Stock markets around the world continued their strong recovery yesterday and the Irish market closed more than 3.3 per cent higher as investors bid aggressively for stock.

But dealers are very cautious about the current rally and some believe that if profit-takers move in the days ahead, the markets could suffer another sharp shock, and that this pattern of recovery and weakness may continue for some time before the market sustains a recovery.

Dealers said that there were few offers to meet the aggressive bidding for stock, reflected in the comparatively small volumes traded in market heavyweights such as AIB, Bank of Ireland and CRH. There was, however, some chunky dealing in Eircom which gained seven cents to €2.47 as Vodafone added another 3.5 per cent. Smurfit also traded in size and the shares gained seven cents to €1.99 on turnover of more than 3.3 million shares.

On overseas markets, Baltimore and Parthus remained in the doldrums in London with Baltimore down 9p on 96p sterling with Parthus down 1 1/2p on 95 1/2p. Elan was in demand on the NYSE as some in the market took the view that it could be the next takeover target in the pharma sector following Johnson & Johnson's agreed bid for Alza. Ivernia rebounded 25 per cent in Toronto, adding nine cents to Can$0.44 - but that big jump was the result of just 1,000 shares trading.