WALL Street's startling recovery on Tuesday night gave London's equity market a much needed boost yesterday. The Dow Jones Industrial Average, which had been some 160 points lower at one stage on Tuesday, eventually closed nine points ahead.

And European markets, including London, were given a further shot in the arm when Wall Street opened for business yesterday afternoon. The Dow raced up over 60 points, only to slip back rapidly later in the session.

Helping British shares build on a bright start to the day was some encouraging economic news, which included better than expected figures for average earnings.

On the other hand, the market was unsettled by the minutes of the June meeting between Mr Kenneth Clarke, the Chancellor of the Exchequer, and Mr Eddie George, governor of the Bank of England. These revealed the governor's unhappiness over, the Chancellor's decision to cut interest rates at that time.

The split between the two saw gilts relinquish their initial small gains and eventually close little changed.

By the end of the day, the FTSE 100 index had recouped 25.9 of Tuesday's loss at 3,658.2, with market observers noting the recapture of the 3,650 level as a healthy signal.

Second liners fared much less well, with the FTSE Mid 250 only managing to recapture 6.4 of the previous day's 90.6 loss and closing at 4,207.4. The Mid 250 was burdened by a handful of profit warnings from constituent stocks including Iceland, the frozen food retailer and English China Clays.

There was more bad news for the recent high flying biotech stocks, with British Biotech, the flagship of the sector, taking another pounding and slipping more than 3 per cent in advance of news that only half the £144 million sterling rights issue had been taken up leaving the rest with the sub underwriters.

Dealers said many of the bears of British Biotech in recent days would look to close their short positions by acquiring stock when the rump was placed in the market.

Seasoned traders in London expressed their astonishment with Wall Street's overnight performance and remained dubious about the US market's ability to maintain the recovery.

One head trader said he felt the Dow had now fallen far enough in the short term but warned "the Dow and the British market don't feel comfortable at all it's too soon to call the bottom of the markets.

Another said investors should expect "savage spikes for some time to come the markets at the moment, are not for the fainthearted.

One of the biggest disappointments in yesterday's performance by British stocks was the continuing poor level of genuine retail, or customer, business. Much of trading activity is between market makers. Turnover at 6 p.m. just managed to creep over the 600 million mark, eventually settling at 601.3 million, of which 54 per cent was in non Footsie stocks.