Irish shares climbed higher as the banks led the way, but interest-rate jitters overseas pushed European markets into the red after a strong start and forced the Dublin market to close off its highs.
European shares moved ahead in early trade after equities surged across Asia amid hopes that the rebound in the yen would protect the region from a further escalation of financial market turmoil.
Tokyo leapt 4.4 per cent and Hong Kong put on 6.4 per cent while Seoul gained 7 per cent, the Philippine market put on more than six and Thailand and Malaysia added more than 5 per cent. But a Bundesbank report hinting at a possible interest-rate rise dampened market sentiment while stronger-than-expected British retail sales data suggested that official interest rates will rise there again in July.
An uncertain start from the Dow Jones index gave European markets little encouragement while concerns about Asian turmoil persisted as analysts and dealers questioned how long intervention would help support the yen.
"We are devoid of local stories so it's what's happening overseas that is setting the mood," one trader said.
The financial stocks, which were left well bid after Wednesday's rally, were among the best performers yesterday although dealers said their gains were more of a catch-up exercise and did not really reflect market sentiment on the day.
AIB surged to 969p in early trade and eventually closed at 963p, a gain of 23p, while Bank of Ireland firmed by 15p to 1360p and Irish Life added 5p to 620p. But industrial and secondline stocks fared less well and trade generally was described as patchy and light.
CRH lost 7p on the day to 1028p, Smurfit was down 2p to 219p and Greencore was unchanged at 363p. The tone among secondline stocks was also weaker, dealers said.
Household products and personal care group IWP International was one of the very few corporate news items on the Irish market yesterday. The company announced a 14 per cent increase in annual pre-tax profits to £25.6 million, in line with broker forecasts.
Dealers described the results as "a solid set of numbers" but the share price remained unchanged at 450p. However, one analyst said the share price should advance in the short to medium term although he did not expect to upgrade his forecasts for the company.
"What IWP has done is put in place the building blocks for future earnings growth," said Mr Pat O'Sullivan Green, analyst at ABN AMRO.
Jones Group, which announced the sale of Tube Rollers to Duggan Steel Group Limited for £1.1 million, saw its share price rise by 10p to 220p. This is the last of the non-core businesses to be sold as part of its asset disposal programme.
Meanwhile, the National Treasury Management Agency (NTMA) auctioned £150 million of 10-year bonds yesterday. The auction was covered 2.47 times, the agency said.
