The UK market trampolined lifelessly off a dangerous support level yesterday, but dealers remained sceptical about any near term-recovery.
Everything revolves around the US Federal Reserve and the Fed is running out of room to manoeuvre.
Its rate-setting committee meets today and is widely expected to ease monetary policy. If it does so it will be making its seventh cut so far this year and will have lowered from 6 per cent to 3.5 per cent.
However, the market has discounted a reduction so comprehensively that few strategists expect the markets to react with any enthusiasm.
If the cut goes deeper, they might take it as a sign of panic rather than central government assistance.
Consequently, the week started on a weak note, with the FTSE 100 sliding 55 points by mid-morning.
The index fell below 5,300 and was only 24 points above its low point of the year.
One technical analyst said that in the space of four trading days, the protective floor of 5,400 had become a glass ceiling.
Nevertheless, there was relief later on in the morning as the index snapped back up in anticipation of a better day for the Dow Jones Industrial Average.
As the Dow recovered some of Friday's profit warning-related 150-point fall, Footsie held its gains to end a net 15.3 higher at 5,357. Volume however was pitifully low, at just 1.3 billion shares.
Neither was there much encouragement from the latest economic data. The latest figures for M4, the broad measure of money, were in line with expectations, and so were the trade
figures. However, public sector finances were in surplus by £9 billion compared to forecasts of a £6 billion surplus.
In the derivatives markets volume in Footsie futures was slightly more resilent, with the contract on the Footsie expiring next month trading 26,000 lots - but remaining roughly in line with its estimated fair value premium.
One strategist, Ian Scott at Lehman Brothers, said the market was attractive at current levels, particularly relative to long-term interest rates. But the appetite was not really there.
Among the smaller indices, the FTSE 250 rose 3.4 to 6,136.6 and the Techmark 2.54 to 1,496.35.
However, the Small Cap dipped 4.4 to 2,718.8. The FTSE All-Share gained 6.26, to 2,596.87.
