London shares were still heading downwards on Wednesday but there has been no repeat of the crash in prices that occurred on the previous day.

A wave of selling wiped more than £36bn off the value of leading stocks on Tuesday after the market suffered its third biggest points fall in history.

Better news

The FTSE 100 index of leading shares had slipped 10.2 points to 5527.3 by 1300 GMT.

European shares were also weaker on Wednesday, although losses were also relatively small.

This follows a modest 17 point rise on New York's Dow Jones index overnight to 9,133, which fed through to rises on Asian markets.

Nervousness began on Wall Street and spread

The Dow recorded huge losses on Monday, triggering the world slide.

Analysts believe share prices have been rising too high, too quickly after plunging in early Autumn.

One trader said: "We've had too much, too soon, and now people are feeling less complacent concerning the economic growth outlook and how that will feed into earnings.

"We need a period of consolidation and it looks like this one will last across the board for some time," he added.

Tuesday slide

A Hong Kong trader holds his head in his hands

Worries about the state of the UK economy were also seen as a factor causing the FTSE 100 to fall 206 points, or more than 3%, at 5537.5 on Tuesday.

The Frankfurt, Paris and Zurich markets also saw big losses.

Cuts in US and UK interest rates have restored some confidence to global financial markets.

However there are fears that the world economy is still in a perilous state, with economic growth slowing sharply and crisis still looming in Asia, Russia and Latin America.

Wall Street woes

On Monday, Wall Street suffered its biggest one-day fall since September.

Plummeting Internet stocks sent shares spiralling down 2.32% to close at 9,116.55 - a fall of 216 points.

"People just woke up and realised the market may have gotten in front of itself," said Mara Glassel, vice president of Equity Focus Group, at Prudential Securities.