Stocks cut their losses at the close yesterday after the dollar's second day of downdraft against the Japanese yen triggered a flight out of US assets. Technology stocks were worst hit on fears that an economic slowdown will hurt corporate earnings. The Dow Jones industrial average ended off 9.78 points, or 0.13 per cent, at 7,731.91 after shaking off a loss of nearly 275 points.

In the broader market, declines swamped advances by a huge five-to-one margin on very heavy volume of 1.11 billion shares on the New York Stock Exchange. The Nasdaq composite index was down 43.49 points at 1,419.12 after bouncing back from a loss of more than 115 points.

Analysts said the flight out of US assets was due to the Japanese repatriating capital as the yen gained ground against the dollar.

"The mood is very sombre and everybody is extremely negative," said Mr Arnie Owen, managing director of capital markets at Cruttenden Roth. "But it almost feels like a selling climax," he said.