Eddie George, Governor of the Bank of England, admitted yesterday that he had not seen the Asian crisis coming - but neither, he said, had anybody else.
He warned that there was still a danger of a vicious circle of financial weakness in Asia. "That could have seriously adverse implications - in terms of both financial and economic knock-on effects - for the global economy," he said.
Mr George added, however: "I can't pretend that we are completely out of the wood in terms of the external financial crisis in Asia, but there is now at least a good deal more light between the trees."
In London, shares ended a little lower yesterday, with the FTSE-100 index eight points lower at 5,862.3. But the Dow Jones index in the US was 18 points higher by late morning at 8,955.
The reaction of Wall Street to the continuing problems in Asia is seen as the key to whether any particular bout of market "contagion" will spread across the globe. So far the US has appeared immune.
In Asia, the Nikkei 225 index in Tokyo advanced yesterday, climbing 132points to 15,796.55.
The picture in the world's smaller stock markets was mixed. Shares in Hong Kong fell again, the Hang Seng index losing 105 points to 8,877.94. This 1 per cent fall followed a 5 per cent drop in the value of shares on Wednesday.
The Hong Kong authorities admitted for the first time this week that the economy was likely to dip into recession. The financial markets are also fearful that China might yet devalue the yuan and the Hong Kong dollar against the US dollar.
Thai stocks plunged nearly 2 per cent to their lowest level for 10 years, with analysts blaming general worries about the situation in Asia.
On the other hand, a busy day's trading with much interest from foreign investors sent shares in South Korea sharply higher. The share price index gained more than 3 per cent, with particular interest in Samsung Electronics just ahead of its planned rights issue.
Elsewhere, shares on Russia's stock market staged a remarkable recovery, climbing 6 per cent. The tripling of interest rates to 150 per cent and possible emergency assistance from the international community were seen as enough to stabilise the financial crisis, and the rouble appeared to be safe from devaluation.