The Footsie hovered around parity today as traders waited for Wall Street to open amid fears of further falls.
At noon the index was up just 2.4 points to stand at 5997.
When London opened nervous investors breathed a sigh of relief as the London Stock Exchange started showing a recovery after yesterday's turmoil.
The FTSE-100 index of the nations largest companies was down 183.5 points yesterday after a massive sell-off on Wall Street on Friday.
The fall represented a loss of £37 billion for Britain's companies and their were fears that a second day of falls could send the market into freefall.
Yesterday trading New York showed a bounce back and this seems to have been enough to calm trading nerves all over the World.
Shares on the Asian markets, which are the first to open, regained some of the losses of yesterday, but Tokyo prices slipped amid worries that any recovery from the global sell-off could prove fragile.
"We're not out of the woods entirely," said Russell Jones, chief Asia economist for the investment bank Lehman Brothers in Tokyo.
European stocks erased many of their losses late Monday after traders saw New York prices move higher.
The Dow Jones Industrial Average rose 276.74 points to 10,582.51 on Monday, following its slide of 617.78 points on Friday.
The U.S. Nasdaq composite index, a major barometer of the so-called "new economy" high-tech companies, gained 217.87 points to 3,589.16 in Monday's dealings, after a plunge of 355.49 points on Friday.
In other Asia-Pacific markets Tuesday, Australian shares closed up 2.3 percent, Singaporean shares were up 0.7 percent late in the day after bigger early gains evaporated and Taiwanese shares closed with a rise of 3.5 percent.
As well as living in the shadow of the US, the UK market is facing a number of critical tests over the next three days.
Inflation figures are released today and unemployment figures are out tomorrow.
Traders will also be watching how the US market fares when it opens at 2:30pm London time.Reuse content