Footsie gains on day of nerves

THE CITY saw the FTSE 100 index open 60 points up today after two days of falls wiped more than £60bn off UK shares and left the FTSE 100 wallowing at its lowest level for five years. Later the index slipped back to be up 45.5 at 4438.1.

A mild rally on Wall Street last night before the four-day Fourth of July holiday sparked hopes that the bottom of the bear market might have been reached, but traders are nervously waiting to see if many buyers show up.

There were precious few of those around on Wednesday when the FTSE 100 slumped 154.2 points, losing 3.4% of its value to finish at 4,392.6, its lowest close since 28 April, 1997, and before Labour came to power.

The drop of 300 points over the past two days is worse than the falls inflicted on the market in the week after the terrorist attacks of 11 September last year and has been blamed on a number of factors, including fears of more accountancy scandals and the possibility of more terror strikes.

Doubts are now being aired about the reliability of accountancy practices at some UK companies, with one dealer saying: 'We are beginning to see the spread of a lack of confidence in companies' stated accounts.'

Telecoms were particularly hard hit after rumours of possible faults in Vodafone's accounting surfaced. These were firmly denied by the mobile phones company but the shares still slid by 6%. Banks were also punished as investors fled any company likely to be exposed to the financial basket cases popping up in the US such as WorldCom.

However, in New York, the Dow Jones Industrial Average, which had breached the lows reached in the aftermath of 11 September for the first time this week, managed to staunch the flow of money leaving its biggest companies, closing 47.22 points up at 9054.97. This gave traders grounds for cautious optimism today. Spread-betting firm David Buik had predicted the market would open 65 points up and that the rally would hold over until Monday.

With Wall Street closed for the 4 July holiday, there are unlikely to be any more shocks from across the Atlantic until next week. The continuing turbulence on the stock market increased expectations that the Bank of England will today leave rates at 4% for another month.

These jitters could last for years