Growing fears in relation to the credit crunch and the continuing rise in inflation have marked a turbulent few days in which Dublin's ISEQ index of Irish shares closed on Tuesday at its lowest level since November 2003. The ISEQ lost 4.6% of its value, wiping €2.5m off the value of shares, as the demise of financial and construction stocks accelerated.

Bank of Ireland dropped 11% to €4.51– down 53% since June of last year – after warning shareholders that it was not making a profits forecast because of the uncertainty facing it this year. The bank blamed its exposure to the UK mortgage market as a possible reason  for the current weak level of its share price. AIB slumped 71c to €8.26 and Anglo Irish fell by 49c to €4.98. Irish Life and Permanent represented the biggest casualty of the day, however, with its stock falling by 12.31% to €4.70.

The plunge comes in the wake of Monday's downgrade in its outlook from global ratings agency Moody's – the second in just over a week – citing concerns about funding and deteriorating profit. Standard and Poor's Ratings Services had already lowered its long-term credit rating on Irish Life and Permanent to 'A' from 'A+'.

Construction stocks also fared badly on the Dublin index with CRH falling by 64c to €15.63. In a trading statement this week, the building materials group said first-half profit fell 10% on a weaker dollar and deteriorating markets in North America and Europe. McInerney, which has lost over 88% in share value over the past 18 months, fell by another 4c to €0.33.

The latest falls came as a monthly survey from Rubicon Investment Consulting revealed that over €15bn has been wiped off the value of the Irish pensions so far this year and they are valued at less than they were at the end of 2005.

On Wednesday Bank stocks recovered some the ground lost in Tuesday's mauling on the stock exchange. The ISEQ index closed up 2.93% to 4,795.84.

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