MARKET REPORT - LONDON

THE dark clouds hanging over Wall Street for much of the past week were again casting their spell on European markets, where London reacted predictably to the latest slide in the Dow Jones Industrial Average.

London stayed firmly on its recent roller-coaster ride, opening easier and then moving sharply lower as the big market-makers chopped their quotes to avoid any potential big selling orders.

However, gilts moved only narrowly at the start of trading in the wake of a fairly resolute showing by US bonds.

The FTSE 100 index kicked off the day over 21 points off and then went into free-fall, hitting a session low of 3,933.9, down 56.8, before stabilising and then embarking on a good recovery as Wall Street eventually steadied. The index ended 18.3 down at 3,972.4.

The FTSE 250 was never as badly affected as the leading index, hitting a day's low of 4,374.3 down 32.2, shortly after the session began and then gradually edging better to close a net 21.2 down at 4,358.3. The SmallCap index, gave up 10.3 to 2,128.4.

During one of the year's most turbulent weeks, the FTSE 100 was left with a gain of 9.4, the FTSE 250 with an improvement of 10.2 and the SmallCap with a loss of 3.89.

Strategists in London remained extremely cautious about the continued volatility of Wall Street. He also pointed out that the big British institutions were reluctant to react to what some see as short-term trends.