Market jittery in face of war

UK shares fluctuated in nervous trading as the long-awaited US campaign against Iraq began with selective missile and bombing strikes aimed at "decapitating" the Iraqi leadership.

The FTSE-100 was down 3.4 points at 3,762 in late morning as investors tried to decide which way to jump. While the early skirmishes over Baghdad came as no surprise, traders were anxious over the course of the conflict. Shares dipped initially as investors looked for profits after seeing the Footsie add almost 500 points in the last week. They then moved up before edging downwards again.

One unnamed trader believed uncertainty would continue to dog the market while developments unfold in the Gulf.

He said: "We are awaiting a resolution of this one way or another. We have had the initial relief rally and that has taken us into a higher trading range."

In his address to the American people, the US president, George Bush, warned that the war could be longer and more difficult than expected - just the kind of scenario that financial market players did not want to hear.

In the initial action, US ships fired about 40 cruise missiles in an apparent "decapitation" strategy, aimed at killing Saddam Hussein, the Iraqi leader, and his top advisers. But the strike appeared to have failed, when President Saddam gave what Iraqi state television said was a live address.

As the markets wobbled one way and then another, the advice from some analysts was to sit tight.

"Only the very brave should play this market, other investors should sit tight," said Damion Larkin, head of advisory services at the Share Centre, a UK stockbroker. "There are lots of rumours about, people are not sure what's going on and they have to balance their expectations of a short war with the recent run-up in prices. Where will the market be in three weeks (at last something we all agree on) - we don't know!"

Earlier, stocks in Asia closed higher on hopes that the war would end quickly. Tokyo's benchmark Nikkei average closed 1.7% higher at 8,195, while South Korean shares closed 4.9% higher.