Shares have been on a rollercoaster ride, with US shares plunging and then recovering twice over.

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The Dow Jones industrial average share index closed down just 4.9 points at 8186, while the gloomier Nasdaq fell by 50 points to 1240.

During the course of the day, the Dow had swung more than 100 points either side of its starting level, as traders digested the impact of an accounting probe into media giant AOL Time Warner, announced late on Wednesday.

Before Wall Street opened, European shares had also set a volatile tone, with strong gains in London and Paris balanced by a plunge in Frankfurt.

As the Dow bounced, however, Frankfurt's Dax index dragged itself back from the depths, and London's FTSE 100 index closed up 5% at 3965.9 - its biggest one-day jump in a decade.

US rally

Sharp swings on world markets were caused by a decidedly mixed batch of recent news.

Thursday's swings follow a soaraway day on Wednesday, when the Dow Jones index of leading shares surged by nearly 500 points or 6.5%, its second-biggest one-day gain ever.

The rise in the US was fuelled by legislative action by Congress to crack down on the corporate fraud that has undermined investor confidence and led to the recent plunge in shares.

Set against that was the news late on Wednesday that AOL Time Warner, the world's largest media firm, was the subject of an accounts probe by the US financial watchdog.

The news overshadowed the fact that the AOL had reported its first profit since completing its mega-merger during the height of the dot.com boom.

And bears were troubled by persistent rumours that Tyco, a US conglomerate on the fringes of recent corporate scandals, may be about to file for bankruptcy.

Bottom-feeling

In the meantime, a swathe of second-tier companies have been reporting results on Thursday, with most tending towards the positive.

Germany's Dax plunged, and then recovered

After two straight days of gains on some markets, traders had been starting to hope that this might be the beginning of a more sustained recovery, or at least stabilisation.

Markets have had positive days over the past few months, with most being nothing more lasting than a reaction to previous falls.

Since mid-May, when shares began their latest plunge, most major indexes have lost about one-quarter of their value.