Heavy demand for the major financial and industrial shares drove the Irish market ahead strongly for the third successive day. The ISEQ index has recovered more than 6 per cent this week alone and is now 10 per cent above its 12-month low of late last month.
The ISEQ Index closed 2.2 per cent higher on 4,929.23 after it peaked at 4,954 in earlier trading. Around €1.5 billion (£1.2 billion) was added to the value of the market.
And, while there were some signs of the recovery tailing off in late trading last night, with some of the leading shares coming off their best levels, dealers said there was strong underlying demand for the leading Irish stocks from overseas investors, with a growing dearth of sellers to meet that demand.
"The technical situation has got better and will continue to get better. The supply of stock has dried up," said one dealer.
Analyst Mr Liam Igoe, of Goodbody Stockbrokers, who is the arch-bull of the Irish market with a year-end forecast for the ISEQ of 6,000, said there was a growing realisation that the rate of earnings growth in Ireland continued to be strong.
"We've had the Bank of Ireland figures, we've now had the National Development Plan and we have Eircom figures today," he said, adding that overseas investors are taking the view once again that earnings growth in the Republic was far superior to anywhere else in Europe.
Mr Igoe also said that gloomy forecasts from some London analysts to the effect that the Irish economy was facing a sharp fall because of overheating were losing ground.
"Overseas investors held the key to the market on the way down and also hold the key now that the market's on the way back up. They are the natural buyers, but the Irish institutions - the natural sellers - have stopped selling and the supply of stock is drying up," said Mr Igoe.
NCB's head of equity research, Mr John Reynolds, said one of the main factors driving the market was the end of interest rate uncertainty. He said bond markets had improved after a very poor October and that had boosted the interest rate-sensitive stocks such as the banks.
Although the recent surge has pushed the ISEQ beyond NCB's end-year ISEQ forecast of 4,800, Mr Reynolds has not been drawn into an increase of his forecasts.
