MARKET REPORT - Iseq: 4,498.10 (+82.07)THE GRIM state of the Irish stock market was underlined by the general feeling of surprise among traders as the exchange notched up a second successive day of gains yesterday.

Following an 8 per cent bounce on Tuesday, a reaction had been expected by many. However, a strong US market overnight provided some impetus for Dublin yesterday after a hesitant opening, and buyers returned to the market in some numbers.

Companies in financial services, construction and airlines were in demand, the latter two in part on the back of a further decline in the price of oil on world markets.

Anglo Irish Bank was the standout performer again yesterday - adding 12 per cent to close on €6.45 for a two-session gain of 27 per cent - but a number of traders believe the stock gains of recent days may be attributable to a technical short squeeze following the Seán Quinn investment in the bank.

Other financials also traded in healthy volumes, with Irish Life & Permanent adding 25 cent, or over 4 per cent, to finish on €6.25. Bank of Ireland recovered from some early weakness to close 1.33 per cent or eight cent stronger on €6.08, while AIB also performed creditably, slipping just four cent to €9 at the close on a day when it went ex-dividend.

Paper group Smurfit Kappa, which has been one of the Irish market's stronger performers in recent times, advanced 24 cent, or 5.67 per cent to €4.47 on the back of moves by the industry to try and push through price increases.

Ryanair closed down 1.3 per cent - just shy of €2.55 - though traders said the group had spent most of the day around the €2.63 level.

As a group, construction firms and housebuilders had a good day while food business Kerry Group added €1.20 or 6.38 per cent to €20.

Settlement date:August 11th