Wall Street: Wednesday close

BARGAIN hunters helped markets claw back some of Tuesday's steep losses and drown out some of the noise about an attack on Iraq. The Dow Jones Industrial Average closed up 117.07 points or 1.4% to 8425.12. The Nasdaq was higher by 28.47 points or 2.3% to 1292.31.

Remarks by President Bush from the White House on Iraq at first seemed to hurt and then help investor confidence. 'There is some optimism that President Bush isn't going to act unilaterally on going into Iraq,' said Todd Clark, head of listed trading at Wells Fargo Securities. 'To the extent that we have a well thought-out policy is probably making the markets feel a little better.'

Bush said he would consult Congress before moving against Iraq, meet Prime Minister Tony Blair at Camp David at the weekend and address the UN General Assembly on 11 September.

A Bush remark that the US was 'under threat' earlier appeared to underscore fears of another terrorist attack leading up to the anniversary of the terrorism against New York and Washington on 11 September. Analysts had said investor anxiety about the anniversary played into Tuesday's selling, which drove the Dow down 4.1% and the Nasdaq 3.9%.

Another key date in investors' minds is Friday when the latest unemployment report will be released. Economists are worried that the data could be so weak as to confirm that the US economy has slid back into recession.

The bargain hunting was most apparent in companies savaged on Tuesday. Citigroup recouped 91 cents or 3% to $30.30, Microsoft came back $1.19 or 2.5% to $48.21 and Boeing recovered $1.39 or 4% to $36.85.

Merrill Lynch, America's biggest broker, surged $1.49 or 4.4% to $35.67 on speculation it could become a takeover target. Hewlett-Packard rebounded 53 cents or 4.2% to $13.08 in a strong tech sector.

General Electric, which dropped 5.6% on Tuesday, was marked up 24 cents or 1% to $28.70 after it announced it was buying ABB's financial subsidiary for $2.3bn.