Stocks rose strongly on both sides of the Atlantic and the dollar rallied as a devastating US-led air assault on Baghdad encouraged Wall Street that the war on Iraq might end swiftly.
Rumours that President Saddam Hussein was dead sent investors pouring their cash into stocks, even though Britain's defence chief said he could not confirm a BBC report quoting an official of his government as saying Saddam was likely killed in the first wave of air strikes.
More than €1.4 billion was added to the value of the Irish stock market yesterday as it surged on hopes that the war in Iraq would be a short one.
The ISEQ gained nearly 2.7 per cent to 4,078, breaching the 4,000 level for the first time since February 3rd.
"We are following the charge," one Dublin dealer said. However, he added that volumes in Dublin had been light.
In New York the Dow Jones industrials surged 231.58 points (2.79 per cent) to 8,518.18, the eighth straight consecutive rise for the blue-chip index.
The Nasdaq jumped 19.54 points (1.39 per cent) to 1,422.31.
The market got a noticeable lift around midday after news of the bombing campaign getting under way in Baghdad.
Traders said the massive campaign fuelled hopes of a speedy resolution to the conflict.
"Of course we are not cheering for war, but we are impressed with the news so far," Mr Ralph Acampora of Prudential Securities said.
"The uncertainty that has surrounded us for months is now lessening.
"The government, the military and investors are quite confident we will win this war and it will be over quite quickly," said Mr Michael Woolfolk, currency analyst at Bank of New York.
The rally in stocks has boosted the S&P 500 and Dow into positive territory and up more than 1 per cent on the year, while the Nasdaq is up more than 6 per cent for 2003.
"With the apparent success that allied troops are having in Iraq, the possibility for a substantial market rally exists," said Mr Phil Flynn, vice-president and senior market analyst with Alaron Trading Corporation.
European shares closed at their highest in two months, buoyed by reports of major US-led military successes.
The FTSE Eurotop 300 index of pan-European blue-chips rose 3.41 per cent while the narrower DJ Euro Stoxx 50 index jumped 4.28 per cent.
Mr Peter Oppenheimer at Goldman Sachs was relatively optimistic about the prospects for European equities.
He said the company's valuation analysis suggests markets are still undervalued, although the degree of overshoot is now just 10-15 per cent.
"We recommend a focus on stocks with attractive valuations, strong growth and/or balance sheet strength."
BNP Paribas, meanwhile, said it was increasing its weighting in equities from 55 per cent to 60 per cent and said that a possible reduction in the war risk premium would clear the way for the markets to continue their recent gains.
However, one analyst at a London-based investment bank said that despite the "general hope factor" surrounding the early stages of the invasion of Iraq, there remained plenty of uncertainty about recent economic figures released in the UK and US.
Positive war news helped the dollar rise to a two-month high against the Swiss franc and a one-month peak against the yen.
The US currency was also firm against the euro.
The gold price, which has taken a big slide in recent sessions, slipped around $2 an ounce as investors waited for more decisive news from Iraq.
