THE London Stock Exchange's blue-chip league, the FTSE 100 Index, went on a rollercoaster ride yesterday following the events in Iraq.

Early trading saw shares surge, but expectations that the Footsie would burst back through the 4400 barrier - as it did earlier this month - failed to materialise as the index finished near its opening mark.

Positive sentiment had pushed the Footsie to a peak of 4397.2 in early trading, but this disappeared as shares drifted back to stand only 0.4 ahead at 4348 at the close.

Investors expecting a big push on Wall Street saw US stocks gain 100 points within the first hour of trading, spurred by hopes of a quicker post-war victory in Iraq and a start to oil exports from the troubled region.

Bookmakers were predicting before the Wall Street markets opened that they would provide improved sentiment that would send the Dow Jones Industrial Average about 130 points higher in early business.

But the gains were quickly trimmed as the Dow Jones Industrial Average moved back to stand 60 points ahead, albeit well above the 10,000 barrier.

Shareholders and traders alike will have been left disappointed by the London market's failure to maintain its celebratory mood after Saddam's capture.

Car bombs exploding in the Iraqi capital of Baghdad did little to sustain that mood.

The Asian markets had augured well, closing strongly into positive territory, with Tokyo's Nikkei finishing more than three per cent ahead.

But the boost provided by hopes of a speedier resolution to the Iraq situation was not as strong as some London commentators had been expecting.

The Footsie's gain of 35.6 points to 4383.2 was weaker than the 60 points rise tipped by analysts ahead of yesterday's session.

Hilary Cook, of Barclays Stockbrokers, said: "Saddam's capture is good news for the market but traders are aware this is not the end of things in Iraq."

Geoff Langham, a trader with deal4free.com, said: "People are asking 'What have we gained? We have trapped a man who appeared pretty powerless'."

The retreat by the Footsie also reflected ongoing uncertainty, with the 4400 mark remaining a tough barrier despite recent signs that economic progress was being made.

Analysts said it was clear that many investors believed the top-flight was still fully priced after setting a 15-month high earlier this month.