Dublin report:Dublin failed to escape the gloom as losses in Asian markets saw European equities open lower, writes Dominic Coyle.

The Iseq Overall Index was not helped by a report from UBS downgrading Irish banks, the dominant sector in the Irish market.

However, a late rally driven by more benign US market activity helped ease some of the pain and traders were hoping for a more positive session tomorrow if the US can build on its gains.

Still, the banks all closed in the red. Anglo Irish was down 7.6 per cent before coming back a bit to close 42½ cent or 4.3 per cent off at €9.45.

Other lenders fared little better with AIB ending the day 71 cent or 4.44 per cent weaker on €15.27 while Irish Life & Permanent gave up 49 cent or 4.47 per cent to close at €10.48.

Bank of Ireland was the relative outperformer of the sector though it dipped below the €10 barrier to stand at €9.85, 22 cent or 2.19 per cent softer on the day.

Elsewhere, Ryanair was again out of favour after last week's brief rally and gave up another 16 cent, or 4.09 per cent, to close on €3.75, almost 20 per cent off the level it ended 2007 on. Aer Lingus also lost ground, giving up 5.2 cent, or 2.17 per cent, to end the session on €2.348.

C&C's recent rally came to an abrupt end, closing 14.7 cent, or 3.45 per cent, weaker on €4.12.

Tullow was another company to find itself on the wrong side of a broker note, as Dresdner assessed its prospects in the light of reduced demand for oil in a slowing economy. The stock finished 16 cent weaker on €2.50.

"There are very few safe havens," one trader said. "With just a couple of exceptions, everything based in Ireland was marked down."

CRH was one of the few stocks to gain on the session, closing five cent stronger on €25.65.