THE WEEK IN THE MARKETS

A landmark week for the Irish Stock Exchange, with the arrival of Ryanair - on the grey market so far but on a full listing from next Thursday - and the biggest merger in Irish corporate history with the final go ahead by the Waterford board for its link up with Avonmore.

First that merger which has been six years in the making and which could be a precursor to further rationalisations in the Irish dairy sector. It is still by no means certain that the deal will give through, given the presence of a rump of Waterford shareholders bitterly opposed to the merger and also the requirement for 75 per cent votes in favour.

But the view seems to be that given the strong recommendation of the Waterford board and an active campaign to win the hearts and minds of the co op shareholders, this merger - which will create a food giant with sales of £2.5 billion and market worth of over £700 million - has a better than even chance of going ahead.

The implications for the rest of the industry are stark. Given the proposal to maintain the milk price 3p above the industry average for three years after the merger, other dairy groups will come under pressure to make the savings that can support that sort of milk price. Those savings can only come about through rationalisation.

Kerry chief executive Denis Brosnan has repeatedly said that he has no interest in increasing the size of Kerry's Irish milk business, so the pressure to merge and rationalise will be on the likes of Golden Vale and Dairygold as well as the second tier processors like Lakeland and NCF.

The grey market trading in Ryanair shares ahead of next week's formal listing was described as "phenomenal" by dealers and certainly the 62 per cent premium is far higher than in any other flotation this reporter can remember. And on NASDAQ, over eight million ADR's equivalent to 40 million ordinary shares traded.

Even taking account of double counting of the buying and selling sides, these means that around 20 million Ryanair shares worth between £50 million and £60 million traded on NASDAQ alone. The shares slipped back from their 315p high yesterday but, even with profit taking, the view in the market is that the shares are unlikely to slip back below 270p.

Otherwise it was a matter of the Irish market pushing steadily upwards to fresh daily highs before yesterday's slump on Wall Street after Intel's profits warning brought the Irish market back modestly.

Most of the heavy trading was in the two big banks, with heavy demand driving AIB up through the £3.5 billion market capitalisation barrier, joining Bank of Ireland which was the first to make the break through that particular landmark.

Of the industrials, CRH and Smurfit were, as usual, the heaviest traded stocks but there was chunky trading in Greencore now that the battles with the beet growers and the sugar company workers are over.