The cost of borrowing for Ireland has fallen to 6.34% today, 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.

This was seen as a positive step for Ireland. The cost of borrowing for Ireland peaked at 15% in July 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. While such a step would be positive it would still far from a full return to the markets. That would require the NTMA to borrow money over a longer period.

Another 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%.