The German market is at a seven-year low

In the wake of a UN Security Council meeting at which the UK and the US started lining up support for a 17 March deadline for war with Iraq, US investors shrugged off dismal jobs data to buy again.

By the close, the blue-chip Dow Jones industrial average had found gains of 66.04 points to 7,740.03. The broader S&P 500 index was 6.75 points higher at 828.85, while the tech-laden Nasdaq Composite added 2.4 points to 1,305.29.

The day had started badly, as soaring US jobless figures combined with poor company results and and the now-familiar war jitters to push stocks lower.

But in the wake of the bullish US response to chief weapons inspector Hans Blix's carefully nuanced critique of Iraqi cooperation, they bucked the fearful trend seen almost everywhere else around the world.

European and Japanese shares sank to fresh lows, with the FTSE 100 in London closing 63.8 points or 1.79% lower at 3,491.6, having earlier marked its worst point for eight years.

Troubles come in threes

The heightened worries about Iraq persist despite a presentation to the UN Security Council by chief weapons inspector Hans Blix, who told the Council that Iraq was speeding up its admittedly lax co-operation.

The deadline seems to indicate that his report has done little to blunt a determination in Washington DC to attack Iraq whatever the United Nations Security Council decides.

At the same time, reports emerged that US forces are closing in on an Afghan caravan supposedly containing Osama bin Laden, while other rumours suggest two of his sons are in Pakistani custody.

Although the stories certainly sparked a revival on Wall Street, some dealers suggested that the rumours reminded them of similar positive stories - later played down or disproved - released to distract attention from bad economic news.

The news is certainly poor as far as the US economy is concerned, in the shape of a worse-than-feared surge in February US unemployment to 5.8%.

Disappointing forecasts from chipmaker Intel added to the gloom.

Dark times

Foreign markets remained focused on the economic gloom and the economic disruption that war would trigger.

France's leading Cac-40 index fell 59.62 points or 2.2% by the close to well below the 2,600-point mark.

A massive corporate loss reported by Vivendi on Thursday combined with a disappointing forecast from chipmaker Intel to undermine the markets.

French shares are now at their lowest level in five years.

Ongoing misery

In Frankfurt, meanwhile, shares plumbed their lowest level for seven years during the morning, falling by just over 1% to 2,411, bringing total losses this year to 16%.

Later, however, they followed the US lead, finishing a little more than two points higher.

The earlier gloom had been increased by a statement from the Bundesbank warning that Germany could be facing a protracted period of weakness

Technology stocks, including Infineon and Siemens, were pulling the index lower.

BNP Paribas equity strategist David Thwaites said the losses were the result of "a pretty nasty cocktail" of worries about the economic outlook, corporate news and war fears.

'Days away'

Earlier in the day, Japanese shares closed at their lowest level in 20 years, taking the lead from falls in the US overnight.

US President George W Bush fuelled concerns that an attack on Iraq could be just days away, warning that the crisis was moving into the final stages of diplomacy.