Heavy demand for financial shares - largely driven by the domestic economic story - sent Irish financial shares to new highs on the Dublin market with heavy trading in the leading shares in both Dublin and London.

Settlement Day: April 5th By Brendan McGrath, Markets Editor

And just to show that the market has short memories, AIB, which jumped 25 cents to a new 2002 high of €14.35, is now trading 5 per cent higher than it was before the $691 million Allfirst loses were revealed. And the stock has now recovered 26 per cent from the €11.35 it reached the day those losses were revealed.

The heaviest trading, however, was in the financial stock with the greatest exposure to the domestic market, Bank of Ireland. Bank shares traded as high as €12.90 before closing 24 cents higher on €12.65 with 1.8 million shares trading in Dublin and another 2.4 million in London.

Other financials also notched up gains with Anglo Irish six cents higher on €5.45 while First Active gained 15 cents to €4.30. Irish Life & Permanent was the only financial to miss out yesterday and eased three cents to €14.42. IFG, which reports results today, was unchanged on €2.90.

Smurfit was the most active industrial stock and regained nine cents to €2.72 on renewed speculation that it will sell its 30 per cent stake in Smurfit Stone. Dealers, however, dismissed speculation that Smurfit might be eyeing British packaging group David S. Smith which is currently worth about €800 million.

Greencore lost four cents to €3.16 but it has emerged that Fidelity has been an active buyer of the stock in the past six weeks, buying about 1.8 million shares to take its stake to 7.2 per cent. Grafton jumped 30 cents to a new high of €4.20 while Viridian was one cent easier on €7.45 as Fidelity disclosed that it had bought 1.05 million shares to take its stake in the power utility to 8.65 million shares or 6.55 per cent.