Eircom shares continued their modest recovery yesterday, rising 5 1/2 cents on the day to finish at €3.80 1/2 (£3).

One dealer echoed the feeling that the shares had bottomed out, stating that traders seemed happy to buy the stock now that it seemed to have turned around.

However, the 500,000 investors who have held on to their shares since flotation are still looking at a net loss on their investment. While the share came to within two cents of its €3.90 (£3.07) flotation price in early business yesterday, it's still a long way off the high of €5 (£3.94) reached on July 22nd when post-float euphoria was at its height.

For all that, investors will be relieved that the share may have turned the corner, finishing yesterday's session 13.5 cents ahead of last Friday's post-flotation low of €3.67 (£2.89).

However, traders warn that the immediate gains may be limited. The entire European telecoms sector is experiencing a weak period and there is little on the sectoral horizon to enhance the shares.

Eircom's immediate fortunes will probably depend on when Irish institutional investors return to the stock. While some analysts have predicted a sharp rise once the share makes its definitive turnaround, weakness on the London and New York stock exchanges yesterday may yet halt the recovery.

The next marker for investors is the publication of Eircom's interim results in mid-November. The company will enter a closed period before this and will not be permitted to comment on its performance.