There were hailstones over the London Stock Exchange yesterday, but the financial weather in the City was more seasonal: showers interspersed with occasional sunny spells. The dampness blew over from the US, where Compaq, the world's largest personal computer maker, warned late on Friday that profits would be hit by poor sales and tough competition.

That sparked off an area of market low pressure throughout the high-performing technology stocks. Over the weekend it deepened and travelled towards the UK. By yesterday morning the winds had hit and London traded down almost 100 points, while the US S&P futures hinted at a fall of at least 120 points when the Dow Jones Industrial Average opened later.

But it had effectively run its course and it looked like the computer maker's profit warning was just a local phenomenon. Although Compaq shares were off another 25 per cent at worst yesterday, they recovered later - as did the markets that were suffering on their behalf.

The Dow was up during London trading and continental bourses ended flat after being sharply down first thing. Bond markets were also solid.