European stocks edged upwards to their highest closing level since early August today, with euro zone banks racing ahead after a report in the Financial Times suggested France and Germany were calling for a relaxation of global bank capital rules in order to prevent a fresh credit crunch.
The five-month high in stocks came as investors responded with cautious optimism to the outcome of a meeting of euro zone finance ministers in Brussels to discuss the restructuring of Greek debt.
The Irish market underperformed the main European indices, with the Iseq achieving a mere four-point rise after cement-maker CRH fell 0.6 per cent to €16.00 on the back of poor forecats for the US non-residential sector. Ryanair, meanwhile, was flat at €3.96.
As financial stocks rallied across Europe as fears about a Greek default receded, the Irish banks joined in the brightened mood, with Bank of Ireland finishing up 5.6 per cent at 11 cent and AIB rising 7.8 per cent to 7 cent.
Dragon Oil climbed 2.2 per cent to €6.08 after it published a trading statement affirming its financial strength on the back of rising oil prices and reiterating its commitment to grow to a production target of 100,000 barrels of oil per day - analysts at Davy called its statement “impressive”.
Among the fallers, builders’ merchants and DIY chain owner Grafton fell 1.5 per cent to €2.65, while Independent News & Media fell 1.3 per cent to 22 cent.
In London, the FTSE 100 benchmark index climbed 0.9 per cent, its highest close since July, with the rise in equity values led by both financial and commodity stocks. Signs that a Greek deal may be around the corner had a positive knock-on effect on other cyclical sectors, spearheaded by integrated oil stocks, as oil prices rose on an EU ban of Iranian crude imports.
In France, the Cac rose 0.5 per cent, while in Germany, the Dax index also gained 0.5 per cent.
US stocks reversed early gains, after the Dow Jones Industrial Average rose above the highest closing level since May, prompting investors to debate whether a three-week rally was warranted.