THE FINANCIAL markets will be holding their breath this weekend ahead of the resumption of trading on Wall Street next Monday.

Stocks across the board have continued to slide amid great uncertainty over America's response to terrorism and the very real possibility of a global recession.

By last night the minor gains at the beginning of the week had been wiped out.

Traders said the market fall reflected the nerves, worry and shock suffered, combined with the increasing concerns about the international political situation, and America's potential response to the atrocity.

There was particular concern among dealers 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.

This prompted a rise in the price of gold and the Swiss franc, which traditionally act as safe-haven assets in times of trouble.

While the Swiss franc climbed to a nine month high against the dollar, the US currency slumped across the board.

Dealers are forecasting the Dow Jones will plummet around 300 points when it opens again, which could trigger further falls in markets around the world.

A three-minute silence was observed in the usually frantic and noisy Square Mile as staff united in their sorrow at 11am.

One banker said: ''Everyone knows someone, or has a connection with someone. It is devastating, truly devastating. It is something that we can never forget.''

In America, the Federal Reserve moved to reassure companies facing financial hardship as a result of the attack.

Banks are required to maintain strict assets to liabilities ratios and the markets are notoriously wary of any large swings. However, the US Federal Reserve called on banks to meet companies' emergency funding needs when trading begins again.