London's FTSE 100 index of leading shares fell further on Tuesday before clawing back some of its losses. The index had ended Monday's trading session at 3,436 points - its lowest level for seven and a half years.
On Tuesday morning it dropped a further 36 points to 3,400. But by the end of the day it had struggled up to 3,452.
That is still less than half its value at its height, in December 1999.
No buyers
Traders said that uncertainty about war with Iraq was still the main concern for investors.
"There's no-one out there prepared to buy this market," said Lawrence Peterman, investment director at stockbrokers Eden Group.
Investors were also unnerved by news that Japan's Nikkei ended below 8,000 points for the first time in 20 years.
Shares in New York were making gains on Tuesday after Monday's falls.
One-Minute World News 
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