A strong early showing on Wall Street, where investors continued to sidestep lingering worries about Iraq, helped to lift spirits in European markets, which sagged on war worries earlier in the session.
The ISEQ closed up just under 1 per cent at 3,948, while London's FTSE 100 index, posted its third successive gain, rising 37.1 to 3,729.5, while the 250 index was up 11.4 at 4,075.3 and the SmallCap 4.1 firmer at 1,726.1.
The Techmark 100 was the odd man out of the front-line indices, easing 0.46 to 623.71, burdened by the big slide in Reuters.
Mr Jonathan Loynes, chief UK economist at Capital Economics, said the day's UK retail price inflation up 2.7 per cent on the year was "a touch worse than the consensus forecast, but certainly not a disaster".
"Hopes that RPI would slip back to 2.6 per cent always looked too optimistic given the reports of strong high street spending in the early part of the month," he said.
Sterling fell across the board, hitting a 3½-year low against the euro and multi-week lows against the dollar and yen as concerns about Britain's economic and political prospects continued to increase. Gilts softened as the pound fell.
By its close, the Dow Jones Industrial Average had racked up a rise of 1.67 per cent while the Nasdaq composite was 2.78 per cent higher. European markets overcame the early weakness to extend their rally from last Thursday's six-year low into a third consecutive day.
In early evening trade, the FTSE Eurotop 300 index was almost 1 per cent higher.
However, European industrial production data provided an unwelcome reminder of worrying economic fundamentals.
Eurostat, the European statistics office, said industrial production dropped 1.5 per cent in December, the worst fall on record.
Mr Ian Harnett at UBS Warburg noted that the negative news flow on Iraq, and poor momentum from the euro, earnings and oil prices had been dominating increasingly attractive valuations in European equities.
"However, these momentum pressures are beginning to moderate as an Iraqi resolution approaches, creating the scope for a short term rally similar to those of October-November," he said. - (Financial Times Service)
