Wall Street again displayed its virility and leadership yesterday in no uncertain terms. The US buoyancy led to a big surge in European bourses. German shares benefited most with a 3 per cent gain, while France and Italy also recorded substantial gains. With London joining in with a 0.8 per cent rise, the Irish market was not going to be left out. At the end of the day Irish shares were up by more than 1 per cent but one dealer noted that volumes were low. Most investors were waiting to hear what Mr Alan Greenspan, chairman of the US Federal Reserve, was gong to say. But the markets closed ahead of his speech.

"People are reluctant to make big bets ahead of the Greenspan testimony," a dealer said. "However, we've seen a bounce in yesterday's hardest-hit stocks, mainly the banks, and the tone is positive in line with recoveries on Wall Street and in London".

Although Mr Greenspan is playing a strong hand with the US economy still showing healthy growth and little inflationary impact, analysts suggest that markets would be wise to be wary. Last year the Fed chairman sent bond and stock markets plunging by warning of "irrational exuberance" in the financial markets. Among the Irish financials, Allied Irish Banks regained 13p to 581p in a series of deals. Bank of Ireland, which had plunged 19p on Monday, regained 14p to 820p yesterday. Irish Permanent gained 5p at 655p.

CRH was a strong market with a 10p gain to 680p while Crean recovered.

Going against the market trend, Fyffes remained roughly the same at 89p, while Green weakened 5p at 360p. However, Kerry was 25p stronger at 650p, while Smurfit gained 6p to 219p. Waterford Foods, which faces the last meetings on the merger with Avonmore this week, firmed 3p to 168p. Turnover on the official list fell from £1.79 billion in May to £1.72 billion in June, according to figures from the ISE. The market capitalisation, however, rose from £26.7 billion to £28.19 billion. Turnover of Irish gilts also fell, from £11.99 billion to £8.94 billion.

Irish gilts firmed marginally in quiet trade yesterday but continued to underperform the German bunds, dealers said. "We've seen some profit taking and the spread has widened," according to one dealer. Yields against German bunds widened marginally from Friday's close, while dealers waited for Mr Greenspan to make his semi-annual speech on monetary policy and economic conditions.