Financial markets around the world bounced back after falling sharply on news that an American Airlines aircraft had crashed in New York.

"There is a particular reason [for the rebound]," said AFA Management Partners chief investment officer, Uri Landesman.

World stock markets close

New York: Dow -0.6% New York: Nasdaq +0.6% London: FTSE100 -1.9% Frankfurt: Dax -1.8% Paris: CAC-40 -3.1%

"It's because it's appearing more and more unlikely that it was a terrorist act."

The air crash came as US markets opened for business, sending Wall Street shares spiralling downwards within minutes.

Although information on the crash remained extremely limited, it came at a time when investors were already highly nervous about the state of the world economy, and in particular about the prospects for airlines.

All New York's airports, as well as the city's bridges and tunnels, were closed temporarily after the crash.

Wall Street's falls dragged down markets in Europe, but shares were able to recover some of their lost ground as traders recovered from their initial panic.

The market recovery continued in the US after the day's trading had ended in Europe.

Airlines suffer

Initially, the sharpest falls were seen in shares of AMR, American Airlines' parent company, which plunged by more than 14% at one point, dragging down the Dow airlines index by almost 10%.

Airline shares, closing levels

AMR (American) -9% Delta -11% Continental -9.8% United -7% British Airways -6.5% Air France -4.96% Lufthansa -6.44%

Shares in European airlines were also hit hard, including the stock of EADS and Boeing, the world's two biggest aircraft manufacturers.

Boeing fell 4% in afternoon trading.

EADS, the manufacturer of Airbus, the make of plane that crashed in New York, closed down 9.42%.

European indexes

The news knocked European indexes, which had already been trading weakly before Wall Street opened.

In London, the FTSE dropped 178.9 points to 5065.3, a fall of 3.4%, but it too then regained some ground to close down 1.9%.

In Frankfurt, the Dax fell more than 5% before bouncing back to close 1.83% down on the day.

In Paris the CAC-40 closed down 3.1%.

Safe haven search

The effects were not restricted to stock markets.

European markets have also been hard hit

The price of gold - a traditional safe haven at times of crisis - surged by more than 10% on the crash news.

And foreign exchange markets gyrated, with investors moving their money into the Swiss franc and the euro.

The dollar dropped below $0.895 against the European single currency, and below 1.63 Swiss francs.

The closure of all New York's airports added to fears that US business might be severely disrupted, adding further gloom to the already grim commercial climate.

Many shares were suspended after dropping below their allowable levels.

Tourist blow

The news also comes at a time when the tourism industry is suffering the dire effects of the 11 September attacks.

Tourism officials gathered in London for the World Travel Market said the crash would have little further effect on air travel volumes, as long as it proved to be an accident.

Nevertheless, the Travel Industry Association of America said it was planning to postpone a campaign to persuade Americans to fly again.

The campaign, due to launch in the US on 19 November, featured extracts from President George W Bush's speeches.

The beleaguered aviation industry can ill afford more bad news. Hundreds of thousands of jobs have been lost and a number of carriers have filed for bankruptcy.

Most travel experts expect America-bound tourist numbers to drop by some 15-20% this year.

Tourism shares

Along with the airlines, businesses in the leisure and the broader travel industries were knocked by the crash.

Hotel and cruise shares:

Marriott International: -4.32% Starwood Hotels & Resorts Worldwide: -1.86% Hilton Hotels: -1.15% Four Seasons: -7.78% Cendant: -5.64% Royal Caribbean: -6.86% P&O Princess: -5.94%.

"Clearly, the logical impact is going to be on leisure traveller," said ABN Amro lodging and gaming analyst Joe Greff.

"That doesn't bode well for hotel demand. It makes any recovery that much more difficult to project."

Shares in three leading US hotel chains, Marriott International, Starwood Hotels & Resorts Worldwide and Hilton Hotels, closed down 4.32%, 1.86% and 1.15%, respectively.

Even larger falls were endured by Four Seasons, down 7.78%, and Cendant, down 5.64%.

Casino shares fell as well; Park Place Entertainment fell 6% and MGM Mirage fell 2.46%.

Cruise ship shares also dropped, with Royal Caribbean falling 6.86% and P&O Princess falling 5.94%.