There seems to be a growing sense among investors that, after recent declines, shares now offer very good value.

October was the best month for many years for most of the world's stock market indices. In Britain, the rise of 8.5 per cent in the FTSE 100 index was the best one-month gain since September 1997.

While this rise was very welcome, it merely provided some relief to long-suffering equity investors. Despite the October rise, the FTSE 100 is still down by 22.5 per cent so far this year, meaning that 2002 is almost certain to be a third successive year of negative returns for the index.

During the month, the main beneficiaries were the stocks that had been hardest hit in recent months.

One of the worst-hit UK sectors over the summer was insurance.Groups such as Aviva (formerly CGNU), Royal & Sun Alliance and Prudential have all been hit hard due to the falling value of their very large equity portfolios. Therefore, they were major beneficiaries of the October market bounce.

Aviva led gainers with a rise of 37 per cent, closely followed by Prudential, which rose by 35 per cent during the month. Royal & Sun Alliance failed to hold its gains due to its revelation that it was the subject of asbestos-related claims. Overall, 12 of the top 20 FTSE 100 gainers in October were financial stocks.

A similar pattern was reflected in the Irish stock market with the ISEQ recording an equally strong gain during October. Several of the bombed-out technology and pharmaceutical stocks headed the gainers list.

Elan rose by more than 90 per cent in October but this will be of little comfort to most investors in the stock as the shares have still lost 95 per cent of their value during 2002.

Iona Technologies and Trintech also had a good month, although they too are still well down on the year as the share prices of both companies have lost more than 80 per cent of their value this year.

In contrast, the recovery in Conduit's share price in October was enough to bring it into positive territory for the year. This makes it one of the few technology stocks to be ahead in price during 2002. However, shareholders will not be celebrating just yet, given that the shares have still halved in value over the past 12 months.

Just as in Britain, financial stocks are well represented in the Irish list of gainers during October. First Active, Bank of Ireland and Anglo-Irish Bank all rose by more than 10 per cent over the month.

However, what is even more impressive about the October performance of the Irish financials is that they have also been performing much better than their international peers all year.

Despite the weakness in British and European financial stocks, the share prices of the Irish stocks have benefited from the strong Irish economy and minimal exposure to falling equity markets. The upshot is that the share prices of the main Irish-quoted financial stocks are now higher than their respective levels at the beginning of the year.

In the year-to-date, Bank of Ireland and Irish Life & Permanent are up by 7.5 per cent, while AIB's share price has risen by 11 per cent. While these are not large gains in absolute terms, when viewed in the context of the year-to-date decline of 25 per cent in the ISEQ-Overall index they are very impressive returns.

Strong as these performances are, they are put completely in the shade when set against the stellar year-to-date gains of 60 per cent from First Active and 53 per cent from Anglo-Irish Bank.

The first few trading days of November have witnessed further gains in share prices across most markets. Gains have occurred across all sectors of equity markets and most share prices are well above their recent lows.

There seems to be a growing sense amongst investors that the cumulative declines in share prices in recent years mean that shares now offer very good investment value.

With interest rates extremely low throughout the world the dividend yield offered by many companies is proving to be very attractive irrespective of the prospects for capital appreciation.

Only time will tell whether the past month marks the ending of the longest bear market since the second World War or whether it is merely a "bear market rally".

However, what is clear is that the seemingly endless decline in share prices has been decisively interrupted. This will give potential aggressive sellers of equities pause for thought before acting and will raise the confidence levels of those investors who believe that fair value has now been restored to global share prices.