Global financial markets swung wildly yesterday as investors were battered by weak US jobs data, the latest statement from weapons inspector Mr Hans Blix and unconfirmed reports of the capture of two of Osama bin Laden's sons.

The markets' gyrations showed investors remain highly nervous ahead of a possible war. The statements from US president George W Bush and Mr Blix, the chief UN weapons inspector, were deemed to increase the likelihood that a war in Iraq could be imminent.

President Bush made clear that he would call for a vote in the Security Council , but added that the US was ready to act without the blessing of the UN, if necessary.

Mr Blix said Iraq had not handed over enough documentary evidence that it had disarmed its weapons of mass destruction and added that further inspections would take months.

"The markets are coming to terms not just with the growing probability that war will break out \, but that it will start without the backing of the UN," said Mr Mark Cliffe of ING Financial Markets.

Shares and the dollar started the day badly, falling after the US Labour department said non-farm payrolls fell 308,000 in February, taking the unemployment rate to 5.8 per cent. The dollar fell to a four-year low against the euro of $1.1067, while the gold price rose from $356.60 to $357.70, a 10-day high, when the employment data came out but fell to $349 on reports of the arrests of two of Mr bin Laden's sons in Afghanistan.

Mr Andy Smith, precious metals analyst at Mitsui, said: "There were about 150 things supporting gold today and it takes one story from the Khyber pass to flummox it."

Equity markets took brief heart from the bin Laden reports, but the news also caused government bonds to lose early gains. The Blix report added to the mix, with both pro and anti-war camps at the United Nations taking comfort from his evidence.

European shares suffered most from the turmoil with the FTSE 100 index falling 1.8 per cent and the CAC 40 in Paris dropping 2.3 per cent.

The ISEQ bucked the trend closing up 0.5 per cent at 3815.2 on the back of a strong performance by AIB and CRH.

The Dow Jones Industrial Average fell 111.27 to 7,562.72 at the opening before rallying to 7,730.71, up 56.72 by lunchtime in New York.

The Dow closed up 66.04 points (0.79 per cent) to 7,740.03, and the Nasdaq composite edged up 2.64 points (0.20 per cent) to 1,305.53 at the closing bell.

Dealers said investors were having to deal with a number of cross-currents, exacerbating volatility in a market already made choppy by the lack of volume.

"The market is reacting in a sideways pattern just because you do have some cross winds," said Mr Jay Susskind, director of trading at Ryan, Beck and Co.

Japanese equities slumped to a 20-year low, led by large losses in financial stocks and European equities dropped to a six-year low for the third day running.

The pan-European FTSE Eurotop 300 index fell 2.1 per cent yesterday, taking the weekly loss to 5.7 per cent.

Swiss, French and Dutch markets all dropped to their lowest levels in more than five years.

With equities hitting new lows, investors sought shelter in the bond market.

European government bonds added to Thursday's gains on hopes for further eurozone rate cuts.

Two-year schatz yields fell 3 basis points to 2.236 per cent.

Crude oil prices remained firm with Brent crude futures hitting a high of $34.15 a barrel, their highest level since September 2000. - (Financial Times Service)