Expected rate cuts buoys markets

HOPES of more interest rate cuts resulted in Irish stocks surging more than 6% yesterday led by the country’s banks.

The positive mood spread across Europe where gains as high as 9% were recorded.

Anglo Irish Bank, which has lost 80% of its value in the last six months, jumped a massive 50% to €1.70. At one stage yesterday climbing as much as 69%.

Bank of Ireland, the country’s largest bank by assets, gained 22 cents or 16% to €1.58, while Irish Life & Permanent rose 63c or 43% to €2.10. AIB added 18c to €3.35 — up 6%.

In construction, CRH jumped 54c to €15.38. Grafton Group and Kingspan followed suit, gaining 14c and 9c to €2.44 and €4.64 respectively.

Elan continued its recent volatile run, posting a 45c increase to finish at €5.85.

FBD were the big losers slipping 55c to €11.45.

The ISEQ index closed up 159.34 at 2679.37.

The London interbank offered rate, or Libor, that banks charge each other for three-month loans fell five basis points to 3.42%, its 13th successive drop, a sign efforts by governments and central banks to thaw credit markets are paying off.

Head of research at Dolmen Securities, Oliver Gilbarry said he is expecting another cut in ECB interest rates when it meets next Thursday.

China yesterday cut rates for the third time in two months.

Leading European stock indexes yesterday closed up 7%, led by banks and commodities, following a 7.7% rise in Japanese stocks.

London’s FTSE rose a massive 8% while France’s CAC 40 increased 9.2%. but the DAX lost 0.3%, dragged down by Volkswagen.