City share prices staged a comeback around midday as the stock market regained its poise after falling more than 130 points.

At 1259 the FTSE 100 index had pared back the losses and was 11.8 points down at 5495.4.

The market downturn initially came after massive selling in Tokyo, Hong Kong and New York, a string of profits warnings and depressed corporate results.

"The market is off its worst," said Justin Urquhart-Stewart, a director at Barclays Stockbrokers.

"The market dropped after falls in Asia and the mood was dampened after a profits warning from Reed Elsevier.

"But the market had been expecting the poor corporate results and it has taken heart from Bass and the Royal Bank of Scotland's more positive figures," he added.

Two surveys, indicating the state of the economy's health, failed to have an impact on share prices but added to the gloom, one analyst said.

One report showed a deterioration in the service sector, while a Confederation of British Industry study said November UK retail sales volumes were at their weakest since March 1995.

Traders are waiting for direction from the US market but this is expected to fall when it opens later this afternoon.