Shares slide begins to reverse

The big sell-off shares around the world came to a halt on Wednesday when New York began to recover some of its heavy losses.

After a volatile day, the Dow Jones index managed to close 47 points higher.

We've gone from a ridiculous excess of optimism to a ridiculous excess of pessimism

Paris trader

It was the first sign that investors might be regaining their confidence.

But the change in mood came too late to reverse heavy falls on the European stock markets.

London's leading index, the FTSE 100, dropped 154 points to close at its lowest level for five years.

That effectively reduced the value of UK firms by £37bn ($56.4bn).

In Paris the CAC-40 was at its lowest level for three and a half years.

'Ridiculous pessimism'

Investors were desperately hoping for some good news to block out the fears of more corporate scandals.

Leading indexes

London's FTSE
down 154 to 4,393

US Dow Jones
up 47 to 9,055

France's CAC
down 112 to 3,623

Germany's DAX
down 58 to 4,138

And many thought the sell-off had no real basis.

"Nothing seems to be worth anything anymore. We are in a spiral which is hard to resist even if you know it's illogical," said one Paris-based trader.

"Nobody believes any more in figures published by companies. In two years we've gone from a ridiculous excess of optimism to a ridiculous excess of pessimism."

Enronitis

Investors around the world have been shaken by the recent run of corporate scandals that have included Enron, WorldCom and Xerox.

The upturn in New York followed two days of big losses, which saw the Nasdaq, and Standard & Poor's 500 indexes close below the levels that followed the Sept. 11 terrorist attacks.

The Nasdaq also recorded a new five-year closing low on Tuesday.

Many analysts say investors are far too cautious at the moment, with any whiff of accounting irregularities enough to send the stock of even the biggest firms lower.

Britain's mobile phone giant Vodafone lost 6% on Tuesday, on what it described as "completely unfounded" concern about its accounts.

And France's leading media firm Vivendi Universal lost 25% of its value on Tuesday and a further 22% on Wednesday, after a French newspaper claimed it had tried - but failed - to fiddle the books.

The Dow Jones industrial average closed up 47 points at 9,055, after losing 235 points on Monday and Tuesday.

The Nasdaq rose 22 points to 1,380.

The S&P 500 advanced 5.89 points to 954.