In a bullish report, Goodbody Stockbrokers forecasts a 20 per cent rise in the Irish stock market in 2001. The ISEQ index will advance to 7,000 next year, Goodbody says in its report, Strategy 2001, Gael Force.

The forecast rally will be underpinned by a better international earnings growth environment, more supportive monetary policy across the world, continued GNP growth and tax reductions in Ireland and a re-rating of Irish shares which have been trading at substantial discounts, says the broker.

Goodbody expects industrial and technology shares to outperform financial shares next year. Among the shares tipped to perform well are Galen, CRH, Kerry Group, Greencore, Independent News & Media, DCC and Grafton Group. Technology shares tipped to perform well are Iona, Baltimore and SmartForce. Goodbody acts as broker to Galen, Independent, Greencore and Grafton and Iona Technologies.

On the Irish economy, it anticipates above average growth in 2001 but that growth will be slower than in recent years. It expects inflation to moderate, helped by more benign oil prices, relative interest rate stability and the indirect tax changes announced in the Budget. House price inflation will fall to 12 per cent in 2001 from today's 20 per cent rate, it says.

Goodbody expects a slowdown in the US economy from the combined effects of monetary tightening, higher oil prices and negative equity market returns. It expects interest rate reductions next year in the US and in Europe.