AIB has a very good chance of entering the Dow Jones Euro Stoxx 50 index of leading euro-zone shares next month, Merrion Stockbrokers analyst Séamus Murphy said yesterday.

In a new research note, Mr Murphy said inclusion for AIB in the index would be a significant technical positive for the bank.

The Dow Jones Euro Stoxx 50 has the second-largest global following from funds that track share indices. If AIB were included next month, demand for its shares could grow significantly.

AIB's main competitor for entry into the index is French bank Crédit Agricole. The difference in market capitalisation between the two is just about €100 million, Mr Murphy said.

He believes AIB will need to outperform Crédit Agricole by about 1 per cent between now and the last trading day in May if it is to win the position. AIB's current market capitalisation would rank it among the top euro-zone companies but it would still not have been granted entry to the index on its Tuesday closing price, according to Mr Murphy.

He pointed out that, even if AIB has the highest market capitalisation, it still may not get in because it could cause the cumulative weight of banks in the index to rise too high.

The Dow Jones Euro Stoxx 50 is reshuffled each August, but one new company is expected to gain entry this June. The early inclusion results from the probable merger of Telecom Italia and Italian mobile company TIM.

Shares in AIB rose by 20 cent to €16.60 last night, having climbed by 5 per cent since the end of last month.

Mr Murphy has an end-2005 stock price target on the stock of €16.70.