IRISH BANK stocks kept moving into positive territory yesterday, as financial stocks rose almost 7 per cent, buoyed by better-than-expected results at Citi, the world's largest bank, writes Simon Carswell.

Irish Life & Permanent (ILP) climbed 21 per cent to €5.67, its biggest gain in at least 14 years, while Anglo Irish Bank jumped 13.7 per cent to €5.40. The State's two biggest banks did not perform as well - AIB rose 3.6 per cent to €8.50 and Bank of Ireland gained 3.3 per cent to €5.57.

The higher gains at ILP and Anglo were attributed to "short-covering" by investors buying shares to cover bets taken on the banks' stocks declining.

Of the four Irish publicly quoted banks, Anglo and ILP have the highest amount of stock on loan, which could be used by short-sellers to trade on shares falling, according to figures from Brussels-based securities firm, Euroclear.

John Cantwell, analyst at NCB Stockbrokers, said the shares were experiencing "a bear market rally", driven by gains for bank stocks globally. He added that there has also been "an element of short-covering" in recent days.

ILP, of which Denis Casey is chief executive, confirmed that it had refinanced two-thirds of €3 billion in term funding due to mature in the coming months.

A spokesman for the company said: "A lot of short-sellers have been trying to close out their positions in the stock over the last 24- 48 hours and that, combined with other positive news about our term funding, seems to have influenced the positive sentiment."

Financial stocks rose 19 per cent over the five days, recovering some of the ground lost over the last six weeks and outperforming the market overall, which rose 10.8 per cent over the week.

ILP gained the most over the five days, rising 31 per cent. Anglo jumped 22 per cent, while Bank of Ireland climbed 19.7 per cent. AIB rose 15 per cent over the week.