IRISH shares rose yesterday, as traders reacted positively to yesterday's Budget and apparent progress on negotiations in the US to avoid the so-called fiscal cliff.
By the close in Dublin the ISEQ Overall Index had added 1.22pc, or 40.33 points, to close at 3,340.32.
The move was the index's biggest percentage gain since November 19 and came a day after Finance Minister Michael Noonan revealed a Budget that was seen as overwhelmingly tough on consumers but contained a host of incentives for businesses, especially in the small business sector.
In percentage terms, Bank of Ireland was the big mover. The lender surged 4.4pc to reach 12pc. A fund controlled by the money manager giant Fidelity upped its holding in the lender to more than 8pc.
CRH jumped 2.3pc to €14.36. The construction materials giant has been the subject of repeated takeover speculation in recent weeks, while it also stands to gain from US lawmakers agreeing a deal to avoid falling over the "fiscal cliff".
Drinks company C&C shook off worries about higher alcohol prices to add 0.75pc to close at €4.05.
Elsewhere, European stocks advanced to an 18-month high.
The Stoxx Europe 600 Index added 0.7pc, while national benchmark indexes rose in 15 of the 18 western European markets. Finland's markets were closed for a national holiday.
The UK's FTSE 100 climbed 0.2pc, France's CAC 40 rose 0.3pc and Germany's DAX advanced 1.1pc.
"Markets are moving on the expectation that however difficult things may be, there will be a US budget deal," said Mike Lenhoff, chief strategist at Brewin Dolphin Securities in London. "It's almost inconceivable at this stage that the Congress will allow the fiscal cliff to happen, especially when we don't really know the severity of the recession," he added.
EADS jumped 8pc after the company changed its ownership structure to allow Germany and France to each hold a 12pc stake. EADS also said it will buy back as much as 15pc of outstanding shares.
Daimler advanced 1.2pc after selling a stake in EADS, valued at €1.66bn. The automaker will sell more of its remaining 7.5pc holding after a lock-up period of 180 days from the end of the sale of the first tranche.
Imagination Technologies climbed 6.4pc after JP Morgan Chase analysts said the company's first-half results will meet or beat analyst expectations.
Barclays rose 1.7pc as JP Morgan included the UK's second-biggest bank among its top picks for European lenders.