World stocks stormed past highs reached during the 2000 tech bubble yesterday, with the MSCI World Index hitting a record level.

The widely-tracked index, seen as a bellwether for global stock markets, hit 349.28. Its previous high was on March 27th, 2000, when it reached 349.04 before roughly halving in value in a global equity crash.

Equities have been rallying worldwide since early 2003 on the back of low interest rates and booming economies in countries such as the United States, China and India.

The Irish market has proved no exception, hitting an all-time closing high of 8,066 at the end of March.

Although the Iseq index of Irish shares has since fallen back, hit by a weak performance from financial stocks in April , its outperformance over the last three years remains marked.

Davy Stockbrokers notes that the Iseq is up by 86 per cent since 2003, compared to a gain of 69 per cent for the FTSE Eurofirst 300 index, a rise of 49 per cent on the MSCI world index and a 25 per cent gain on the S&P 500.

The broker now has an end-year target of 9,000 for the Iseq, which would leave the Irish market up 22 per cent over the course of this year.

The MSCI index, which dropped back slightly yesterday after hitting the record, is widely watched as a gauge of global stocks. It contains 2,618 stocks in 49 developed and emerging countries.

US equities constitute almost half the weighting of the index, with Japan, Britain, France, Canada and Germany following.

Despite their 45 per cent strength in the index, US stocks have tended to lag others in the post-2003 rebound, and major indexes such as the S&P 500 and Dow Jones Industrial Average remain below their tech-bubble highs.

By contrast, many of the star equity performers over the past few years have been in emerging markets. MSCI's main emerging market index has more than doubled since 2003.

The all-country world index has gained more than 12.5 per cent so far this year, while its emerging market stablemate is up nearly 25 per cent.

Such rises, along with gains in other major indices, have raised some concerns that equities are heading for another fall - especially as interest rates are generally rising worldwide.

The world-driving US economy is expected to slow down this year, and the pace of gains in equities is seen by some as unsustainable over the full year.

But many investors nonetheless expect stocks to continue rising and to outperform bonds.

Michael O'Sullivan, a strategist with State Street Global Markets, drew a distinction between the current rally and the one that led to the tech bubble bursting.

"We are at a strong point in terms of . . . earnings . . . unlike in the tech bubble when you used to have imaginary earnings," he said.

"The kind of sectors doing well are financials and oils, which are big market caps, unlike tech, which was relatively smaller." - (Additional reporting by Reuters)