Inward investment to Ireland rose by 10 per cent as the number of investment projects increased to 74 in 2006, according to the latest annual Ernst & Young European Investment Monitor (EIM).

Investment continues to be dominated by the US and UK, the survey found. The US increased its number of investment projects from 41 to 42 while the UK increased its by six to 16.

The level of investment from the US is the highest since the year 2000 and it is at its highest from the UK since 1998.

The key investment sectors continue to be software, financial services and pharmaceuticals.

"Ireland's inward investment growth continues to increase to levels we have not seen since the year 2000, which is mainly driven by our two most important international partners, the US and the UK.

"This growth proves yet again that Ireland is still an attractive place to do business for companies that are looking to extend their global reach," said Sinead Munnelly, partner in Ernst & Young Ireland's transaction advisory service group.

Dublin continues to dominate, accounting for more than half of the Irish inward investment.

The UK has consolidated its position as the most attractive destination for inward investment in Europe, as the number of projects announced in 2006 showed a strong increase of more than 30 per cent from 559 to 686.

The report shows that, overall, Europe continues to improve its amount of inward investment, with projects up by more than 15 per cent from 3,066 in 2005 to 3,531 in 2006, with western European countries being the principal beneficiaries.

Germany, Spain, Switzerland and Italy all recorded major increases.

Investment to France grew modestly in 2006, with its overall percentage share declining.