in Yemen.

The Stoxx 600 slid 0.9pc to 394.54 at the close of trading, as Saudi Arabia and its allies bombed anti-government rebels in Yemen.

In Dublin the ISEQ index of Irish shares fell 92.69 points, and ended the day just below the 6,000 mark.

Irish Continental Group, Kingspan, Dalata, Bank of Ireland and Ryanair were among the market heavyweights that were weaker on the day.

Aryzta was among the leading decliners. Its shares were 3.65pc lower at €62.05 each but the fall was broad based and across sectors.

On the other side of the board, market debutante Palin was among the risers, up 2.60pc in its second day, trading to €11.05 a share, well over Wednesday's IPO price of €10. Dragon Oil shares were up 1.40pc at €7.976 each, as investors await the result of takeover interest.

Across Europe nervousness around the situation in Yemen was the big story, though shares pared losses of as much as 1.8pc in the final hour of trading.

European markets are now on course for the largest weekly fall this year.

"It's all about the increased tension level in the Middle East from the Saudi airstrikes in Yemen," said Espen Furnes, who helps oversee $85bn at Storebrand Asset Management in Oslo.

"The strong moves in share prices so far this year make us more vulnerable to a smaller correction."

The Stoxx 600 had rallied 18pc this year but fears over the situation in Greece, and now the potential risk to oil supply have damped enthusiasm for shares.

Irish Independent