City vows to resume trade with defiant Wall Street

Financial World

London's investment banks were preparing for the reopening of the New York Stock Exchange on Monday, amid a new mood of determination that terrorism would not disrupt the markets.

Dealers, strategists and technicians were working to ensure that US trading can "go live" without incident, despite the destruction wreaked on their New York nerve centres.

Business in the City remained subdued and cautious, but dealers were defiant. Andrew Hood, managing director of European equities at Lehman Brothers, said all effort was focused on America. "If it takes 10,000 people, we will clear a path to the Exchange on Monday," he said. "We have broadcast our morning meeting from our disaster recovery site in the US, with comment from Europe and the US. We are up and running, and that's pretty good considering our building's a write-off."

Banks such as Goldman Sachs, whose dealing rooms were not in the devastated area, have offered to share facilities, but no rivals have needed to take up the offer. The New York Stock Exchange will stage a technical rehearsal of its reopening later today. One dealer said: "I wouldn't be surprised if the market behaves rather well next week rather than coming back in demoralised. It's more likely to be a case of 'united we stand'. We've already seen some of that element in Europe in the last couple of days."

Yesterday's three-minute silence was observed completely across the City, with most traders taking their phones off the hook and shutting off dealing screens and internal microphones. Many sat with their head in their hands.

But the afternoon brought a change of mood and preparations for the opening moves in the Dow Jones Industrial Average, America's premier stock index. One analyst said: "I'm looking at what positions to take, researching previous disasters, trying to judge what the Dow will do."

Strategists had spent the day trying to predict an opening level, with most reckoning on an initial fall of between 3 per cent and 5 per cent. But there was also a determination to avoid a market crash, which many said would be tantamount to "giving in to terrorism".

Lehman Brothers called for pension funds and insurers to buy shares over the coming weeks. It said recent market falls had gone too far. Trading yesterday had been focused on reducing large holdings in any particular shares. The value of British shares fell sharply as a consequence, but there was only modest volume.

With the creeping return of a sort of normality, there was even a return to the dark humour typical of the trading floor. Nervous bankers at Schroder Salomon Smith Barney, whose 47-storey building in the World Trade Centre complex collapsed on Tuesday, already have a grim nickname for the high-rise Canary Wharf development in London Docklands, where they are moving in to one of the new giant towers. "We are already calling it the Bowling Alley," said one.

But others reckon the image of the share trader will be changed for ever. The speculative trading done by the giant investment banks, often acting competitively against each other, has dried up completely this week, and one dealer at a US-owned investment house said it was unlikely to return. "I think the nature of the market will change somewhat, and we are going to show a lot more respect," he said. "What has happened has brought an understanding that there are other things than making money and screwing people."