Buoyed by another strong performance from financial stocks, the Iseq climbed through the psychological 5,000 mark in morning trading. That positive momentum continued throughout the afternoon, with the Dublin market eventually closing more than 3 per cent stronger as it added on 166 points to 5,060.51.
Irish banking stocks, in line with financials globally, benefitted from better than expected results from Bank of America and pushed ahead throughout the day to continue the rally of the past three days.
But given the bloodbath of recent weeks, many traders are remaining cautious about the sustainability of the rally with some still attributing the strong recovery in bank shares to short covering as short sellers are forced to formalise their positions.
“It’s more technically driven than fundamentally so,” said one.
Nevertheless, the banks still put in an impressive performance with Anglo Irish Bank the star player on the day. Its price surge by more than 10 per cent as it added on 56 cents to €5.96. Irish Life & Permanent was also very strong on good volumes and it eventually closed the day up 6.7 per cent at €6.05, a gain of 38 cents. Bank of Ireland added on 37 cents to advance by more than 6 per cent to €5.94. AIB’s gains were more modest as it closed 3 per cent stronger at €8.76.
With most of the volumes were centred on the financials, the rest of the market put in a typical day of summer trading.
However, Ryanair, like most European airlines, was under a bit of pressure as oil hovered close to the €130 a barrel level. It slipped back 11.5 cents, or 3.57 per cent, to €3.11 by the close of business.
There was also a bit of interest in Grafton which gained 30 cents to €3.58, a gain of more than 9 per cent.
European stocks rose for a fourth day, the longest stretch of gains since May, as Bank of America’s better-than-estimated earnings bolstered confidence in financial firms and higher metals prices lifted commodity producers.
Royal Bank of Scotland Group, the UK’s second-largest bank, and UBS, the European bank hardest hit by the subprime contagion, rallied to the highest in at least two weeks. BHP Billiton and Rio Tinto Group led a rebound in mining shares.
National benchmark indices rose in all 18 western European markets except Spain. The UK’s FTSE 100 climbed 0.4 percent. France’s CAC 40 added 0.7 per cent, while Germany’s DAX increased 0.8 per cent.