Irish bank and transport shares most exposed to the potential economic fallout from the coronavirus fell sharply for a second successive session, as an Italian official said it may need to call on the EU to offer leeway on budget targets due to the outbreak.
AIB and Bank of Ireland fell by 4%, Ryanair retreated by 3%, and Irish Ferries owner Irish Continental Group also fell, by 2.5%.
However, Dalata Hotel Group shares ended sharply higher on the belief that its hotels in Ireland and Britain would not be affected by any fallout.
But the sharp falls for Irish banks and a further slide for global stock markets showed that investors were not yet assured that the coronavirus strain, called Covid-19, could be contained.
The Ftse-100 in London, the Cac-40 in Paris, and the Dax in Frankfurt all fell by up to 2%.
Gold climbed again, as investors sought haven investments away from tumbling stock markets.
“The spread of the virus to Europe was always likely to be viewed as a much more worrying event than the broader outbreak in China, since the kind of draconian measures available to the Communist Party will be all but impossible to implement in the EU,” said Chris Beauchamp, chief market analyst at online broker IG.
Volatility is not going to disappear immediately, and we should expect things to take a while to settle down.
And leading economist Mohamed El-Erian advised US stock market investors against piling in at an early stage to buy stocks. “I stress, this is different,” he told CNBC’s Squawk Box programme.
In a further sign of stress for the world economy, the price of oil tumbled for a third session as panic over the spreading coronavirus gripped investors. Brent crude fell below $55.50 a barrel on the belief that world economic growth will slow, darkening the outlook for fuel demand.
“The market has woken up to the fact the virus could have a global economic impact,” said Frances Hudson, global thematic strategist at Aberdeen Standard Investments.
“Projections of demand are all on the gloomy side of negative and this a demand-led market,” said the analyst.
The slump in demand and prices comes as the Organisation of Petroleum Exporting Countries and allied producers prepare to meet in Vienna early next month. Saudi Arabian energy minister Prince Abdulaziz bin Salman said the group has not made a decision yet on whether to extend or modify production cuts.
Meanwhile, experts said that a number of central banks around the world will be forced to delay hiking interest rates or will have to take further measures to keep rates at historically low levels.