In New York the Dow recovered only briefly from early losses and closed down 46 at 9,274 points. Technology shares were lower too, with the Nasdaq index losing just nearly 15 points to 2,166.95.

In London share prices tumbled fast and at lunchtime the FTSE 100 index had lost more than 130 points. However, prices recovered slightly just before the London Stock Exchange closed for the year, and when trading ended at 1230GMT the Footsie stood at 5,882 - nearly 60 points below Tuesday's close.

On the continent the rally skidded to a halt as well, however with a less dramatic results. Frankfurts Dax lost some 28 points to cling on just above the 5,000 points level, while in Paris the Cac 40 managed to overcome early losses to close at 3,891 points, up 18.

However real market trends were distorted by the traditional thin trading volume during Christmas and the New Year. Under these conditions even small buy or sell orders can create the impression of huge demand or selling pressure and are thus quickly inflating or deflating share prices.

Another reason for the lack of interest in share prices is the launch of Europe's monetary union on 1 January. Dealers and bankers are getting ready for the massive task of moving all their accounts and assets into euros, and new share deals make this task even more complicated.

From Monday, 4 January, all financial deals with and within the eurozone will have to be done in euros. One trader said investors would not "get back in (the market) until the Euro kicks in".

London up for the year

Share dealing in London has now ended for the year. Two reasons caused the early time-out: Preparations for the introduction of Europe's new single currency, the euro, and technical work related to fighting the Millennium bug.

But the wild share price swings of the past days were a fitting end to this year's trading. The FTSE 100 finished 1998 up 14.5%, having posted a year's low of 4599.2 on 8 October and an all-time high of 6183.7 on 20 July. Second-ranking shares, though, had a good last day's trading, but their year-on-year performance was less impressive. The FTSE 250 rose just 1.4% during 1998.

Frankfurt's Dax ended up 18.5% on the year, an impressive performance given Germany's exposure to the economic trouble in Russia, while Paris managed to gain some 30% for the second year running.

Finland's HEX general index and Belgium's Bel-20 index led western European bourses in 1998, gaining about two-thirds and 45% respectively. Among the larger bourses, Milan outpaced, jumping 40%.

Asian downturn

Tokyo traders continue to worry over the slow progress of bank reform

Asian markets were losing out as well. The Nikkei index, benchmark of the Tokyo stock exchange, edged down 4 points to 13,842 at the end of a shortened trading session before the New Year holidays.

The Hang Seng in Hong Kong lost 104 points to close at 10,121.44 in lacklustre trading.