European shares rebounded today from nine-month lows in the previous session, as investors went bargain hunting following a sharp six-week sell-off, with banks among the top risers.
Analysts suggested this was only a technical rebound and long-term financial problems in the euro zone remained.
The Iseq was up 3.3 per cent to 2868.21 sgortly before 1pm, with bank shares gaining back some of the ground they6 had lost in recent days. AIB was trading 4 per cent up at €1, while Bank of Ireland added 7.2 per cent to trade at 71 cent. Irish Life and Permanent was flat at €1.98.
Building stocks and airline also gained, with CRH up 4.8 per cent to €17.98, while Kingspan gained 3 per cent over the session to €7.01.
Elsewhere in Europe, the STOXX 600 banking index was up 2.2 per cent after falling 3.7 per cent in the previous session. Banco Santander, HSBC and Barclays rose 0.9-4.5 per cent.
Lloyds Banking Group and Royal Bank of Scotland were also given a boost from upgrades by Credit Suisse and gained 5.7 per cent and 4.9 per cent respectively.
"We are technically very oversold so we expect to see a bounce in the market," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.
"But the longer term picture is still quite challenging and problems remain. Italy has just made cuts to its budget which mean the economy will be put under severe pressure for quite some time."
Italy joined Europe's austerity club late yesterday with €24 billion of deficit-reducing cuts that target public workers and local government.
Markets were soothed by news US Treasury Secretary Timothy Geithner flew to Europe to press for united action to tackle a deepening debt crisis that has rekindled fears of a return to recession.
Energy stocks gained as oil edged above $70 a barrel after a report showed a much larger-than-expected decline in US gasoline inventories. BG Group, Royal Dutch Shell and Total rose 0.7-3.3 per cent.
Across Europe, the FTSE 100 index was up 1.7 per cent, Germany's DAX was 1.6 per cent higher and France's CAC 40 rose 2.5 per cent.
US stock index futures also rose.
"We are looking at a bit of a bounce here this morning," said Peter Cardillo, chief market economist at Avalon Partners. "What we're seeing here is bargain hunting coming in. Yesterday's action is a good indication that the correction is nearing its end."
Agencies