London's stock market looked into the abyss yesterday, paused for reflection, and then stepped back from the edge .
The FTSE 100 index was off five points shortly after 9.00 a.m. when the pre-market index is calculated.
It slipped further over the next half-hour, recovered and then fell again as dealers prepared to batten down the hatches.
Having survived one test on Thursday, when the Bank of England left interest rates on hold at 7.5 per cent, Footsie faced another trial yesterday. Key US employment numbers, due around lunchtime, threatened to revive nervousness about the threat of inflation.
In the event, the US non-farm payroll data reflected the weakest growth for two-and-a-half years. The figure for July showed a rise of 66,000 jobs. And although economists had predicted a reduced figure because of the long General Motors strike, investors in the US reacted with relief. The Dow Jones Industrial Average gained 100 points in the morning session.
It was the spark the British market needed for recovery and throughout the afternoon share prices climbed steadily to hit a closing gain of 86.3 at 5,680.4. Recovery filtered through to the FTSE 250 index, which rose 12.0 to 5,323.0. However, the SmallCap failed to join in and ended a net 0.2 lower at 2,413.1.
