The two large Irish banks continue to be in favour with brokers. British-based Merrill Lynch has included Bank of Ireland and AIB among its preferred stocks this month. Despite startling performances by both shares in recent years, the broker continues to recommend them as good buys for investors. Among Ireland's other financial institutions, it is also positive about Anglo Irish Bank, which again carries a buy recommendation, but remains neutral about Irish Permanent.

In the British financial sector, Merrill Lynch prefers Barclays and Lloyds TSB. Other good bets in that market include Abbey National and HSBC Holdings. Among the European banks, the broker cites its favourite stocks as ABN AMRO, BNP, Deutsche Bank, Handelsbanken, Societe Generale and Union Bank of Norway.