Irish shares rebounded from four-month lows on Friday in line with equities globally, amid speculation UK Labour MP Jo Cox's murder on Thursday may rebuild support for the Remain camp next week's Brexit referendum.

However, the Iseq dipped below the 6,000-point level in late trade, to end the session up 1.6 per cent at 5,991.5.

The yield on Ireland’s 10-year bonds, which rose sharply on Thursday amid heightened concern about the UK’s membership of the EU, eased back by 0.06 percentage points to 0.86 per cent.

"The big sentiment swings, up and down, over the past two weeks has all been about Brexit. It's going to continue into the vote on Thursday," said Aidan Donnelly of Davy's private clients division.

"Still, the market currently believes that the tragic incident yesterday will help the Remain camp," he said, referring to the murder of Ms Cox, a pro-EU politician. Banking stocks led the recovery, having been heavily sold off during the week, in line with European peers as the sector is seen as one of the most affected by a potential Brexit.

Bank of Ireland led Ireland's largest shares higher, soaring 10 per cent to 24.1 cents, while Permanent TSB added 5.7 per cent to €1.96.

Two-month low

Equities globally climbed as the pound, which Mr Donnelly called “the real thermometer” for the market’s view of Brexit, strengthened by 0.9 per cent to $1.4333. It fell to a two-month low versus the dollar on Thursday as the polls have tightened and Bank of England officials reiterated warnings about the risks of Brexit to the UK economy.

"I still think in the last few sessions ahead of the Brexit vote that we are in for a huge amount of volatility, that sterling is still highly vulnerable as are all risky assets," said Jane Foley from Rabobank International in London. "Whilst there has been an appearance of some sort of relief rally . . the vote could still go either way."

(Additional reporting, Bloomberg)