After an early morning battering which saw nearly 1 per cent knocked off the value of Irish shares, the Dublin market rallied in the afternoon in line with key European markets.
The catalyst for the turnaround was a comment by European Central Bank President Jean-Claude Trichet that he has
Despite raising its benchmark lending rate to 4.25 per cent, Trichet's comments that he had bias towards further rate rises eased concerns that the ECB would keep raising interest rates to contain inflation.
Having priced in further rate rises, markets reacted positively and Ireland was no exception.
Despite some selling off near the end of the day, the market still managed to close nearly 1 per cent stronger as it tacked on 42 points to 4,932.56.
The turnaround was led by the two big banks which rallied strongly following Mr Trichet's comments. AIB advanced 17 cents to €9.58, while Bank of Ireland was nearly 3 per cent better off as it added on 15 cents to close at €5.48.
Irish Life & Permanent, however, eased back a little, shedding 1.9 cents to €6.051, with Anglo Irish Bank finishing off nearly half of a per cent at €5.668.
Having traded down 8 per cent at one stage, market heavyweight CRH staged a remarkable comeback to close more than 3.5 per cent up at €15.66 in volatile trading.
DCC also enjoyed a good day, picking up 65 cents to €15. A number of food stocks also did well, with Kerry advancing 13 cents to €17.93 and Greencore tacking on 3 cents to €1.85.
The spike in oil prices to record levels hit Ryanair in early morning trading, but as oil came of its highs, the stock rallied, eventually ending the day 3 cents stronger at €2.54. European stocks rose for the first time in three days, led by banks and insurers, as Mr Trichet's comments eased concerns. Europe's Dow Jones Stoxx 600 Index advanced 0.9 per cent to 283.08 at 4:30 p.m. in London, reversing earlier declines of as much as 1.7 per cent. The UK's FTSE 100 Index briefly fell into a bear market before rebounding.
National benchmark indexes rose today in 12 of the 18 western European markets. The UK's FTSE 100 climbed 1 per cent. France's CAC 40 gained 1.1 per cent, and Germany's DAX advanced 0.9 percent.