Investor: This year is just over two months old and the consensus view among economists is that it is shaping up to be the best year for the global economy since 2000.

The US economy is growing rapidly and no one expects growth to falter in a presidential election year.

Asian economies are also doing very well led by extraordinarily rapid growth in China. In addition, Japan, the old powerhouse of the region, seems to be casting off the shackles of persistent deflation and has surprised economists with its recent resilient growth performance.

Europe remains the laggard this year, with growth expected to be just under 2 per cent, although this is a substantial improvement on last year's sub-par growth. Equity markets over the first two months of 2004 have, by and large, responded positively to the economic environment.

After such strong rises in share prices in the last nine months of 2003, some pause in the market recovery would not have come as a surprise.

Although it is true that the rate of share price appreciation has slowed considerably from 2003, global equity markets have delivered respectable returns in the first two months of the year.

As the table shows, the bellwether S&P 500 index of US stocks is up 3 per cent, although the Japanese stock market managed to do better with a rise of 5.6 per cent.

Interestingly, the technology-led Nasdaq index is only up 1.3 per cent, which seems to support the views of many analysts that technology and communications firms are now fully valued after the sharp bounce of last year.

Despite the slower pace of European economic growth, the Eurotop 300 index rose by a creditable 5.2 per cent over January/February, while the UK's FTSE 100 only managed to eke out a rise of 0.3 per cent.

But sterling has been quietly firming against all currencies on the foreign exchange markets and when the FTSE 100 return is expressed in euro the picture alters dramatically.

The euro return of the FTSE 100 is 5.8 per cent, which slightly outperforms the return from the FTSE Eurotop 300.

The Irish market has underperformed a little so far this year, with a gain of 3.5 per cent. A rejuvenated Elan Corporation provided a strong positive impetus to the index, with its shares more than doubling in the first two months of the year.

The announcement that it was fast-tracking development of its key multiple sclerosis drug Antegren gave the shares a major boost.

Not surprisingly, Elan is far and away the best performing Irish stock so far in 2004.

Poor returns from the heavyweight financial stocks have acted to put a cap on the performance of the ISEQ Overall Index.

A poorly received set of annual financial results from AIB led to a sharp sell-off in the stock with the result that AIB's share price has fallen by 2.5 per cent since end-December.

The share price of AIB's arch rival, Bank of Ireland, has also been lacklustre with a year-to-date decline of 2.7 per cent. The decline in Bank of Ireland's share price has been all the more surprising when one considers that the firm has been actively buying back its own shares.

Since November, Bank of Ireland has spent about €116 million buying back 10.8 million shares, equivalent to 1.1 per cent of total shares in issue.

The worst-performing large capitalisation stock this year is not in the financial sector but is in the transport sector.

The high-flying Ryanair share price fell to earth with a thud in response to the first-ever profit warning from the firm and a somewhat negative outcome to the European Commission's Charleroi investigation.

The end result is a fall of 26 per cent in the Ryanair share price since end-December, leaving it the seventh-largest stock as measured by market capitalisation.

Industrial stocks have generally enjoyed steady if unspectacular gains so far this year.

CRH, the markets bellwether industrial firm, rose by 5.3 per cent, with the mid-cap industrial holding company DCC rising by a strong 10.9 per cent.

Other notable performances include the 18 per cent gain from bookmaker Paddy Power and the 19 per cent gain from food company Glanbia.

This review of the Irish market's constituents highlights just how diverse returns have been within the gentle rising trend experienced by the overall market index during the past two months.

Stock selection will have been key to portfolio performance over the two-month period and, with overall market indices likely to continue to trade in a narrow range, stock selection will remain of paramount importance for all investors.