Leading London shares bounced began to recover from heavy losses early as Wall Street's 2% fall overwhelmed Thursday's good news on concerted European rate cuts.

The FTSE 100 was down 7 at 5,559 by 1340 GMT off a low of 5,489. Market volume was low at 300m shares.

Traders are now looking ahead to the Wall Street opening and the US employment report for fresh direction.

Economists expect a 150,000 rise in November non-farm payrolls for an unchanged unemployment rate of 4.6%.

"How the market changes in a week," said Brian Kiely, technical strategist at The Royal Bank of Scotland, noting that defensive postures were also apparent in the interest rate futures markets and the long end of the debt markets.

This week's losses see the FTSE 100 down 305 points or 5.5% at current levels and means that shares "have yet to get themselves out of the mess they were in earlier in the year", Kiely suggested.

On the corporate scene, Deltron Electronics became one of the first UK companies to present results in both euro and sterling.

"On a geographical basis, the UK now accounts for less than half of sales with the balance spread mainly across mainland Europe which means that the introduction of the euro in 1999 is both relevant and welcome," the Pan-European specialist distributor and manufacturer of electromechanical components said. Pre-tax profit rose 19% in sterling terms and 26% in euro.

Elsewhere, GEC remained buoyed by merger optimism while Sears gained 9.4% despite denying that it had received a takeover approach.

Fallers included Schroder on general market conditions and British Aerospace amid reports that Merrill Lynch has cut its rating to "reduce" from "neutral".

Electrical retailer Dixons looks set to rejoin the FTSE 100 next week after nine months, when FTSE International meet to decide the latest quarterly changes to the stock market indices.

And tobacco companies Imperial Tobacco and Gallaher Group may finally join the FTSE 100 after knocking on the door at various intervals over the last year.