Dublin's ISEQ index has surged by nearly 5 per cent today on the back of an interest rate cut by the US Federal Reserve last night, which led to a rally across Asian and European markets.
In late afternoon trade the ISEQ was 4.8 per cent higher at 7977.2 . In a broad-based rally across European markets, London's FTSE 100 gained 2.9 per cent, while US markets were also performing well in early trade.
In Dublin banking stocks lead the gains in the early afternoon with Allied Irish Bank up 1.5per cent to a bid price of 17.82, while Bank of Ireland was up 0.78per cent to 12.08. In other stocks RyanAir was up 0.15per cent to 5.07, CRH 0.96per cent to 28.85 and Aer Lingus 0.04 per cent to 2.43.
A trader in London speaking about troubled bank Northern Rock
Irish stockbroker Davy said Allied Irish Banks, Anglo Irish Bank and Irish Life & Permanent were all comfortable with their own recently upgraded earnings outlooks for 2007.
Banks in Ireland have taken a battering on fears that credit market turmoil could puncture house prices and were today rebounding after their heavy losses.
But Northern Rock's share price remained under pressure. After early gains the stock plunged almost 20 per cent on rumours of a cut-pice takeover bid although it recovered some ground later. "There is uncertainty over the future of Northern Rock. There is no clear-cut direction," a trader said. "The big shareholders are dumping their stake. It does clearly illustrate that in the short term there is no immediate takeover possibility."
Wall Street markets continued their rally after the Fed's move last night, which was aimed at easing the crisis in credit and housing markets.
The Dow Jones industrial average was up 0.76 per cent, at 13,843.76. The Standard & Poor's 500 Index was up 1 per cent, at 1,534.98, while the Nasdaq Composite Index rose 0.90 per cent, at 2,675.55.
"The interest rate cut in the US was much expected but it looks like (Wall) Street was pleasantly surprised by the severity of the (0.5 percentage point) cut and that has clearly had an initial impact on us," said Richard Hunter, head of UK equities at Hargreaves Lansdown.
But signs of fallout from credit market turmoil continued to lurk in the background, with investment bank Morgan Stanley's earnings missing analysts' estimates.