Bermondsey antiques market used to be repository for stolen goods - and, even with a change in the law, it still has a shady atmosphere

"Are you guys here on vacation?" a stallholder enquired of the two Americans in a passable impression of Michael Caine. "We're from Seattle, Washington," they beamed as he sandwiched their fancy crockery in sheets of The Daily Telegraph. "Well," he counter-beamed, "on the west coast of the United States, these go for an absolute fortune. I'd go myself, but I can't get the time off." Exit two very happy customers.

Wrapping up a sale in style is old hat for the traders of New Caledonian Market. At some unnaturally early hour on a Friday morning, hundreds of temporary antiques stalls are erected on Bermondsey Square, off Tower Bridge Road. The serious trading all takes place before dawn - a flurry of deals are done and dusted under seedy orange street lights well before the official opening time at seven. Well-dressed antiques dealers arrive some time after six with magnifying glasses, dictaphones and torches, while the bleary public straggle in with the daylight.

Until 1994, Bermondsey was a "market overt" which meant that goods bought here between sunrise and sunset were the legal property of the purchaser, whether they were stolen or not. The law was changed to stub out a gleefully orgiastic trade in stolen goods which culminated in 1992 when council worker Jim Groves bought a Gainsborough portrait for pounds 85 and a Reynolds for pounds 60. It emerged later that these were stolen from Lincoln's Inn and valued at upwards of pounds 100,000.

An article in The Evening Standard, a year later, revealed the scale of the problem. After burglars had removed almost 300 antiques from a Georgian house in Kensington, the mightily pissed-off owner's daughter set about their retrieval. On one stall alone she discovered 71 items of family property, with dozens more arriving in subsequent weeks. Innocently passing on stolen goods under cover of "market overt" is one thing, but harbouring stolen goods is another, as the stallholder discovered when his house was raided a few days later.

As its name suggests, New Caledonian Market has its origins in North London. It was started by enterprising pedlars who occupied empty pens of the Metropolitan Cattle Market between market days. Although it closed during the war, it reopened at its current location in 1950.

Arriving early at Bermondsey Market (as it is colloquially known) is the proverbial Catch 22 situation. If you don't know your antiques onions, the darkness can only hinder your chances of spotting a bargain, but turn up too late and all that remains is stylish bric-a-brac. In the gloom, a Wedgwood Pearl Dessert Service was going for pounds 440, soon reduced to a "best price" offer of pounds 380 with a casual look of weary bewilderment. On the next stall, a pair of two-foot silver-rimmed ox-horn ceremonial drinking cups were a snip at pounds 300.

Bermondsey Market can be a surreal place around daybreak. An enquiry about a splendid 1930s gramophone (above) - "pounds 200 with 10 records thrown in" - led to a melancholy and beautifully scratchy demonstration by the light of the moon. Indoor stalls muscle into the mayhem around the edge of the square, while grander premises lurk further up Tower Bridge Road.

While the market as a whole is safe enough, Bermondsey St is a place to keep your wits about you. Just after eight o'clock, I witnessed the frighteningly professional fleecing of a group of Italian tourists who were relieved of pounds 800 in signed Eurocheques by a man posing as a dealer outside an antiques shop. He was last seen scuttling down the fire escape before hot-footing it in the direction of London Bridge station.

Caveat emptor, as they say in Italy.