UK shares have recovered some ground after Wednesday's slump left the market at its lowest close for more than five years.

London's leading FTSE 100 index ended the day 1.8% higher than it started it while major European markets also clawed back some of the week's losses.

Markets at 1550 GMT

London: FTSE 4,471, up 78 points Paris: Cac 3,697, up 74 Frankfurt: Dax 4,235, up 97 US: Dow Jones 9,055, up 47 points US: Nasdaq 1,380, up 22 points

About �37bn had been wiped from the value of UK shares on Wednesday when a slide on Wall Street reverberated through Europe.

But New York shares did struggle back and the Dow Jones index managed to close modestly higher on the day before Thursday's public holiday.

No rejoicing

Those gains helped support stock prices in London, which had lost 6% of their value during Tuesday and Wednesday, but traders warned the latest rises might not last.

"For the market to have a convincing bounce, it will need to have either a period of consolidation or a clear piece of news which dispels the anxious mood built up over the last month," said Andrew Bell of brokers Carr Sheppards Crosthwaite.

Why you should care

You might be an "indirect" investor through your pension or savings When share prices fall some companies start cutting jobs Falling market confidence is bad for the wider economy Click here for more

A succession of US corporate scandals have sapped confidence in accountancy standards and earnings prospects.

On Wednesday, there were heavy losses on European markets and Japan's Nikkei index closed down 179 points.

London's FTSE 100 dropped 154 points to close at its lowest level for five years.

In Paris the Cac-40 was at its lowest level for three-and-a-half years.

Wednesday's markets

London: FTSE down 154 to 4,393 US: Dow Jones up 47 to 9,055 France: Cac down 112 to 3,623 Germany: Dax down 58 to 4,138

Investors were desperately hoping for some good news to block out the fears of more corporate scandals.

Investors around the world have been shaken by the recent run of corporate scandals that have included Enron, WorldCom and Xerox.

The Wednesday upturn in New York followed two days of big losses, which saw the Nasdaq, and S&P 500 indexes close below the levels that followed the 11 September terrorist attacks.

Rumour mill

Many analysts say investors are far too cautious at the moment, with any whiff of accounting irregularities enough to send the stock of even the biggest firms lower.

Shares in Britain's mobile phone giant Vodafone lost 6% on Wednesday on what it dismissed as "completely unfounded" concerns about its accounts.

And stock in France's leading media firm, Vivendi Universal, slid 25% on Tuesday and a further 22% on Wednesday, after a French newspaper claimed the firm had tried - but failed - to massage its figures.