The stock market gained more than 1 per cent yesterday, lifted by a strong performance from financial and pharmaceutical stocks.

Bank of Ireland gained 42 cents, or close to 4 per cent, to €11.60, helped by the resumption of its share buyback. The bank was in the market on Wednesday to buy 1.35 million shares at €11.20 per share.

AIB also moved ahead, adding 25 cents to 13.33 despite the fact that its buyback programme is now believed to be near an end. Dealers said, however, that the share repurchase scheme had mopped up supply of the stock which should lend support to the share price.

Irish Life & Permanent managed a more modest five cent gain to 10.40 as Merrion Stockbrokers advised shareholders to reduce their holding, citing the downturn in the domestic economy, further declines in equity markets, domestic inflationary pressures and margin contraction in its core markets.

Elan was a strong performer, adding 31 cents or nearly 8 per cent to 4.21, after a Swiss study said its Alzheimer's vaccine helped slow the progress of the diesease in some patients. Galen also bounced back, to close 26 cents higher at 7.91 while United Drug added 10 cents to 13.90 on the back of broker upgrades following the recent results.

Food stocks had a mixed day with Kerry losing 65 cents to €12.30 in light volume of around 230,000 shares. By contrast, IAWS gained 13 cents to 7.37 as the market shrugged off concerns about the impact of the outbreak of mad cow disease on its Canadian joint venture.

Among the smaller stocks, Barlo shares lost three cents to €0.22 as the company released better-than-expected full-year results but warned that trading conditions remained tough and it did not expect profit growth this year.