DUBLIN REPORT: Iseq:3,056.56 (+8.34) Settlement date:June 17th

EUROPEAN MARKETS continued their modest rally yesterday, with a surge of buying and selling activity at the close of trading as a result of re-weightings on the MSCI indices.

Bank of Ireland was the main beneficiary of the re-weightings, as it moved from the MSCI Small Cap Index to the MSCI Standard Index at the close of business.

This prompted a large spike in “technical buying interest” in the stock, as investment funds that track the index bought the banking stock.

AIB and Irish Life & Permanent also climbed, with the latter shaking off the ill effects of a downgrade by ratings agency Standard Poor’s last Friday.

Banking analysts also noted that the disposal of Royal Bank of Scotland branches will provide a litmus test for the appetite for UK bank assets, which is significant for AIB because it plans to sell its UK operation later this year.

Pharmaceutical group Elan saw its share price suffer as a result of the index re-weighting, with the stock declining at the end of trade.

The other main event of the day was the consolidation of shares in Independent News Media, as it sought to evade penny stock status. The group’s proposed one for seven share consolidation became effective, meaning it no longer trades at about the 10-11 cents level but above 80 cents.

A Dublin-based dealer said the move by the company was mainly “optics”, while the resultant change in its share price should not be of too much relevance or concern to investors. Only the number of shares in issue in the media group has changed: its market capitalisation remains the same.

Paper and packaging group Smurfit Kappa performed well as it sought to erode recent pressures. There were buyers in insulation group Kingspan, while food groups Aryzta and Kerry both ended the day in negative territory.