Merger mania sends shares prices higher

The banks benefited from relief as the Brazil crisis seemed to have been mostly contained and their exposure was overestimated, one trader said.

European shares have risen sharply, closing with across-the-board gains largely sparked by a wave of announced and rumoured mergers.

With US markets closed for the Martin Luther King Day holiday, volumes were light, and European stock markets were left to concentrate on their own issues, disregarding wider concerns such as the fate of Brazil's currency.

In Dublin, the overall ISEQ index rose by more than 70 points (1.37 per cent) as the leading financials like AIB shot ahead. Approximately one billion euros was added to the value of the index, with dealers describing the trade as "catch up time".

AIB was up by 63 cents at 1703 euros (£13.41), with Bank of Ireland putting on 15 cents to close at 1860 euros (£14.65). The frenzy of trading in telecommunications stocks did not have any impact in Dublinas there are no major telecommunications stocks to buy, said dealers. Telecommunications stocks across Europe were boosted by the news that Vodafone of the UK is buying US operator for Air Touch.

The strong finish by Wall Street on Friday night gave dealers in Dublin the signal they needed. "As soon as trading began there was a rush of buyers, but later on the volumes reduced somewhat," said a dealer.

On currency markets, Brazil's decision to float the real ended uncertainty over its planned route out of its financial crisis, but did not dispel traders' caution.

"It may give some brief respite, but the fundamental questions are still there," said a dealer in Dublin.

In quiet trading, the dollar gained marginally to around 116.30 yen and $1.1570 per euro, near the upper end of a half-cent trading range and little changed from late Friday's $1.1593/96.

On stock markets, the Dow's 220-point advance last Friday boosted market sentiment as did hopes for further mergers after some high-profile tie-ups across Europe.

Britain's FTSE 100 index ended 3.1 per cent higher, little more than one per cent off its all-time closing high of 6,195 set earlier this month.

Vodafone soared 14.8 per cent on its bid for AirTouch, igniting the telecom sector as a whole and boosting the FTSE 100 by 26 points, while the telecom sector, where other gainers such as Orange, Cable & Wireless and Colt Telecom Group, added a further 42.5 points to the index.

Frankfurt's electronic Xetra DAX index gained 2.07 per cent in quiet trade, recouping some of last week's seven per cent fall on fears over the Brazilian crisis.

The banks benefited from relief as the Brazil crisis seemed to have been mostly contained and their exposure was overestimated, one trader said.