Shareholders in the major banking stocks finally were thrown some crumbs of comfort as both AIB and Bank of Ireland rallied strongly despite the increase in rates by the European Central Bank and a weak opening session on the New York market. Bank of Ireland shares rebounded 9 per cent to a close of €6.75 (£5.32) while AIB was 5 per cent higher on €9.17.

But dealers pointed out that AIB shares had risen as high as €9.34 before losing ground were wary that yesterday's recovery might be shortlived or "a dead-cat bounce".

"Nothing fundamentally has changed and the forces that drove the banks to these sort of levels are still there. At best, we may see modest gains followed by renewed selling," said a dealer.

While some dealers were a bit more optimistic, few were willing to state that the banks' dismal run has come to an end.

"I think they have been oversold, but bank shares have no natural buyers right now. The domestic institutions aren't interested and overseas institutions, especially the British, still have this bubble in an Irish economic bubble," said one analyst.

AIB reports its full-year results in two weeks' time and some believe that if the bank can beat the current forecast earnings per share of 86-88 cents, the shares may stage a recovery.