Robust lending data helps financials outdo industrials again

The Irish stock market ended modestly higher as banking stocks in particular attracted good overseas interest despite weakness on international markets and a quarter point rise in British interest rates.

The ISEQ index of Irish shares closed 12.09 points, or 0.33 per cent, higher at 3,717.30 after a dull day for domestic corporate news.

Banking shares again outperformed the leading industrials, buoyed by robust lending data which showed private sector credit growth up 21.7 per cent at the end of September against 19.7 per cent the previous month.

"The general feeling is the financials have recovered better from the mini-crash than the industrials," a dealer said.

He said industrial stocks were generally trading on a high price/ earnings ratio and were also trading toward the top end of the range relative to their peer groups, making progress difficult given the current uncertainty in global markets.

`Stocks like Smurfit and CRH seem to be treading water," the dealer said.

But Bank of Ireland had no such problems and proved the star performer on the day, gaining 13p to 878p on good overseas demand. The market is expecting a good set of half-year results next Thursday, while confirmation of the terms of the bank's offer for New Ireland Holdings may also have lent support to the share price.

During the day, Bank of Ireland confirmed its £23.82 per share offer for New Ireland which values the life assurance company at £273.6 million.

AIB, which firmed 2p to 580p during the day, later fell back to 575p while Irish Life slipped 1p to 349p in a late sterling deal amid talk that AGF-Irish Life Holdings was the seller of 3.5 million shares at 342.5p on Wednesday. Dealers said it was hard to read the implications of the sale with some fearing a technical overhang on the basis that the group, which is controlled by French insurer AGF, would move to sell more of its 14 million shares.

Others dismissed this, saying that it often takes the market a while to digest a large deal.

"If you're going to do a placing, you might as well do a large placing, so if they had wanted to do the lot, they could have done the lot. It doesn't necessarily suggest that they are in the wings, waiting to place the balance," a trader said.

Among the industrials, CRH gained 3p to 793p in a late sterling deal while Smurfit lost 1p to 189p but dealers said volume in the shares was light and interest low.

Greencore was unchanged at 308p, while Kerry gave up Wednesday's gains to drift down 13p to 807p in a sterling trade. Elsewhere in the food sector, Avonmore firmed 1p to 263p on reports of a better offer to the unions on its rationalisation programme.