Dublin Report: The Dublin market hit new highs yesterday as investors returned in force to buy Irish shares. Most stocks ended the day in better shape although Elan wasn't lifted by the rally. Dealers suggested that the ISEQ could have reached higher if Elan had surged.

Financial stocks were in most demand. The sector's prospects were enhanced by positive broker comment from Morgan Stanley earlier this week which seemed to have underpinned much of yesterday's strength.

Anglo Irish Bank put in a strong performance with the shares gaining almost 2 per cent to close at €19.68, up 38 cent. Some Anglo shares had changed hands at prices as high as €19.70 with dealers pointing out that the stock is virtually trading at €20.

AIB shares ended the session higher, rising by 8 cent to €15.75 in good volumes.

Bank of Ireland shares edged 19 cent higher to €12.70. Irish Life & Permanent managed to catch up with the leaders and the shares added 25 cent to €14.35.

Eircom hit a new high of €2.11, up 6 cent on foot of large volume trading in the stock in Dublin and London.

The second-liners also powered ahead with Paddy Power putting in a particularly strong finish. The stock rose by 45 cent to €12.70, almost 4 per cent better ahead of results later this month.

Independent News & Media added 5 cent to €2.38, with dealers reporting renewed buying interest.

Kingspan closed at €8.02, 7 cent higher while Grafton reached a new high of €10.10, up 20 cent. Fyffes shares benefited from a better outlook for banana prices with the stock rising above €2, to end the day at €2.04, up 2 per cent.

CRH was relatively quiet, although its shares rose 19 cent to €21.44.

Elan moved in the opposite direction, closing at €20.20, down 95 cent with US analysts taking a less optimistic view of its latest announcements.

Ryanair was in negative territory with the shares shedding one cent to €6.49.