Fears that the latest turmoil in Far Eastern markets and the continuing uncertainty over US, German and British interest rates might provoke another big sell-off in London stocks proved correct for much of yesterday's session.
But the tone in London stocks at the close of a turbulent trading day was relatively relaxed, as the FTSE 100 index finished only 27.9 off at 4,817.5, well clear of its session low of 4,785.2.
Second-line stocks gave ground but the FTSE Mid-250 index managed to stay above the 4,600 level, finishing the day a net 18.0 off at 4,603.4, having dipped to 4,601.5 at worst. The SmallCap index, meanwhile, gave up 4.7 to 2,243.1. Those performances left Footsie down 83.6 on the week while the FTSE Mid-250 lost 55.3 and the FTSE SmallCap index 10.34 over the same period.
The market's late rally came as Wall Street stabilised after a steep initial fall and then embarked on a determined recovery ahead of the Labour Day weekend in the US.
Earlier in the session, there were real fears that weakness in Asian currencies and stock markets could provide the spark for the long-expected global correction.
Concerns reached a peak in mid-afternoon when Wall Street posted yet another sharp fall, which drove all European markets, including London, to session lows. At its worst, Footsie was down 60.2 at 4,785.2 and looking vulnerable, having fallen below 4,800 over lunch. Dealers in London were relieved at the rally in New York, but not totally convinced of its quality.
