Shares in New York have rebounded after slumping to levels last seen shortly after terrorists flattened the World Trade Center on 11 September.

Traders hit the New York bourse to buy up selected tech stocks at rock-bottom prices after weeks of market collapse, buoyed by rumours of good upcoming figures from software giant Microsoft.

But earlier in the day, investors in London, Frankfurt, Paris and New York had reacted badly to separate but simultaneous bad news from both sides of the Atlantic.

The horrific attacks on New York and on the Pentagon in Washington DC triggered a worldwide selloff, before a bouncebank which began in November last year.

Dire corporate results and weak economic data since then now makes earlier hopes of a rapid, solid US recovery look like false optimism.

Monday's falls:

London, FTSE 100: 4,541.9 -63.4 (1.38%) Paris, Cac-40: 3,669.24 -130.29 (3.43%) Frankfurt, Dax: 4,127.21 -105.19 (2.49%) New York, DJIA: 9,281.82 +28.03 (0.30%) Nasdaq composite: 1,460.34 +19.38 (1.35%) S&P 500: 992.72 +3.58 (0.36%)

Overshadowing it all was the relentless slide in the value of the dollar, now almost at parity with the euro, and the deepening worries about the fragility of the US recovery.

The dive pushed the New York-based Nasdaq index, the bellwether of the technology sector, as low as 1,414.69 in noon trading, lower even than the 21 September nadir of 1,423.19.

Battered bourse

New York's modest recovery also helped by a speech on the Middle East by US President George W Bush, encouraging traders for whom the spiralling violence there has added to insecurities born of the so-called "war on terror".

But few believed that the bounce was anything but a kneejerk reaction to the cheapness of key stocks.

The trend, dealers said, is still downwards.

The morning's European selloff was in full swing by the time New York's 1330 GMT opening simply accelerated the trend.

Investment bank Goldman Sachs was in the midst of the falls, warning its clients that tech stalwart IBM is likely to underperform both this year and next.

That hit hardware makers, while telecoms stocks suffered on bad news from their transatlantic rivals.

Phone companies were also hit by further signs that bankrupt carrier Global Crossing may have tried to evade a federal investigation.

Meanwhile, WorldCom edged closer to the abyss as its shares fell below $1 after Salomon Smith Barney cut estimates.

Allegations of further illicit activity at investment banks - staff suspended at Merrill Lynch and a lawsuit by aggrieved insurers directed at JP Morgan's work for Enron - poisoned the chalice still further.

Battered bourse

Earlier, Europe had produced enough indications of its own that companies are having a hard time recovering from last year's downturn.

The tone was set in Europe as Germany's Dax and France's Cac-40 both registered triple digit falls.

In Frankfurt, a rejig of German shares based on the value of shares only freely tradeable in the market punished giants like Deutsche Telekom, still majority-owned by the government.

Emergency refinancing talks between power technology group Babcock Borsig and its banks pushed financial stocks sharply lower, while insurers suffered amid the general despondency.

In France, traders were alarmed by reports of a cash shortage at media giant Vivendi.

The company's shares fell more than 10% after it sold off part of its utility arm, Vivendi Environnement - just days after parking another slice with Deutsche Bank in a so-called share repurchase deal.

Techs under suspicion

France Telecom and its mobile unit, Orange came into the firing line too, after Moody's credit rating agency said their debt was little better than junk status.

In the UK, the falls were less stark, but nonetheless the mood was grim thanks in part to a deeply pessimistic analysis of the media market from advertising group WPP.

But the tech sector came in for a battering in London as well as elsewhere, with mobile group Vodafone touching four-and-a-half year lows and competitor MMO2 sliding after a negative report from Goldman Sachs.