Leading stocks dominate as market bounces back

Market Report: Investors returned to the Irish market in their droves yesterday, adding over €3.5 billion to the value of shares traded on the Dublin stock exchange.

The Iseq index of Irish shares rose 297.26 points to 7,310.53, a 4.24 per cent gain, making the Dublin market Europe's star performer. London and continental bourses added between 2 per cent and 2.5 per cent yesterday.

Dealers said the day was a welcome relief from the drubbing handed out to the market over the last two weeks. They attributed the recovery to Wednesday's strong rally in New York.

The leading stocks dominated the recovery, particularly AIB, which was the subject of a Deutsche Bank research note saying that the stock had been oversold recently and rating it as a buy. Deutsche increased its target price for AIB to €21.50 from €20.50.

Investors responded by weighing in for 2.7 million shares. By the end of the day it had gained 90 cent to close at €18.50. Dealers said that the Deutsche note was not the only factor in its rise. "It was on the way up any way," one said.

Bank of Ireland followed suit with a similar gain, adding 69 cent to close at €14 after 2.25 million shares were traded. Both banks rose by around 5.2 per cent. Anglo Irish Bank also sprinted ahead, adding 53 cent to close at €11.27 on volumes of 2.3 million shares. Its price increased by a shade under 5 per cent.

Irish Life and Permanent gained 70 cent to close at €17.95 on volumes of 460,000 shares.

Building materials giant, CRH, was one of the day's other big movers, benefiting from positive sentiment towards the construction sector in general. The FTSE construction index was up 3 per cent in London. It added €1.20 to close at €24.50 after close to two million shares were traded.

Pharmaceutical group Elan made one of the biggest leaps, adding 11.7 per cent or €1.35 to end the day at €12.90.