The Dublin market closed the day more than 4 per cent stronger, led by a strong rally in a number of headline stocks, particularly banks and construction companies.
Falling oil prices and a strengthening dollar lifted markets throughout Europe and the Iseq was no exception, putting in the best performance among the 18 western European markets as it picked up 182.92 points to 4,695.98.
"The oil price coming off another $1 was the key catalyst for the whole market," said one trader.
Financial stocks put in strong performances, although volumes were light enough across the board.
Irish Life & Permanent was the best performer of the day as its share price surged by more than 9.5 per cent, adding on 59 cent sot €6.79.
Anglo Irish Bank also enjoyed a positive day as it tacked on 47 cents to €6.83. AIB closed the day up 4.47 per cent at €9.231, while rival Bank of Ireland was 25 cents better off as it advanced 4.13 per cent to €6.31.
Among the construction stocks, Grafton saw its share price soar by nearly 10 per cent to €4.35. Building materials group Kingspan was 5 per cent stronger at €7.35, while market heavyweight CRH was up nearly 3.5 per cent to €19.04.
Smurfit Kappa, which this morning reported a doubling in pre-tax profits to €83 million as it delivered second quarter results ahead of market expectations, was another big gainer on the day. The company's statement that full-year guidance for the year would be maintained despite more challenging conditions combined with the robust results found favour with investors and the stock closed the day 8.65 per cent stronger as it notched up 39 cents to €4.90.
Among the losers, Paddy Power gave up a lot of ground as it closed at €16.80, down 3.45 per cent or 60 cents.
Elsewhere, European stocks rose to the highest since June as investors speculated carmakers will benefit from the stronger dollar and oil's drop to a 14-week low buoyed the profit outlook for airlines and retailers.
National benchmark indices climbed in all of the 18 western European markets except Greece. The UK's FTSE 100 added 1 per cent, while France's CAC 40 climbed 0.8 per cent. Germany's DAX rose 0.7 per cent.