Irish stocks maintain advance

IRISH stocks continued their advance yesterday climbing 2.6% as details of the government’s bank guarantee sank in.

The ISEQ index closed up 90.66 points at 3,641.29 as attention turned to the US Senate and the rescue package. The ISEF Index of financial stocks rose 6.3% to 4,382.82.

AIB rose 1.7% and Bank of Ireland jumped 8.8% adding 10c and 35c to €6 and €4.30. Anglo-Irish gained almost another 8% to €4.15. Irish Life and Permanent continued the trend increasing 19% to €5.509.

Merrion Stockbrokers yesterday raised its recommendation on three of the banks covered by the guarantee. It raised Allied Irish to “buy” from “reduce”, Irish Life to “buy” from “hold” and Bank of Ireland to “hold” from “reduce”.

In construction, CRH fell 10c to €14.90 with over 2 million shares traded.

Grafton Group and Kingspan made modest ground adding 7c and 5.2c to €3.30 and €6.452.

Elsewhere, Elan Corporation was 42c better off, while beverage maker C&C shed 13.5c to €1.764.

Across Europe stocks posted their first back-to- back gains in a month as banks jumped on speculation lawmakers will pass a $700bn rescue plan, overshadowing a report showing US manufacturing contracted more than forecast.

British stocks rose for a second day, led by financial shares. The benchmark FTSE 100 index climbed 57.14 or 1.2% to 4,959.59 in London. Barclays, Britain’s third-largest bank climbed 4.4% and UBS gained 6.7%.

Meanwhile, the ECB could cut rates as early as December and follow that with two more cuts early next year, according to National Irish Bank chief economist Dr Ronnie O’Toole.

“The precise timing of rate changes is a tricky question, and in these turbulent times timing is particularly delicate. Depending on developments, a rate cut at the ECB meeting this coming Thursday cannot be ruled out completely, though it remains highly unlikely,” he said.

He added that substantial worsening of the growth outlook together with a more favourable inflation outlook could be further reason for dropping rates.