Aer Lingus was yet again the topic of the day in the Irish market yesterday as, less than a week after it officially floated on the Iseq, rival low-cost carrier Ryanair made a bid for the group.

The surge in shares in the former State airline helped push the Iseq to yet another record high. Meanwhile, speculation about further consolidation in the commodities sector, with India's Tata Steel saying it was eyeing various takeover opportunities in Europe and an announcement from Viridian that it had received a possible takeover approach from an unidentified suitor, helped push European markets close to levels not seen for years.

In Dublin, dealers said all eyes were on Aer Lingus, which jumped more than 15 per cent to end the day up 39 cent, at €2.90 - above the €2.80 a share offered by Ryanair. As many as 64 million units changed hands in Dublin, with a further 55 million trading in London as dealers reported significant hedge fund interest in the stock following the takeover bid.

Under stock exchange rules Ryanair is unable to buy any shares below the price of its offer and it's believed that some tactical players are seeking to push the share price up in order to force the company to raise its bid.

The news had a different effect on Ryanair's share price, sending it down as low as €8.33 early in the day, only to recover slightly to close down only 3 cent - less than half a per cent - at €8.67.

After the market closed, Ryanair said it had increased its holding in Aer Lingus to 19.2 per cent.

Elsewhere, activity was muted, though Viridian, which trades mainly in London, put in a healthy performance. The shares closed up almost 6 per cent, or 63.50 pence, at £11.49.