Irish bank shares soar on short-selling ban

It was a historic day on the Irish Stock Exchange today, as the first day of trading following the Financial Regulator’s decision to ban short-selling of the four main financial stocks led to record one-day gains.

Trading was exceptionally heavy, with almost 74 million shares traded, as hedge funds looked to cover their short positions and long only institutions made a return to investing in Irish banks.

In early morning trading, the Iseq roared to a 25 per cent gain, as financial stocks soared, with Anglo Irish Bank and Bank of Ireland stock up by nearly a third by 11.30.

However, later in the day the market settled down somewhat, to close up 383.6 points or 10.2 per cent to 4,136.32.

In a rumour heavy marketplace, Bank of Ireland, which had earlier dispelled reports that Spanish bank Banco Santander was looking to take it over, led the charge. The stock closed up €1.42 or almost 38 per cent to €5.20.

Anglo Irish Bank, which is reported to be in discussions regarding a possible acquisition of Irish Nationwide, followed closely behind, advancing by €1.25 or 28.7 per cent to €5.60.

Irish Life & Permanent was next, increasing by €1.04 or 20 per cent to €6.14, while AIB was the under-performer on the day, closing up €1.01 or 19.4 per cent to €6.23.

Other stocks rose by way of association, with Independent News & Media advancing by 24 cent or 21.2 per cent to €1.37; Grafton Group closing up 36 cent or 9.6 per cent to €4.10 and Ryanair finishing the day up 20 cent or 7.9 per cent to €2.72.

Elan gained 41 cent or 5.7 per cent to rise to €7.64, after Sanford C. Bernstein announced that it didn’t expect sales of the pharmaceutical firm’s drug Tysabri to significantly decline, following the drug’s association with a rare brain disease.

Less favoured on the day was construction firm McInerney, which dropped 2 cent or almost 5 per cent to €0.33. Also down were food firms Glanbia and Total Produce, with Glanbia falling by 8 cent, or 2.1 per cent to €3.67, and Total Produce down by 2 cent or 3.8 per cent to €0.48.

In the US, stocks soared as the Securities and Exchange Commission banned short sales of financial firms, and the US Treasury proposed the removal of troubled assets from banks' balance sheets. Having staged a 4.3 per cent rally the day before, by 11.26 am, the S&P 500 had climbed 40.26 points to 1,246.77, wiping out most of its losses for the week.

In the UK, the FTSE 100 recorded its greatest ever one day gains, soaring by 431.3 points, or 8.8 per cent to 5,311.3, as markets felt the impact of the short-selling ban. Royal Bank of Scotland gained 32 per cent while Barclays advanced by 29 per cent and Lloyds TSB was up by 20 per cent.

In France, the CAC 40 also recorded its greatest rally, as it rose by 9.3 per cent, while in Germany, the gains were not as strong, as the DAX increased by 5.6 per cent.