Dublin Report:Ireland's benchmark index rose for a second day, led by the financial sector, as stocks tracked gains in the rest of Europe and in Asia following a signal from the US Federal Reserve that a run of interest-rate increases in the world's biggest economy may be nearing an end.

The Iseq Overall Index climbed 122.30 points, or 1.7 per cent, to 7,516.28, after the Fed said on Thursday that further rate hikes would depend on the outlook of economic growth and inflation as indicated by data. The overnight lending rate was raised to 5.25 per cent, up from 1 per cent in 2004.

On the Iseq "overall volumes were poor but financials were strong", one dealer said. "With fourth of July coming on Tuesday, there will be a lot of US investors away from the market on Monday, so it will be quiet then too." Anglo Irish Bank led the gains in financial stocks yesterday, rising 55 cent, or 4.7 per cent, to close at €12.20.

Bank of Ireland climbed 29 cent, or 2.1 per cent, to €13.95, while rival Allied Irish Bank rose 27 cent, or 1.5 per cent, to €18.76.

Shares of Irish Life & Permanent advanced 40 cent, or 2.2 per cent, to €18.60.

"People see that Irish financials are cheap, especially Anglo Irish," one trader said.

Shares of Elan also rose after the drug company announced on Thursday that it won European approval for its multiple sclerosis drug Tysabri. Elan and its US partner, Biogen Idec, expect to have stocks available in Ireland next month. The stock climbed 27 cent, or 2.1 per cent, to €13.

The biggest gain posted on the Iseq yesterday belonged to South Wharf, which surged €1.15, or 26 per cent, to €5.50.

The company, formerly known as Ardagh, indicated after the markets closed on Thursday that a long-running dispute with Dublin Port over a 25-acre Docklands site may be resolved.

The two companies agreed to put the land up for sale to a third party for at least €250 million and to abandon litigation.