A recovery  in Bank of Ireland's battered share price, allied to a better tone in overseas markets, helped the ISEQ index to close higher yesterday. After falling steadily since Monday on news of its mooted link-up with Abbey National, Bank of Ireland shares bounced back to close 37 cents, or 4 per cent, higher yesterday at €9.05.

Dealers said talk that the bank might now be vulnerable to takeover itself, and rumours in particular that Lloyds TSB might take a look at it, had bolstered the share price early on. Others said the value offered by the bank at the €8.50 to €8.70 level had helped support the stock.

AIB did not perform as well, however, losing 15 cents to €11.80 as some investors switched out of the bank to buy Bank of Ireland shares at the lower levels. By contrast, Irish Life & Permanent added 30 cents to €10.70 after company broker Davy suggested investors take another look at the stock at current levels.

Independent News & Media was the most heavily traded stock on the day, with more than 18 million shares changing hands. Dealers said a single institutional buyer, thought to be Bank of Ireland Asset Management, accounted for the bulk of the shares, snapping them up at a price of €1.20. The shares later recovered to close at €1.37, up two cents on the day. Independent News also confirmed it was back in the market to acquire shares, buying 500,000 at €1.20 yesterday on top of 120,000 at prices between €1.32 and €1.35 the day before to take its stake to 1.94 per cent.

Kingspan was another active stock, jumping 20 cents to €1.55 as 3.8 million shares traded.