The Government's announcement on Anglo Irish Bank this afternoon met with a positive investor reaction, which helped to stem the losses on the Irish market.
After a bruising session yesterday, Irish banks continued to sell off this morning, with Bank of Ireland coming under particular pressure.
However, the afternoon brought the announcement that Anglo Irish Bank is to be split into two separate entities and the market took this news positively.
One Dublin broker explained that although the ultimate cost of rescuing Anglo remains unknown, today's announcement brought a welcome “sense of finality”.
This lifted banking stocks off their lows, although they were still down on the day. Bank of Ireland saw the most action, with about 42 million shares traded. It closed at 70 cent, down about 3 per cent, having been off almost 7 per cent earlier in the session.
By comparison AIB was overlooked, with just two million shares changing hands on the day. It closed at 75.5 cent, down less than one cent. The relatively low volume of shares traded in the name indicates that institutional investors are making their banking play through Bank of Ireland rather than AIB, one broker suggested.
In the construction sector, CRH once again disappointed. Unlike most of its peers, the cement stock failed to get a lift from speculation that US President Barack Obama is to announce a stimulus plan today to boost the economy.
CRH tumbled 3 per cent, or 41 cent, to €13.04, a surprising underperformance given that the company has a greater exposure to the US than many of its European peers.
Recruitment firm CPL Resources dipped 2 per cent to €2.35 after releasing a mixed set of results.
Across Europe, France's CAC 40 gained 0.9 per cent and the UK's FTSE 100 increased 0.4 per cent. Germany's DAX Index advanced 0.8 per cent.
Additional reporting: Bloomberg