The Iseq index of Irish shares continued to trade up this afternoon, driven by strength in bank shares following yesterday's announcement on the proposed pricing for loans taken on by the National Asset Management Agency (Nama).
The Dublin market was up 68.49 points to 3,432.97 by 1.32pm, as both AIB and Bank of Ireland made considerable gains in early trade.
By 1.42pm, AIB had gained 23.1 per cent and was trading at €3.24. Throughout the morning, the stock hit a high of €3.42 before slipping to €3.00 by 9.18am.
Brokers said there were lots of buyers on the market for the shares. "AIB is outperforming any of the other banks at the moment. I think the risk-reward was greater," said one trader.
Bank of Ireland, meanwhile, gained 9.8 per cent to €3.15 on large volumes. The bank stock had hit a high of €3.45 during the session but gave up some of its gains during trading, moving as low as €3.04 throughout the morningm session.
The financial institution published a statement today saying it estimated the discount it would suffer on loans transferred to Nama would be less than the broad 30 per cent figure mentioned in the Dáil yesterday.
"There have been no surprises in what was said yesterday, and banks have reacted well as a result," on Dublin trader commented.
Irish Life and Permanent, which is not participating in Nama, slipped 4.5 per cent. Traders said the shares had a good run of interest this week and was now suffering from a lack of buyers.
Earlier strength in Smurfit Kappa shares diminished somewhat by early afternoon, as the share price slipped 0.3 per cent to €5.83. Data from the US market showed containerboard inventories in August were at their lowest level in 15 years, despite declines in box shipments and mill operating rates.
"While the box shipment data were disappointing in light of improving economic conditions, the discipline shown by the industry in terms of inventory management is impressive and will help to support pricing," stockbroker Davy wrote in a note.
"The European industry is so far showing similar discipline in managing inventory levels. If this can be maintained, there is no reason why profitability cannot be restored to the containerboard sector which will have obvious positive consequences for corrugated prices."
Aer Lingus also shed earlier gains, losing 0.6 per cent to 73 cent. Chief executive Christoph Mueller was this morning reported as saying that the airline could return to profitability by 2012. He also said the airline had more than a 50-50 chance of survival if economic conditions improved and a "sweeping savings plan" could be implemented quickly.
Mr Mueller also warned workers to brace themselves for job cuts, describing them as more "amputation levels" than "cosmetic surgery".
"As we have speculated previously, it appears the new CEO is tackling this issue head on already only two weeks into the new job," said Goodbody analyst Marina Houghton.
In other stocks, CRH showed slight gains, rising 0.1 per cent to €19.63, while C&C added 4.3 per cent to €3.13. Independent News & Media, meanwhile, rose 10 per cent to 33 cent a share as the stock came back on to people's radars.
