Shares in AIB and Bank of Ireland fell sharply in early trading amid growing concerns around US banks.

The global rout in bank stocks was prompted by Silicon Valley Bank, a major banking partner for the US tech sector, being forced to raise fresh capital after losing $1.8bn selling a package of bonds to meet depositor demands for cash.

Bank of Ireland shares fell as much as 5.95pc in early trading, while shares in AIB also dropped by 5.39pc.

Permanent TSB shares also declined by 4,58pc.

Other listed Irish companies saw shares dip on Friday morning. Ryanair shares were down almost 3pc, while Dalata Hotel Group saw shares fall by 2.64pc.

The dramatic sell-off in US bank stocks spilled over into Europe on Friday, as some of the region's biggest banks saw their shares tumble in their largest decline in nine months.

Europe's STOXX banking index fell more than 4pc and was set for its biggest one-day slide since early June, with declines for most major lenders, including HSBC, down 4.5pc, and Deutsche Bank, down 7.9pc.

Shares in Italy's UniCredit and Intesa Sanpaolo also fell sharply.

Neil Wilson, Chief Market Analyst at Markets.com, said that the episode could be the “straw that breaks the camel's back” for banks after worries about ever higher interest rates and a fragile US economy.

SVB stock was still sliding after the bell and has lost about 70pc of its value in 24 hours. Shares of big banks were dragged down with it, with J.P. Morgan Chase & Co losing 5.4pc, Citigroup down 4.1pc and big lenders in Asia and Australia on the slide - albeit to a lesser extent - on Friday morning.

The yen weakened and Japanese government bond yields plunged after the Bank of Japan opted to keep stimulus settings steady at Governor Haruhiko Kuroda's last meeting in charge, as expected.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.7pc to a two-month low, with banks and Hong Kong tech stocks leading losses. Australia's benchmark index S&P/ASX200 lost 2.28pc.

S&P 500 futures were down 0.73pc, following the cash index dropping 1.8pc and falling below its 200-day moving average.

The U.S. dollar edged higher and short-end Treasuries extended sharp overnight gains - driving two-year yields down another 12 basis points to 4.7837pc in Tokyo trading.

Fed funds futures also rallied strongly, pulling the market-implied peak in U.S. rates from above 5.6pc to just below 5.5pc, and pricing about a 50pc chance of a 50 basis point Fed hike this month, down from more than 70pc a day earlier.

"I think there's speculation that there are wider problems within the US banking system, or there's that potential, and that's caused a re-think of Fed policy," said ING economist Rob Carnell in Singapore.

"The thinking is that if what the Fed's doing is causing this distress, then perhaps they won't be doing that much more," he said.

"But it's a big move on the back of what seems to be some fairly woolly speculation...which just shows how antsy the markets are right now, and this has spilled into all the other markets."