Dublin Report: All eyes were on AIB yesterday as the stock gained 1.6 per cent amid bid speculation.

Despite a weak opening by the Dublin market, shares in AIB rose by as much as 2 per cent after a report in the Financial Times linked it with a possible acquisition by Spain's largest bank, Santander.

The shares later gave up some of their ground, however, to close 30 cent, or nearly 1.6 per cent, higher at €19.20.

Even if nothing emerges in relation to Santander, dealers said takeover speculation was likely to help support the stock at current levels.

Aside from AIB, trading was relatively dull as the approach of the Easter holidays dampened activity.

Overall, the Iseq closed broadly unchanged as other banking stocks failed to follow AIB's upward trajectory.

Bank of Ireland closed unchanged at €14.90, while Anglo Irish Bank gave up five cent to €13.07 and Irish Life & Permanent lost 15 cent to €20.05 amid profit-taking after a strong recent run.

Dealers reported continued interest in Greencore, which gained a further four cent to €4.07, as 2.6 million shares changed hands.

But elsewhere in the food sector, Glanbia, which is being sued by Danone over its use of the Essence trade name, lost three cent, or 1.1 per cent, to €2.55.

Shares in Eircom gained ground, closing three cent higher at €2.15 amid hopes that Australian investment group Babcock & Brown may shortly table a bid for the company.

Financial services group IFG, which is due to release annual results on Wednesday, nudged ahead by four cent, or 1.9 per cent, to €2.14.

Despite announcing a bolt-on acquisition worth up to €3.5 million, shares in Horizon were unchanged at €1.06.

The Iseq Exchange Traded Fund (ETF), which tracks the top 20 stocks on the Irish market, closed the day two cent lower at €15.97.