The ISEQ has plunged 5.95% to 3,739.45 - down 236 points - as stock markets dipped today as scepticism persisted about a US bail-out plan ahead of Congressional testimony by US Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke.
Shares in the financial sector were in freefall with their losses being blamed on the ban of 'short selling' of financial stocks, which was announced last week.
Traders said the ban prevents speculators from balancing out investment risks and resulted in far fewer people willing to buy bank shares as a result.
Shares in Anglo Irish Bank slumped 12% to €4.13, while Bank of Ireland tumbled 9% to €4.25.
Irish Life & Permanent also lost 9% to stand at €5.83. The AIB bucked the trend with a 17c, almost 3%, increase to stand at €6.07.