FAR from lobbing another bombshell into global markets, as most dealers had feared, Mr Alan Greenspan, the chairman of the US Federal Reserve, soothed some previously fevered brows, by stating that there were few signs of inflationary pressures in the US economy.
Those comments, coming from the man who triggered the big sell-off in global market in December when he warned about "irrational exuberance", prompted a sharp turnaround on Wall Street, which in turn led to a strong rally in UK equities.
Dealers in London said his words were interpreted as a signal that US interest rates would be left on hold following the February 4th meeting of the Fed's Open Market Committee which determines US monetary policy.
Wall Street had fallen around 40 points before Mr Greenspan's speech, but quickly reversed that decline to show a 30-points plus gain as London closed.
London's FT-SE 100 index, which earlier had fallen over 26 points on fears about US and UK interest rates, embarked on a strong recovery which eventually saw it close a modest 1.5 points higher at 4,195.5.
The market's initial Greenspan worries were made worse by news that Mr Eddie George, the governor of the Bank of England, had repeated his call for a rise in UK interest rates to cool inflationary pressures.
Speaking in Edinburgh on Monday evening, Mr George said the strength of sterling should not be used as an excuse to delay a rise in interest rates.
The market's initial gloom was only partly offset by a surprisingly weak set of M4 money supply and lending figures and a relatively downbeat Confederation of British Industry survey of industrial trends.
Other leading FT-SE indices also staged good rallies but not to the extent of the 100 index. The 250 finished 10.1 lower at 4,570.1, having been 16.1 weaker not long after Wall Street opened. The SmallCap index ended the session 4.3 down at 2.282.4; at its worst it was 5.6 lower.
Financial shares, which have spearheaded Footsie's drive to new peaks this year, were the main sufferers during the initial sell-off, but managed to recover along with the broad market. Marketmakers maintained, however, that the banks and insurances "looked pretty much worked out for the short term".
The blocking by the Department of Trade and Industry of the joint bid for Mid-Kent Water by French utilities General Utilities and Saur saw the UK company's shares and warrants plunge and caused ripples of unease across the sector.
