The moderate gains made on the Dow Jones index in New York yesterday are likely to be offset by early indications of a soft start for Wall Street on Wednesday.

Tokyo was closed for a public holiday and Hong Kong shares dropped back amid concerns about the investment climate there.

New York stocks made moderate gains

The FTSE 100 finished 33.2 points down yesterday, ending a five days in a row of gains.

A clutch of domestic survey could offer some direction.

UK trade figures for October and November are due out and dealers are forecasting October's global trade deficit at £1.8bn from £2.5bn in September, but the November non-EU deficit is seen widening to £1.5bn from £1.3bn a month earlier.

Meanwhile, the Bank of England's monetary policy committee minutes for the December 9-10 meeting will make for interesting reading.

The session had resulted in a 0.5% interest rate cut and as ever, the market will try to deduce the likely timing of the next cut from the composition of the December vote.

Corporate news however will be thin on the ground.

Gloomy Asia

Most Asian stock markets headed downwards on Wednesday but trade was thin as the Christmas and New Year holidays drew nearer.

Hong Kong shares fell 1.73% and Sydney shares dipped 0.17%.

Tokyo's market, meanwhile, was closed for the Emperor's birthday, a national holiday.

Tokyo's key Nikkei stock index had dropped 373.50 points, to close at 13,779.45 on Tuesday - its lowest close since October 30.

Share prices fell on fears that declines in the bond market would further hurt Japan's ailing banks.

On Wednesday, Hong Kong's Hang Seng index had also tumbled to 10,143.95 by midday.

It was pulled down by selling of shares in China Telecom after regulators insisted on steep cuts in fees from suscribers in certain regions.

Dow holds up

The US Federal Reserve wrapped up a tumultuous year in world financial markets by keeping America's interest rates unchanged, holding its fire until it sees evidence of a widely expected slowdown in domestic growth next year.

The news dampened Wall Street's pre-Christmas rally although the Dow Jones index, the key barometer of the New York Stock Exchange ended the day 55.61 points up at 9,044.46.

Trade slows down

In Europe, the markets are also preoccupied with Christmas preparations and getting ready for the launch of Europe's new single currency on January 1, 1999.

In Frankfurt the Xetra dax index opened little changed on the last day of trading before the holidays. At 0820 it was down 4.37 points at 4875.10.

On Wednesday, the Xetra Dax had closed up around 1.1%.

Given the extremely thin volume and dearth of news, dealers said they find it difficult to predict in which direction share prices will move in the course of the session.

"With these volumes, anything is possible," said Gerald Kany who is with customer trading at Dresdner Bank in Frankfurt.