The Irish Stock Exchange is expected to forge a formal link-up with the French stock market by the middle of next year, an alliance that is aimed at providing a Europe-wide listing and presence for all the financial and industrial companies currently listed on the Irish stock market, not just the leaders.

Stock exchange chief executive, Mr Tom Healy, would not comment on the expected link-up with Paris, but he confirmed that the exchange has been looking at possible link-ups with a variety of European markets, including those in France, Spain and the Scandinavian countries.

The proposed pan-European Top 300 proposed in the alliance between London and Frankfurt would benefit only a very small number of Irish companies with a high market capitalisation. The FTSE Eurotop 300 currently includes only three Irish companies - AIB, Bank of Ireland and CRH - and excludes the likes of Smurfit, Kerry and Irish Life, companies which would undoubtedly hope to be part of a continental European investor's portfolio of stocks.

Market sources believe that is of crucial importance that that the Irish Stock Exchange forges a link-up with a major European market like Paris when EMU becomes a reality. At that time, international investors will be basing their investment decisions on a sectoral basis rather than a national basis. In that situation, it will be important for Irish companies - especially the second-line companies most at risk - to have a prominent presence in a major market if they are to be included in portfolios.