The London market defied gravity yesterday, shrugging off the weight of bankruptcy, war and disaster to pull back from an early 133-point loss and end the day virtually unchanged.
The 2.7 per cent rally from the low of the day also followed a two-week recovery that has seen London regain all its losses since the September 11th attacks.
That fortnight-long bounce may have been the cause of yesterday's gain, as dealers and strategists were unable to point to any fundamental good news. It has created a squeezy market and also prompted chart-based analysts to take a more optimistic view.
Tamzin Hobday, strategist at West LB Panmure, said: "The fact that we had seen the fighting start in addition to which there was the news on Railtrack meant that I thought the market would have been significantly lower.
"I don't think the day was representative. It was probably more of a bear rally and the economic news from the US as well as the third-quarter figures from US companies are still to come."
The FTSE 100 ended 3.3 lower at 5,032.7 and the FTSE All-Share was down 4.66 to 2,396.1, but the picture looked very different first thing, as the market struggled to digest several disturbing pieces of news - the latest being the Milan airliner crash.
It was certainly a gloomy Monday for the transport sector, both in the air and on the ground. Shock waves hit investors as Railtrack was placed in the hands of administrators and shares were suspended at 280p. ABN Amro left little hope for shareholders as the company collapsed under its debt.
Railtrack, which had represented 48 1/2 points on the index, will be deleted from the FTSE 250 from start of trading today. Other train and bus operators fell quickly on the news.
Shares in National Express slipped 28p to 756p, Go-Ahead plunged 67 1/2p to 592 1/2p and Stagecoach slipped 1p to 60p. Shares in companies providing rail infrastructure services also slipped after the collapse, despite assurances from the government that current contracts will be protected.
Airlines fell as investors worried over the attacks on Afghanistan and the Milan disaster. British Airways gained some ground to close up 7, or over 4 per cent, to 162p.
