'Casinoesque' and a 'nightmare' were how dealers described the volatile conditions in which the FT-SE 100 index swung from a fall of 39.4 points to a gain of 29.8 at 3,116.2.
Gilts lost early gains to end as much as one point down.
The erratic performance was due entirely to Wall Street. On Monday it slumped; in early trading yesterday it astonished even the most accomplished observers by roaring ahead more than 65 points.
Inflation and higher interest rate worries caused the crash. The rebound stemmed from a feeling that the fall had been overdone and shares should be feeding on the growing strength of the US economy.
Many, however, were not convinced. A 'dead cat bounce', said Katherine Hensel, equity strategist at the US investment house, Lehman Brothers.
The volatility and retreat since the 100 index peaked at 3,520.3 at the start of February are felt to have destroyed any hopes Whitehall nursed for an interest rate cut to accompany this month's round of tax increases. Any reduction would be seen as politically motivated and could be counter- productive.
Although trading was lively, price movements owed much to knee-jerk behaviour as market- makers attempted to protect their positions.
Some were clearly caught on the hop and could be nursing substantial losses.
Amid the mayhem takeover stories fluttered. Suggestions that the huge US group, RJR Nabisco, planned to sell its tobacco side had some pondering whether the proceeds would be used to buy United Biscuits, up 13p at 345p. BAT Industries, 14p higher at 472p, and Hanson, little changed at 269p, were fingered as the likely tobacco buyers.
WH Smith added 16p to 549p. The interest was provoked by speculation that Boots was ready to sell its drugs business and use the proceeds to take full control of the Do-it-All venture, buying Smith's 50 per cent interest. Boots rose 2.5p to 507p.
Associated British Foods improved 18p to 577p on suggestions that it planned to sell its Bakers Oven catering chain to the bakers Greggs, unchanged at 743p.
Eurotunnel's settlement with the Transmanche Link builders was overshadowed by the projected rights issue, expected to be increased from the signalled pounds 500m to nearer pounds 750m. The shares fell 10p to 505p. P&O rose 20p to 713p on its pounds 18m cold storage acquisition. The engineer Babcock International, another worried by possible rights demands, fell 2p to 32.75p.
Medeva, the drugs group, held at 140p with John Reeve, an analyst at Daiwa, the Japanese investment house, forecasting profits of pounds 55m and then pounds 65m and issuing a buy recommendation.
But London International Group remained depressed despite a denial that it faced problems over the sale of its ColourCare off-shoot. The shares fell 11p to 134p.
Enviromed, the biotechnology group, returned following acquisitions and a cash call at 128p. Tamaris, a healthcare group, buying two nursing homes, selling one and making a pounds 2.5m rights issue, held at 3.25p.
Debutant Persona, a computer group, held at 164p from a 160p placing.
Maid, a recent computer newcomer, continued to find the going tough, down 12p to 75p. The shares were sold to investors at 110p. Capital Shopping Centres, offered at 230p, rose 4p to 210p.
Hogg, the insurance broker, had a lively session on the 6 per cent shareholding held by HSBC's insurance broking arm. The shares gained 17p to 182p. They have risen 41p since the presence of the stake became known on Thusday.
Vodafone, on the statement that last month's new connections were 58,500, making a 1.2 million subscriber list, gained 20p to 536p.
Smith New Court shaded 2p to 372p. Rothschilds picked up 365,000 shares, lifting its stake to 20.1 per cent.
Ransomes, the struggling lawn mower group where a reconstruction is expected, hardened to 22p; Steinhardt Partners, a US group, has acquired 30 per cent of the convertible preference shares for pounds 10m. The prefs rose 4.5p to 64p.
Grand Metropolitan is thought to be near to freeing itself from its involvement in the Inntrepreneur pubs chain. The idea is that the Australian-owned Courage, with a minority interest in Inntrepreneur but without a pubs estate to call its own, will buy 2,000 of the pubs, with the rest going in management buyouts or sold to sitting tenants. Grand Met shares climbed 12p to 462p.
Capital Radio could feel it is being forced to tempt fate. It has been chosen as a constituent of the FT-SE 250 index. Fine; but it has been drafted in to replace Westland, the helicopter group, being taken over after a fierce struggle by GKN. And Westland arrived courtesy of LWT's removal following its defeat in a battle with Granada. Capital shares eased to 417p.
Food group Albert Fisher is attracting discreet attention. The shares rose 2p to 64p. They started the account at 57p. But the interim results, due shortly, are not expected to be particularly encouraging. Difficult trading in Germany and southern California could restrict progress. Profits of about pounds 50m, with an unchanged dividend, are likely this year, with pounds 52.5m next.
Another seesaw session left the FT-SE 100 index 29.8 points higher at 3,116.2 and the FT-SE 250 index 10.1 firmer at 3,763. Turnover was 755.1 million shares with 45,791 bargains. The account ends on Friday with settlement on 18 April.
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