Rising inflation failed to dampen the spirits of Dublin investors yesterday and the market rose by 1.72 per cent. Trading was cautious, however, as brokers were waiting for guidance on interest rates in the US, where the Federal Reserve was expected to make a statement raising rates after European markets closed.

Elan was the biggest mover on a day which saw continuing doubt in the market about the merits of Anglo Irish Bank's proposed merger with First Active.

Elan gained more than 9 per cent to close at €49 after the pharmaceuticals company won backing from a US court on a patent dispute with US firm Bayer over a treatment for hypertension.

First Active lost another 20 cents to close at €2.10 after a trading statement read to yesterday's a.g.m. failed to impress investors. Anglo Irish suffered from a "fair bit of negative sentiment", as one dealer put it, and the stock traded down before closing unchanged at €2.57.

Of the other financials, Irish Life & Permanent added 20 cents to close at €9.90 on the back of positive sentiment ahead of today's a.g.m. Allied Irish Bank added 17 cents to finish at €11 and Bank of Ireland recovered slightly, adding three cents to close at €7.27.

CRH fell 30 cents to €19.90, despite rising by 30 cents during the day to €20.50. And Smurfit was well-bid, rising by two cents to €2.32. Eircom, despite some interest during the day, finished unchanged at €3.97. One trader said no major news was expected from its annual results next week and the stock is encountering difficulty rising above the psychologically important €4 mark.

Irish tech shares on the Nasdaq exchange in New York rose in early trading. A dealer in Dublin said an interest rate rise in the US might put money back into the sector. By lunchtime, SmartForce was up 4.93 per cent to $45 1/4 (€50), Iona had gained 1.92 per cent to $53 and Trintech had gained 1.05 per cent to 24 1/4.