The cost of borrowing for Ireland has fallen to 6.34% down from 6.47% on Friday.

The development follows the summit of EU leaders which agreed on Friday that the European Stability Mechanism could be used to take equity stakes directly in troubled banks, and is seen as a positive step for Ireland.

The cost of borrowing for Ireland peaked at 15% in July of 2011.

If the interest rate on Irish Government bonds continues to fall it increases Ireland's chances of returning to the markets.

The National Treasury Management Agency is widely expected to attempt to borrow money over a three-month period during July.

A key indicator is the fact that the interest rate for two year Irish Government bonds fell below 5% today.

Sources say this is now at a level at which the NTMA could begin planning a return to the market.

Twelve months ago the cost of borrowing over two years was 23%.