The comment from US Federal Reserve chairman Mr Alan Greenspan that the risk profile of the markets has shifted dramatically since the Russian crisis was partly solved reflected the view of most in international equity markets this week.

The apparent easing of tension in the Far East, Russia and Latin America has suddenly had investors plunging headlong back into the equities they were trying to dump a couple of months ago. The only question now is whether the markets are operating under a false sense of security or whether the recovery, which has seen the Dow move within a couple of hundred points of its high, is sustainable.

In London, the FTSE is also heading back towards its July all-time high on the expectation that a steady decrease in interest rates in Britain and Europe is in the pipeline, although Bundesbank council member Mr Klaus-Dieter Kuehbacher was dismissive of talk of a cut in rates by the Bundesbank by the end of the year or by the European Central Bank (ECB) early in the new year. But a good portion of this week's gains was based on a view that the ECB will cut its core rate of 3.3 per cent to 3 per cent in the new year.

Needless to say, banking stocks were the main beneficiaries of the interest rate speculation, but the Irish banks still under-performed the midweek surge in London. The view in Dublin is that the two big Irish banks - with their exposure to the booming domestic economy - have more ground to gain.

Elsewhere in the financials, a sudden midweek flurry in Irish Life shares had the market buzzing with speculation that the merger with Irish Permanent was virtually a done deal. Not quite. It seems that it will be mid-December before the two companies will have a firm proposal ready and this week's heavy dealing in Irish Life was largely the clearing-out of a line of 500,000 shares which had been overhanging the share price for a few days.

If the markets do continue their impressive recovery from the September-October lows, it seems likely that one early-1999 event will be the flotation Cantrell & Cochrane by Allied Domecq. The fall in share prices had thinking at Allied Domecq drifting towards a sale of the Irish drinks group to an international venture capital group. Now with markets not far off their highs of earlier this year, it seems that flotation of C&C is very much back in the frame.