Irish Life Investment Managers (ILIM) is "relatively optimistic" about the coming year in financial markets.

The company has predicted that low interest rates and modest economic activity will help to spark global equity growth in the next six to 12 months.

In an investment outlook published yesterday, ILIM head of asset allocation, Mr Eugene Kiernan, says that, while markets this year would not achieve the "irrational exuberance" of 1998 and 1999, returns from stocks would be reasonable.

In addition, they should, in the medium term, beat both bonds and cash.

Irish equities, says Mr Kiernan, will move in line with global trends, with the ISEQ recapturing its 6,400 level within the coming six to nine months.

In the technology sector, Mr Kiernan predicts positive long-term prospects, with probable average growth of between 13 and 15 per cent.

He expects to see further interest rate cuts in both Europe and the US, with the Federal Reserve possibly going as low as 3.5 per cent if this was required to stimulate the economy.

If action on interest rates is combined with tax cuts already introduced by President George W. Bush, the United States economy could see renewed growth within the year, according to Mr Kiernan.

Irish Life Investment Managers predicts US GDP will reach 3 per cent in 2002.

In Europe, Mr Kiernan expects the European Central Bank to cut rates to 4 per cent by the end of 2001, as volatility drops out of price indices.

European economies will move on to a better growth path in the coming year, he says, with euro zone inflation expected to register between 2 and 3 per cent over the next 12 months.