The yawning chasm over Iraq between hawks and doves in the UN Security Council raised the geopolitical temperature and initially left battered equity markets seeking direction yesterday.
But a firmer opening on Wall Street, as investors judged the time right to buy shares that fell to five month lows on Tuesday, also gave a brief lift to the European bourses. The ISEQ closed down 1 per cent at 3,788.93
By midsession, the recovery in the Dow Jones Industrial Average looked less than confident although the blue-chip benchmark was registering a rise of 0.3 per cent. The index closed down 0.6 per cent at 7,523.43
The Dow has now fallen over 34 per cent from its late 1999 peak, just shy of its previous biggest pullback - a 36 per cent tumble over just two months at the height of the 1987 market crash.
The uncertainty also hit the dollar which after an early respite for the beleaguered greenback hit fresh four-year lows against the euro before profit-taking helped the US currency rally once more.
The euro rose to $1.1084 against the dollar in European trading but settled back to $1.103 by midday in New York. It closed at $1.1042.
Mr Ned Riley at State Street Global Advisers looked at the scale of the Dow losses another way yesterday.
He noted that the value of virtually all stocks outstanding was currently at a 25 per cent discount to the value of goods and services produced in the US. But at the market's peak in 1999, equities were 150 per cent above the level of total gross domestic product.
Europe recovered briefly from Tuesday's six year lows. But in early evening trade, the FTSE Eurotop 300 index was extending its slide into a sixth consecutive session and was back at its lowest level since mid-December 1996.
London did rather better than many of its neighbours, with the FTSE 100 index gaining 0.5 per cent to 3,452.7 in volume that picked up to more than 3 billion shares.
Asia made no pretensions of a recovery and in Tokyo, the Nikkei 225 average closed below 8,000 for the first time since January 1983. - (Financial Times Service)
