Ireland's bail-out deal failed to ease volatility on the London market today as uncertainty over the rescue and fear of contagion sent stocks lower.
The FTSE 100 Index gained as much as 30 points at one stage after weekend news of the Ireland aid package, but soon slumped into the red as investor concerns failed to budge.
The top flight fell nearly 1% at one stage, with a similar decline on the Cac 40 in France and early-session losses on Wall Street's Dow Jones Industrial Average.
Worries over Ireland continued as few specific details of the bail-out emerged and as the Irish Government was thrown into disarray after the Greens - a junior partner in the ruling coalition - called for a general election.
There was also anxiety that the debt troubles would soon erupt in other embattled eurozone countries, such as Portugal and Spain.
The UK's part-nationalised banks were the hardest-hit stocks.
Royal Bank of Scotland, which is 83%-owned by the taxpayer, dropped 4%. It is seen as the most heavily exposed to Ireland through its Ulster Bank subsidiary, with a reported £54 billion on the line through loans to Irish banks and sovereign debt.
Lloyds, thought to have a £27 billion exposure, also dropped nearly 4% in difficult afternoon trading.
Other banks and financial stocks followed them lower, with Barclays down 1% and HSBC also in negative territory.
The price of oil, which had also been buoyed in initial trading, likewise eased back, dropping back from nearly 83 US dollars a barrel to 81 US dollars as cheer surrounding Ireland faded.
Economists at IHS Global Insight said that while the deal may be "the beginning of the end of Ireland's financial problems", attention was now turning to other indebted European countries.
They said: "The next question will be whether the Irish Government, International Monetary Fund and EU will have done enough to stem contagion, namely the spill-over effects on bond yield borrowing costs for other peripheral Eurozone bond markets, such as Portugal and Spain."
The rescue plans will have to be "convincing, feasible and sufficiently funded" to see Ireland's borrowing rates come down, while the Irish banking sector will have to fully disclose all existing and potential losses, according to IHS experts.Reuse content