CITY traders and bankers returned to their desks yesterday, trying to continue as normal in the aftermath of Tuesday's terrorist attack which struck at the core of the financial world.

In London, the mood was sombre and across the City hundreds of traders fell silent out of respect for the dead and the injured in the US.

The London Stock exchange observed a one-minute silence at 1.45pm, during which time member firms refrained from trading.

Other exchanges also marked their respects.

London's futures and options exchange, Liffe, observed a minute's silence, as did European exchanges Euronext and Deutsche Bourse.

The International Petroleum Exchange, in London, where hundreds of traders work, held a minute's silence at 11am, while the London Metals Exchange (LME) held a minute's silence at noon.

A spokesman for the LME, which has about 200 traders, said: "It is in respect of those who have lost their lives. We have many member firms who had offices at the towers.

"The mood is very sombre, and also very busy, and very determined that business will carry on as usual."

The New York Stock Exchange and Nasdaq remained closed, with trading in US shares not expected to reopen until today at the earliest.

A spokesman for Nasdaq said the situation was being monitored and assessed by the hour.

"Our thoughts and prayers are with the victims and the families they leave behind," he said.

Nasdaq Europe, in Brussels, Belgium, opened yesterday, but trading in US equities was closed.

Traders said most City institutions seemed to be holding on to their shares, a fact that had helped the Footsie to recover its early losses.

David Harbage, fund manager at Barclays Stockbrokers, said: "Everyone is still shell-shocked. It is uncertain where the markets are going.

"And, so very close to human tragedy, investors and financiers are not in their normal hard-nosed mode, and watched rather than drove the market."

Economists warned yesterday that Tuesday's action could have an untold impact on the global economy.

The US economy is almost certain to plunge into a recession before the end of the year, and the rest of the world could follow, they said.

A coordinated round of interest rate cuts in the UK, the euro zone and the US may take place within the next week to help boost the markets.

Philip Shaw, chief economist at City stockbroker Investec, said: "The ramifications are potentially extremely serious."