A day-long jousting session with the 5,100 level ended with the FTSE 100 index, the London market's leading benchmark, finishing marginally ahead, up 15.2 at 5,108.7.
At its worst level of the day, within 30 minutes of the opening, the FTSE 100 posted a low of 5,042.7, down more than 50 points.
The market's smaller capitalised stocks delivered another worryingly weak performance. The FTSE SmallCap index dropped below the 2,000 mark for the first time since January 19th, 1996, and is now 28.5 per cent down from its May 26th peak of 2,793.8.
The market's extremely nervous performance came before the outcome of the regular meeting of the US Federal Reserve's open market committee (FOMC) in Washington yesterday.
A decision from the committee was due shortly after 7 p.m. London time.
Dealers in London said the market had behaved reasonably well in front of what was seen as the most crucial FOMC meeting for many months.
"Everyone I've spoken to expects the Fed to cut, but no one is confident about the extent of the cut," said one market-maker.
He said the market would take a minimum 25 basis points reduction as read and warned that many had already factored in a 50 basis points reduction.
Others said the market would probably run into further pockets of turbulence as the third quarter came to a close and the last quarter, traditionally one of the most volatile of the year, kicked off.
The erratic behaviour of the FTSE 100 was not mirrored by the second-line stocks, represented by the FTSE 250, which stayed in positive ground all day, eventually closing the session a net 9.0 ahead at 4,562.0.
