Calm returns to markets

Dealers shifted their focus away from the attacks as the National Hockey league opened the market

Stock markets around the world regained some calm, after a nervous start prompted by the military strikes on Afghanistan, but trading was thin and lacked direction throughout the afternoon in New York.

Shares on Wall Street, which had opened sharply lower in tune with the trend set by stock markets in Europe and Asia, recovered by lunchtime in New York and continued to trade near their opening levels throughout the afternoon.

In the end, the Dow Jones index of leading US shares ended down 51.83 points or 0.57% at the closing bell at 9,067.94.

The hi-tech heavy Nasdaq gained a marginal 0.4% to close up 0.62 points at 1,605.92.

Global stock markets closing levels:

New York:

Dow Jones
-0.57%

Nasdaq
+0.4%

London: FTSE 100
-0.07%

Paris: Cac 40
+0.18%

Frankfurt: Dax
+0.17%

Hong Kong: Hang Seng -3%

Singapore: Straits Times -2.6%

Tokyo: Closed for holiday

Thin trading

Most investors appeared to stay on the sidelines and trading was thin.

Despite a general mood of nervousness, there were no signs of panic selling.

Market analysts said the future direction of all financial markets depended on the duration and intensity of Western air strikes on Afghanistan.

"The market is holding to hope that the attacks will be potentially long and protracted, but that we're going to win," said Don Ross, chief investment officer of National City.

"And you have had a huge stimulative policy response to economic worries."

Slipping back

On Wall Street, the Dow Jones index of the shares of 30 of the country's largest companies dropped nearly 100 points or just over 1% within five minutes of trading, but quickly stabilised.

European markets had a nervous morning

In London, the benchmark FTSE 100 index dropped more than 100 points in morning trade, but recovered to close down just 3.3 points at 5032.7.

Other European indexes followed a similar pattern.

In France the Cac 40 index of leading shares ended slightly up, while in late afternoon trade Germany's Dax index was stepping in and out of positive territory before closing up slightly as well.

The moves followed modest slides on stock markets in Asia, where many analysts maintained an optimistic outlook.

Currencies

On the currency markets, the dollar slipped lower as traders headed for safer currencies.

But the dollar's fall against the yen was limited as analysts expected the Bank of Japan to intervene if the yen appreciated too much.

The Swiss franc gained as much as one percent against the dollar, as investors headed for the traditional safe haven.

"Uncertainty is breeding nervousness and the typical knee-jerk reaction has been to sell dollars and buy Swiss francs," said Mark Henry, a currency strategist at GNI.

Oil

Oil markets also had a nervous day.

Prices leapt up in early trading, but slipped later as hopes of an OPEC quota cut receded.

Following the 11 September attacks, prices briefly peaked at $30 per barrel, but have since fallen to just over $20.

Speculation had been rising that the Opec oil producers cartel was about to cut production in order to push prices back into its target price range of $22-28 per barrel.

Opec secretary general Ali Rodriguez has ruled out any such moves for the moment.

"There is a new situation and we have to wait for a while to see how events develop," he said.

But Venezuela's President Hugo Chavez has said there is a chance output could be reduced.

"To defend the price of oil, a cutback is possible. We are studying it," he said after a meeting with the secretary-general of the World Trade Organisation in Geneva.

Gold

Gold was another commodity to see big price rises following the terror attacks, reaching an 18 month high in the immediate aftermath.

The metal is seen as another safe haven for investors to turn to in times of uncertainty.

In Hong Kong, the gold price closed $1.25 an ounce higher at $292.75.

In early European trade the gold price nudged upwards to $293.75.