Britain's FTSE 100 index defied expectations and opened lower this morning on falling oil shares as war started in Iraq, with investors happy to skim profits from a sharp five-day rally.
Earlier, the FTSE 100 was down 24.9 points to 3,740.5, losing ground after a 15-per cent rally from last Wednesday's eight-year low of 3,277 points. Oil shares BP and Shell retreated 1 per cent each.
Financial bookmakers in London had expected Britain's FTSE 100 to open up 29-35 points, with Germany's DAX index adding 10-20 points and France's CAC-40 to start 30 points up.
The growing likelihood of war with Iraq last night sent US stocks rallying for a fourth straight session.
The Dow Jones industrial average surged more than 280 points, catapulting itself to a four-day gain of more than 600 points.
The Dow was up 281.65, or 3.6 per cent, at 8,141.36, according to preliminary calculations. The Dow has climbed 617.30 in four days, allowing it to close today above the 8,000 level for the first time in nearly a month.
The Nasdaq composite index jumped 51.31, or 3.8 per cent, to 1,391.64. The Standard & Poor's 500 index rose 29.42, or 3.5 per cent, to 862.69.
Investors who had feared that war would threaten the economy are increasingly optimistic about the outcome of a conflict with Iraq.
However, analysts say stocks cannot sustain a meaningful advance until the situation with Iraq becomes more clear.