European shares rallied this afternoon as investors read comments from European Central Bank President Jean-Claude Trichet to mean the bank would pause after its widely expected 25 basis points rise in interest rates.
At 2.01pm, the FTSEurofirst 300 index of top European shares was up 0.7 per cent at 1,176.16 points.
The Iseq Index of Irish shares reversed a 1 per cent fall to reach 2.26pm ahead 1.3 per cent on 4,953.
"He is very clearly signalling that he has no intention of tightening again: "starting from here, I have no bias" - you can't get clearer than that," said James Shugg, international economist at Westpac.
"The main reason is Trichet has come out and said from here on he's got absolutely no bias," said a trader.
"Some people were fearful of the tone of what he would say, that interest rates would go higher in the future, but the fact that he's said he's got no bias from here shuts the door on the fact that more interest rates are inevitable."
"You also have the US closed tomorrow ... you're starting to see some of the hedge funds come in and short cover ahead of the weekend," the trader added.