Bloxham Stockbrokers senior analyst, Kevin McConnell said investors were booking some profits from recent gains in advance of an anticipated fall in US interest rates the US Federal Reserve is expected to announce today.
"After four weeks of gains investors are booking some profits in advance of two big events; the Fed decision on interest rates and the US mid-term elections," he said.
Mr McConnnell said activity on the Irish exchange was similar to most other bourses where profit taking was also a main feature of the day's trading.
A bull market on world stock exchanges has pushed up share prices in recent weeks with the value of stocks traded on the Irish Stock Exchange jumping value by more than €10 billion from the 12 month low of €48.4 billion low they hit on October 10 last.
Yesterday morning the ISEQ was valued at €58.7bn following a 4.01% rise on Monday, but well off their 12 month high of €78bn high of January 17 last.
Irish shares traded down 1.79% knocking back €988 million of the massive €2,263 million they picked-up on Monday when the market rose by 4%.
Irish financial stocks bore the brunt of yesterday's profit taking falling back 2.38%, reducing the vale of banks and financial institutions traded on the Irish exchange by €767 million.
AIB Group was down 2.03%, Bank of Ireland down 2.90%, permanent tsb down 2.33% and First Active down 3.43%
In London leading shares made a last-minute dash onto positive ground closing at highs as some encouraging US data buoyed the DJIA and underpinned banks and insurers on the FTSE 100, traders said.
The FTSE 100 closed up 4.6 points at 4146.1, off an early low of 4083.1 at midday.
In Paris share prices closed higher in thin trading overall, pulled off opening lows on a combination of short-covering and continued expectations that the US FOMC will lower interest rates tomorrow in a bid to spur growth, dealers said.
The CAC-40 index finished up 28.72 points at 3,247.39, having fallen as low as 3,175.80 in early trading yesterday.
In Amsterdam share prices closed higher, as heavyweight financials tracked their US peers higher in late afternoon trade, with CMG bucking an otherwise tepid technology sector after announcing a definitive merger agreement with Logica, dealers said.
The AEX index closed up 2.38 points at 354.41, off an intraday high of 357.22, after opening at 349.39.
In late trading Europe's biggest lender Deutsche Bank, which saw its shares soar on news of some asset sales that were seen helping its balance sheet.