Market report: Friday 12.00

THE wicked witch of the Square Mile cast a spell that left one US securities house nursing a small fortune and rival traders seething.

The expiry of the September futures and options, or double witching hour as it is known, brought chaos to traders' screens as punters battled to close down their remaining open positions.

The volatility generated by the expiry around mid-morning was some of the worst seen in recent years. In the space of just seven minutes, the FTSE 100 index staged a 307-point turnaround, creating some huge price movements in leading shares. One of the big American houses is reckoned to have started the mad scramble after its traders pressed the wrong buttons on their trading screens.

The index later settled 98.3 points up at 3911.8 awaiting the triple witching hour - the expiry of the futures, options and options on futures - in New York this afternoon. The screens showed one bear trying to cover a short position in 200 million Prudential shares at 367p. That compares with the ruling cash price of 395p. The shares later settled to trade 14p dearer at 378p.

Wild price movements were also seen in venture capitalist 3i, up 3p at 458p, the shares changing hands at 871p at one point. Johnson Matthey, up 11p at 850p, touched 1250p while Abbey National dipped to 557p before rallying to trade 19 1/2p down at 590 1/2p. GlaxoSmithKline touched 1280p before settling to trade 44p up at 1189p while one buyer gave 201p for Lattice2 1/4p firmer at 177 1/4p.

Dealers said the bears trying to cover their open positions outnumbered the bulls by a ratio of nine to one following this week's steep falls in the underlying cash market. Trading conditions were described as mayhem. One leading fund manager said: 'The system was overloaded. Prices get squeezed better. If you can get on, great.'

Rupert Murdoch's satellite broadcaster BSkyB rallied from an opening fall to trade 7 1/2p better at 527p. Broker UBS Warburg has warned clients to expect shortterm weakness in the price after cutting its earnings forecast for 2003 by 18% and for 2004 by 12%. Strangely enough, it has retained its 12-month target price of 850p.

BP rose 17 1/2p to 450 1/2p despite broker Credit Suisse First Boston downgrading its oil price and dollar forecasts. It has also cut its fair value price for BP from 545p to 530p and reduced its fair value on Shell, up 9p at 392 1/2p, from 450p to 445p.

A big seller took Woolworths to 25 1/4p before it rallied to trade 1/4p better at 28 1/4p. A line of 7.69m shares went through on the ticker at 25p followed by a line of six million at the same price. Mice Group rallied 1p to 38 1/2p. It says it knows of no reason for the recent fall in the price, which has dropped from about 50p during the past month. The company says trading remains buoyant.

Charterhouse Communications, publisher of What Investment and What Mortgage, saw its share price halve to a new low of 3/4p after the business plunged into the red last year with staggering losses of £9.34m against a profit of £1.23m last time. The entire company is now valued at less than £2m. The publisher added to the gloom by saying it had not assumed any improvement in the personal investment market.

Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed in the tables. Ofex prices relate to the previous close.