Market Report: AIB and Elan were the main talking points on the Irish stock market yesterday as the Iseq bounced back from Monday's losses to close 1.4 per cent higher.

Shares in the bank surged by 60 cent, or 3.3 per cent, to €18.60 as it issued an unexpected and notably upbeat trading statement, prompting analysts to upgrade their forecasts.

"It was a very pleasant surprise from AIB and it augurs well for Bank of Ireland," one dealer noted. Shares in the latter rose 19 cent, or 1.3 per cent, to €14.29 while Irish Life & Permanent bounced by 30 cent, or 1.5 per cent, to €20.

But Anglo Irish Bank remained under pressure, giving up a further five cent to €12.65 despite being upgraded to "buy" from "add" by NCB Stockbrokers, which also raised its share price target to €15.30 from €13.50.

Meanwhile, shares in Elan jumped for the second day in a row. In New York, their main market, they were up by 5.7 per cent to $17.70 by the Irish close as more than 20 million shares changed hands. In Dublin, they finished €1.53 cent, or 12 per cent, higher at €13.83.

Dealers struggled to explain the sharp rise with explanations ranging from speculation that the FDA was about to make an early announcement on Tysabri to merger and acquisition activity in the sector.

CRH was among the stocks that failed to recover from Monday's slide, giving up a further five cent to €26.85 despite upgrades from Davy and Morgan Stanley, which have set share price targets of €32 and €31.60 respectively for the stock.

Ryanair benefited from a drop in the price of jet fuel, closing the day 14 cent or 2.1 per cent higher at €6.77.

Paddy Power lost 10 cent to €14.30 despite issuing a solid trading statement at its annual meeting. Dealers put the drop down to profit-taking after a recent strong run.

Glanbia also gave up ground after its annual meeting, closing four cent lower at €2.47.