Irish share prices have made further substantial gains, led by the major banking stocks. The banks have benefited from the announcement of corporation tax cuts in the Budget and got a further boost from news of the merger between Union Bank of Switzerland and Swiss Bank.

Dealers reported strong dealing and a high level of liquidity in the banking stocks in particular, with private client interest boosted by the reduction in the capital gains tax rate. One dealer said it was a "golden scenario" with strong buying interest but few sellers in the market.

The ISEQ index of shares gained 1.36 per cent to close at another record high of 4,063.70 . Bank of Ireland rose by 45p to a fresh high of 1050p . AIB firmed 20p to 695p while Irish Permanent added 15p to 735p.

The main industrial stocks were less in demand. CRH slipped 15p to 840p, while Smurfit gained 4p to 203p. However, second-line stocks with exposure to the Irish economy are also starting to gain ground. Green gained 10p to 410p while recruitment company Marlborough International rose 15p to 160p.

Other European markets closed mixed yesterday. In foreign exchange markets, the dollar jumped above 1.79, hitting the highest level against the mark since September 23, but dropped below 130 yen. The dollar's rise above 1.79 marks helped pick Germany's DAX index off session lows in electronic trade. A weaker domestic currency makes that country's goods cheaper abroad and is thus, seen boosting exporters' profits. The electronically-traded Xetra Dax ended below 4,200 but managed to trim gains in the afternoon when the dollar pierced 1.79 marks, traders said. that trade in the US.

In Paris, blue chips ended higher, getting a lift from strength in Elf Aquitaine and Paribas. In London, the FTSE 100 closed lower for the first time in four trading session, weighed by British retail stocks.

Retail shares fell early after the British Retail Consortium said November retail sales rose just 1.1 percent, down from October's 5.0percent jump. November's figures were even lower than the 2.1 percent seen in September, when sales were depressed by Princess Diana's funeral.

But the bright spot remained on financial shares, with Barclays Plc jumping 4.2 percent on continued talk of a bank merger.