Irish and European equities had their best day for four weeks as the markets continued to distance themselves from Monday's six-year lows.
The ISEQ closed up 3.6 per cent while the FTSE Eurotop 300 index of European shares was 2.4 per cent higher at the close of the day.
The broad advance was led by beleaguered life assurers which, the markets decided, were overdue a bounce after their latest miserable couple of months.
Wall Street was more circumspect as investors absorbed another mixed bag of corporate results, including the largest annual loss in US corporate history from AOL Time Warner. Gross domestic product data for October to December were in line with expectations, but still below the growth of the previous quarter.
The Dow Jones closed 2 per cent lower at 7,945, while the Nasdaq was down 2.6 per cent at 1,322.11. Weak US stocks smothered yesterday's dollar rally, leaving only modest gains built on the Fed's decision to maintain a balanced view of risks to the US economy, which investors took as a sign of limited stability.
"The dollar's rally stalled out in midday trade because we had a weak US stock market and that's giving the euro a push to the upside," said Mr Mike King, trader at Commerzbank in New York. Signs from Europe that the United States might not have to fight a war with Iraq without widespread support also gave the dollar a little support and the US currency closed at €1.07 in Europe.
Oil prices were steady yesterday after their recent sharp rises, which contributed so much to the slump in equities. But Mr Steve Strongin, commodities analyst at Goldman Sachs, questioned the widespread view that oil prices would retreat later this year, even without a serious disruption to supply or demand. He said the continuing strike in the Venezuelan oil industry was one of the largest shocks in oil market history exceeding the anticipated disruption resulting from a war with Iraq.
"We estimate that a war could drive crude oil prices up by an additional $10-15 [a barrel], or 30-50 per cent," he said. "Although prices might fall on news of a resolution to the Iraq crisis, such a sell-off would be short-lived once the magnitude of the Venezuelan problem became more widely recognised." - (Financial Times Service)
