IRISH shares were steady yesterday, as European stocks largely held the line despite the mass downgrade of eurozone sovereign ratings by Standard & Poors on Friday.
Traders had spent a nervous weekend waiting for reaction to the downgrade by S&P after markets closed on Friday. That downgrade, which saw the likes of France and Austria lose their prized AAA rating and a further downgrade of Italy, had promised turmoil on trading floors yesterday. France, however, got away a debt auction at a lower borrowing rate and, with US exchanges closed for Martin Luther King day, the market was able to pause.
The ISEQ Overall Index followed the same trend as the rest of the continent, closing up 0.22pc, or 6.52 points, at 2,935.96.
The index lurched deep into the red at the opening as markets threatened to spiral out of control after heavy losses in Asia overnight but quickly recovered once the results of the French auction became known. For the majority of the session, it traded in a band between 2,920 and 2,930, before pushing higher in the last hour.
Of the major stocks, speciality baker Aryzta was the big mover, climbing 3.4pc to €35.88 after its subsidiary Origin Enterprises said it would rebrand its UK agronomy business.
Bank of Ireland was another mover, rising 2.22pc. Irish Life & Permanent added 3.45pc after appointing a new chief executive.
Those gains however were offset by losses among some big players, with DCC the main loser. The conglomerate slumped 1.36pc, the most in two months, after releasing a profit warning yesterday.
Elsewhere, the strong French auction boosted sentiment to such a degree that European stocks advanced to a three-month high.
National benchmark indices rose in every west European market except Portugal and Spain. France's CAC 40 Index jumped 0.9pc, Germany's DAX Index gained 1.3pc and the UK's FTSE 100 Index increased 0.4pc. The Stoxx Europe 600 climbed 0.8pc.
"Rating downgrades are always a bit of old news and everybody already anticipated the move from S&P, but a positive is that President Sarkozy will have less leverage against Chancellor Merkel, who's getting more room to push her agenda," said Witold Bahrke, a senior strategist at PFA Pension in Copenhagen.
Fiat led a gauge of carmakers to the biggest gain on the Stoxx 600 as Goldman Sachs reiterated its "attractive" view on the industry. Fiat surged7pc and Pirelli climbed 4.9pc as analysts recommended both companies and added Pirelli to their "conviction buy" list.
Cruise operator Carnival tumbled 16pc after its liner capsized off the Italian coast.