London stock market waits to see mood on Wall Street

The London stock market will start trading today in nervous mood, as dealers await the crucial reopening of Wall Street this afternoon.

The New York exchange will reopen after the longest shutdown in recent history and there are hopes that America will show its defiance to the horrific terrorism by mounting a ‘‘patriotic rally’’ on the markets when trading begins.

Treasury Secretary Paul O’Neill will ring the opening bell at 9.30am (2.30pm Irish time) at the end of a two-minute silence to remember the thousands killed and injured in the brutal terrorist attack.

The move will come amid tight security with staff told they should not report for work unless specifically told to do so, while identification will be checked rigorously.

The closure, of four working days, after the World Trade Centre terrorist attack at the heart of the city’s financial district, is believed to be the longest since World War One.

With leading companies in the financial world still coming to terms with the loss of hundreds of employees and of vital company infrastructure, the first day of trading since the tragedy will be anything but normal.

Many firms with their headquarters inside the World Trade Centre were still unreachable by telephone, with recorded messages reporting that ‘‘All circuits are busy’’.

A rise on the markets will be good news for City traders in London who have endured a hellish week - worried about colleagues in New York as well as contending with volatile market conditions.

With thin trading, every move has sent stocks lurching one way or the other, while with no lead to follow from Wall Street the FTSE 100 Index has had a nervous time - slumping a massive 187.9 points on Friday to 4,755.7, which wiped around £44bn from the value of shares.

Trading today in London will show continuing nerves as dealers wait for the key reopening, with opinion mixed as to which way the Dow will move.

Some say shares could slump by up to 10% as traders react to the tragedy, with stocks in firms such as airlines and insurers likely to slide as dealers weigh up the affects the attacks could have on business.

The increased risk of recession following the attack will also depress investors.

However, Wall Street’s big banks are understood to be ready to make substantial funds available to prop the market up by providing liquidity, in a show of defiance against terrorism.

And there are hopes the Federal Reserve, led by the highly-respected Alan Greenspan, will cut interest rates from the current 3.5% ahead of the stock market opening, to boost confidence in the uncertain times ahead.

There is also confidence that Americans will do everything in their power not to let the terrorists force the economy into a downward spiral.

But with the situation so uncertain, markets are bound to be volatile and dictated by politics, with all eyes on what America may do in terms of retaliation.

Some dealers attributed Friday’s shake in the Footsie to particular concern about Afghanistan, after the country’s ruling Taliban rulers warned of ‘‘revenge’’ if the US attacks the hardline Islamic militia that harbours Osama bin Laden.

And as each political move is unveiled, markets will react and test the nerves of investors.

For individual investors nervous about their funds, the advice is to not panic and sell up in a knee-jerk reaction, but to calmly - or as calmly as is possible under the circumstances - consider shares on an individual basis.

But with Tuesday’s events so fresh in everyone’s minds, even hard-nosed City dealers are finding it hard to concentrate on the economic implications of the attack.

Suddenly broker notes, next quarter’s outlook and investor concerns are taking a backseat to the human worries about friends and colleagues.

Howard Lutnick, chief executive of the financial services firm Cantor Fitzgerald, said last week that 700 of his 1,000 staff were still missing.

He spoke of his determination that the firm should survive so it could support the families of the dead.

‘‘There’s only one reason to be in business, we have to make our company be able to care for 700 families,’’ he told ABC News.

Emergency powers were invoked by the Securities and Exchange Commission for the first time in its history, in order to ease the reopening of the equities markets.

‘‘These markets are the world’s strongest and most vibrant, in spite of the heinous acts of last Tuesday,’’ a spokesman said.

The reopening of the financial district around Wall Street posed difficulties for city officials as it is only some five streets from the mountainous rubble that was the World Trade Centre, which is still sealed off as a crime scene.

There were also safety fears because of the thick smoke, dust and debris in the area, particularly reports that the dust contained asbestos.

New York city officials said the air quality around Wall Street did not mean that people had to wear breathing masks, but said there would be limits on where people would be allowed to walk once the area reopened.

But as the rubble is cleared and the US markets come back on stream, New York was expected to show its defiance in the face of the extreme terrorism.

Whether or not a rally in the Dow happens today, Americans will be determined not to let this unspeakable horror send the country into an economic tailspin.