GOVERNMENT bonds notched up strong gains on the Dublin market as investors worldwide responded to a set of US producer price figures which were perceived as interest rate friendly.

Although US December producer prices rose by 0.5 per cent, the markets took comfort from the fact that the core Producer Price Index (PPI) rate rose by just 0.1 per cent instead of a forecast 0.2 per cent.

As US treasury bonds rose sharply, so did bond prices around the world and the Irish market followed suit, regaining a good portion of the losses notched up earlier this week. Bond prices rose by between 40p and 55p at most parts of the curve, with the biggest gains in the 10 year area.

Ten year gilts dealt up 50p to a closing yield of 6.68 per cent while five year gilts were 50p higher on a yield of 6.08 per cent. Long gilt prices also rose sharply and the yield on the 2015 benchmark stock was 6.96 per cent at the close.

Despite the strong performance of bond markets and strong early gains on Wall Street, share prices were marginally easier yesterday, bringing at least a temporary halt to the bull run that has pushed the Irish market to successive new highs over the past week.

AIB, which has underperformed other financial stocks this year, was the best performer yesterday with a 5p gain to 400p as Bank of Ireland drifted off 3p to 565p. Other leaders were also weaker with CRH down 2p on 628p while Smurfit was 1p lower on 180 1/2p.

Jurys rose to a new high of 292p before closing up 10p on the day on 290p after excellent half year results which are likely to result in sharp upgrades of full year profits and earnings forecasts.

Fyffes gained 2p to 112p while the new McInerney continued to find support, rising 3p to 50p.