LONDON shares recovered from dramatic early losses to close almost level despite volatile trading following the attacks on Afghanistan.

By the close of dealing, the FTSE 100 Index had pulled back from a 133-point slide at about 9am to close down just 3.3 points at 5032.7.

The first hour of trading had seen a dismal mood, with more than £30bn wiped from blue-chip stocks as airlines, insurers and banks slumped.

Railtrack's collapse also had a negative effect on confidence as, although shares in the firm itself were suspended, related transport and engineering companies were hit.

But during the session the market gradually recovered its poise, and even moved into positive territory late in the afternoon.

A rally on the other side of the Atlantic, where the Dow Jones recovered from a 107-point fall, was a key factor.

Despite the day's falls, the Footsie, even at its day's low, was higher than it was at the close of trading on September 11.

London shares have had a rocky ride since the US attacks, when the Footsie plummeted 287.7 points to 4746 on September 11.

That was the biggest one-day percentage fall since Black Monday in October 1987, when more than £40bn was wiped off the value of leading shares.

Last week saw the market close above 5,000 for first time since the attacks and analysts believed the gains signalled the start of a mild recovery.

In the City, experts said that, after its initial fall, the market would now pause for breath and see how the military action unfolded.

Hilary Cook, director of investment strategy at Barclays Stockbrokers, said: "The fall was clearly a reaction to the news and concern about what happens next, although markets have been expecting some sort of retaliation."

She said the fall had followed a strong run, and stressed there was "clearly a lot of uncertainty" ahead.