IRISH shares stayed down yesterday, with traders looking nervously to Greece and Brussels as EU and IMF officials fought desperately to work out terms of a new bailout for the troubled country.
By the close of trading, the ISEQ Overall Index had dropped 0.81pc, or 23.33 points, to 2,864.89.
"All eyes are on the Greek situation and until that is resolved there will be little appetite for risk in the market. The euro crisis combined with mixed economic data from the US has left traders apprehensive," said one market professional.
The cost of insuring against default on Greek, Irish and Portuguese government debt surged to record highs, driving a gauge of sovereign bond risk to an all-time high. Credit-default swaps on Greece soared 129bps to 1,899, Ireland rose 50 to 816 and Portugal climbed 40 to 837. The yield on two-year Greek bills passed 30pc.
Aer Lingus was one of the biggest losers, falling nearly 8pc before recovering to post a 6.05pc loss, closing at 71c.
The banks all fell a day after Finance Minister Michael Noonan said the Government hoped to impose losses on unsecured senior debt of Anglo Irish Bank and Irish Nationwide. AIB fell 6.25pc, Bank of Ireland dropped 3.91pc and Irish Life & Permanent lost 3.08pc.
It was a day when few stocks posted a gain of note. Independent News & Media added 1.77pc to close at 57c, while CRH gained 1.16pc to reach €14.34 after housing starts in the US increased more than forecast in May and fewer Americans than predicted filed applications for unemployment benefits last week.
The losses in Ireland reflected the wider malaise across Europe, with European stocks falling to a three-month low.
National benchmark indices fell in all of the 18 western European markets. Germany's DAX Index slipped 0.1pc, the UK's FTSE 100 Index lost 0.8pc and France's CAC 40 Index retreated 0.4pc. The Stoxx Europe 600 slumped 0.5pc.
"The situation is terrible at the moment because there are so many stories about the debt crisis and nobody knows what the solution is," said Markus Wallner, a senior equity strategist at Commerzbank in Frankfurt. "The equity market will only turn around when we finally agree on a solution. Economic data showing no sign that the US is in recovery mode are not helping either."
In London, Anglo American declined 2.3pc and Lonmin sank 3.4pc. Copper, lead, nickel and tin dropped on the London Metal Exchange. BP retreated 1.8pc and Royal Dutch Shell sank 1.2pc.
Glencore dropped 2.4pc for its third day of losses. The largest listed commodity trader had its price estimate cut at Deutsche Bank.