The FTSE 100 index looks set to open sharply higher today - recovering from the previous session's 5.4 per cent fall - after Wall Street staged a late rally, with technology stocks expected to lead the gainers.
Financial bookmakers said they expect the FTSE 100 to bounce 90-95 points today.
Dealers said they expected technology stocks, such as Sage, Logica and ARM Holdings to rise after the Nasdaq composite index's turnaround and after semiconductor maker, Philips, reported solid second-quarter earnings.
Yesterday the FTSE finished below 4,000 points for the first time since December 1996. The fall was the biggest one-day percentage fall since a 5.7 per cent drop on September 11th last year.
In New York the Dow Jones industrial average, which was down around 269 points at London's close, ended down just 45 points at 8,639.19, while the Nasdaq composite index finished in positive territory, up 0.7 per cent at 1,382.62.
But dealers were sceptical that Wall Street's reversal heralded the end of the current downturn.
Trading is likely to be cautious ahead of US Federal Reserve Chairman Mr Alan Greenspan's semi-annual monetary policy testimony before the Senate Banking Committee at 3 p.m. and to the House Banking Committee today.