MOST stock market pundits have adopted the view that 1997 will not be as good a year for the Irish market as last year.

Fears over interest rate rises in the US and Britain and the likelihood of a Labour government in Britain are all factors that have been thrown into an equation which has concluded that the bull market which has driven stock markets around the world (Japan excluded) to all time highs cannot continue.

Despite all this caution, the Irish market outperformed most international markets over the past week and even yesterday's unhelpful non farm payroll figures in the US failed to make any significant dent in Irish share prices.

The demand for the leading stocks which drove the ISEQ over 2,800 from 2,725 at the end of 1996 is still unsatisfied.

Heading the upward charge is Bank of Ireland - now enjoying its new found status as Ireland's largest public company, having knocked AIB off the top market perch in the first week of the year. Last year, analysts in Dublin were suggesting that a 100p differential between the Bank of Ireland and AIB share prices was warranted but that differential has now widened to 170p as (mainly overseas) demand has driven Bank of Ireland ahead.

Bank of Ireland's exposure to a recovering British economy and especially the exposure to the strong recovery in the British housing market through BIM and Bristol & West is probably the main factor behind the demand for Bank of Ireland shares. The pricing of recent building society flotations in Britain also suggests that the £600 million that Bank of Ireland will pay for Bristol & West is a good price.

But Bank of Ireland is not the only beneficiary of the strong demand that has driven the market to an all time high. All of the leaders and better quality second liners are doing well with CRH rapidly moving back up towards to its 1996 all time high of 652p.

And even Smurfit, which has languished within a narrow trading range between 160p and 170p for most of last year, has finally moved ahead into the 180s as investors took the view that most off the bad news afflicting the packaging industry has already priced, into the Smurfit share.

Corporate news during the week was all very positive, with excellent half year results from Jury's, Abbey and Heiton and a highly successful return to the market for the revamped McInerney.

In the Jurys case, exposure to the booming Irish economy and recovering British economy boosted half year profits by almost 40 per cent and triggered some substantial revisions to full year profit figures. The half year results also pushed Jurys to a new high of 292p. Building related stocks like Heiton and Abbey are obvious beneficiaries of the construction boom and neither disappointed the market with their half year results.

McInerney's return to the market as a dedicated housebuilding company was well received and from the placing price of 35p, the shares traded up to 50p with good demand reported. The decision by McInerney management to take up the shares being sold by the Four Seasons Country was also seen as a vote of confidence by management.