Optimism pushes up share prices

IRISH shares, spurred by overnight gains in New York, rose yesterday to push the ISEQ up by €1.5 billion this week.

Strong US gains had prompted a bout of optimism, thanks to stronger-than-expected manufacturing data and hopes of an imminent rate cut.

A healthy update on Germany’s economic sentiment followed later yesterday, buoying European markets. The Centre for European Economic Research said its German expectations indicator suggested investors were more optimistic about the outlook for Germany’s economy.

Against this backdrop, Irish shares rose by 1.89% yesterday following a 0.6% rise on Monday and, but for profit taking, the shares could have made a 2.5% gain in just two days.

The rise in share values may also have been halted by a events in the US.

US drug stocks rose, led by Pfizer Inc, after the world’s biggest drug-maker projected 2004 profit and revenue that topped analyst forecasts.

However, AT&T Corp led a decline in the Dow Jones Industrial Average after Merrill Lynch & Co advised clients to sell shares of the biggest US long-distance telephone company.

Pfizer overtook Microsoft Corp as the world’s second-largest company by market value.

British stocks rose as Chancellor of the Exchequer Gordon Brown said the world economy is ready to bounce back from an economic slump as oil prices decline.

Lloyds TSB Group Plc paced gains after the lender said it may sell National Bank of New Zealand Ltd.

In Ireland, like London, financial stocks drove the market ahead with AIB up 1.69% and Bank of Ireland up by 3%.

However, on a day the overall market gained there were a number of losing stocks with Elan, Gresham, Glanbia, Iona, Paddy Power and Waterford among them.

In London, financial stocks were among those to benefit from the improved sentiment, with Lloyds TSB up 20.25p at 476.75p after a positive broker update.

HBOS also rose 13.5p to 805.5p and Barclays added 6.25p to 467.25p.

Only one-time Bank of Ireland target Abbey National bucked the trend in the sector, easing 8p to 512p ahead of an eagerly awaited trading statement today.

European stocks rose for a fifth day in six, paced by car-makers including Renault SA and Volkswagen AG, amid optimism that economic growth in the US may accelerate and lift profits at companies that do business there.

The Dow Jones Stoxx 50 Index added 1% to 2474.94 as of 5pm in London. The Stoxx 600 advanced 1% to its highest since January 7.

Both indexes have surged more than 28% since March as speculation about US growth offset concern that Europe’s economy is stagnating.

Economic reports yesterday on US consumer prices, housing and industrial production helped reinforce investors’ confidence that Europe’s biggest export market is expanding.