As the fallout from recent accounting scandals continued to rock world markets, the FTSE 100 index nose-dived by 70bn. A further 170bn was wiped off the value of Europe's leading firms, which closed at a four-year low.
The ISEQ index of Irish shares was down 2.73% at 4,336.9 points, its lowest close since October 1998.
Irish shares have fallen in value by 2.27bn since Monday and have dropped by more than 5bn in the past ten days.
Some of the country's leading companies did not escape the financial bloodbath. Allied Irish Bank fell 24c to 12.91, Bank of Ireland slipped 20c to 11.10 while Irish Life and Permanent was down 33c to 13.72.
Other fallers in the financial index included Anglo Irish, down 20c to 6.20 and First Active off a cent at 4.65. Building materials group CRH dropped 2.4% to 16.10, while paper and packaging firm Smurfit fell nearly 1% to 3.08. No-frills airline Ryanair dipped 3.2% to 6, while Independent News & Media fell 5% to 1.92.
Michael O'Sullivan, pan-European equities strategist for Commerzbank said stock markets were the cheapest they've been in 17 years. "Trying to call a bottom when markets are tumbling has often been described as trying to catch a falling knife, but this is more like trying to catch a falling piano," he said.
Further falls in Wall Street added to negative sentiment, with the Dow Jones industrial average down 87 points and the Nasdaq 11 points lower by the time the Irish market closed.
The deepening crisis of confidence in corporate accounting sent US stocks to five-year lows, entrenching fears the slump could damage the global economy and reducing the likelihood of higher interest rates in the short term.
In Asia, only China was immune to the rout. Tokyo's benchmark Nikkei was down 2.5% and Hong Kong's Hang Seng Index was off 1.6%.
However, some analysts said the latest share collapse was possibly one of the last spasms of the sell-off.
"It's getting close to capitulation. The FTSE might be there at around 4,000 but the market can't keep on losing 3% a day for the rest of the year," said Andrew Hobson, a fund manager at Exeter Asset Management.
"The market's been driven by sheer lack of confidence rather than fundamentals and has been for a good few weeks now. It's beginning to reveal some very good buying opportunities," he said.