European interest rates are likely to be 0.25 per cent higher by the end of March and up to 1 per cent higher by the end of the year. This prediction was made by chief economist and director of Bank of Ireland Treasury, Mr Jim Power, at an investment seminar jointly held by the Irish Association of Pension Funds and the Society of Investment Analysts in Ireland last week.

Worldwide interest rates are likely to rise, with the exception of Japan, he said. The equity markets should be "buffeted about" by the conflicting forces of strong growth and higher interest rates.

Chairman of Salomon Smith Barney's Equity Strategy committee, Mr John L Manley, agreed with the cautious outlook on the equity markets. "We believe that the current environment of stocks going up in conjunction with rising rates cannot continue indefinitely," he said.