Market Report: Stagecoach resilient in face of terrorist attacks

In the end, however, the day was characterised by resilience rather than panic. The early hedge-fund activity that knocked the market was not followed by selling by longer-term investors. Londoners had long feared such an attack and market professionals knew that equities had bounced back, eventually, from the shock of 11 September 2001, and the impact of last year's Madrid bombings. If anything, traders were keener to nick a bargain in the sell-off than to steer clear of the market altogether. By the end of the day there had been a significant amount of buying activity, and the London Stock Exchange recorded one of its busiest trading days, with 4.2 billion shares passing through its systems. The FTSE 100 closed at 5,158.3, down 71.3, while the mid-cap FTSE 250 was off 109.0 at 7,387.9.

Typical of the defiance of the day were the bus company shares, including those of Stagecoach, whose vehicle was blown up in Tavistock Square. Most saw their shares fall up to 10 per cent at their worst, but recovering to end less than 4 per cent lower. Stagecoach ended at 115.5p, down just 1.25p. National Express, which has doubled its presence in the London market, was down 30.5p at 880p; FirstGroup fell 10p to 323.5p; Arriva was off 12p at 534p; and Go-Ahead fell 31p at 1,248p.

The Stock Exchange had ordered market participants to turn off their so-called "black boxes", the computers which automatically generate share trading orders. These can often exaggerate market movements and were blamed for the extremity of the stock market fall in the days after 11 September 2001. Market makers were also relieved of their obligation to trade after the Exchange declared a "fast market" when more flexible rules apply.

The early theory was that terrorism would deter people from travelling, and would exacerbate the downturn in consumer confidence which has already triggered a string of profits warnings. So tourism stocks were hardest hit. British Airways was the worst blue-chip performer, off 11.5p at 260.75p, while the airports operator BAA fell 20p to 599p. EasyJet, which had published mildly disappointing June passenger numbers at the start of the day, ended down 10p at 254.25p, and Ryanair slipped €0.14 to €6.32. Shares in the tour operators MyTravel and First Choice Holidays were down 0.17p at 5.85p and 5.5p at 187.25p, respectively.

Carnival, the cruise operator, was 71p lower at 3,159p. And hotels groups were also marked down. Hilton was 9.75p lower at 288.25p, with InterContinental Hotels down 20p at 701.5p and Millennium & Copthorne Hotels falling 12.25p to 357.25p.

For a long time, there were no blue-chip stocks recording share price gains, but two closed higher. Amvescap was 13p better at 408p. On Wednesday it rejected a takeover bid from CI Financial of Canada. The hope is that CI will team up with the bigger Sun Life of Canada to make a knockout bid, or the drama will tease out another bidder. The other FTSE 100 stock on the rise, Shire Pharmaceuticals, was up a penny at 620p. The drug company agreed to pay $1.6bn (£920m) for the American biotech group Transkaryotic Therapies, but some of the US firm's shareholders are holding out for more money. Its shares are trading above the level of Shire's cash offer.

There was an early sharp sell-off on Wall Street, which came on top of the previous day's oil price-related drop, but again most of the ground was quickly recovered. One dealer said the effect of the attacks had not been as pronounced on the US markets as London traders had expected earlier in the day. "The world has gone hard to this sort of thing, and the shock effect gets less," he said.

There were even some traders looking, discreetly, for companies that may stand to win new business as a result of the attacks. Underground repair work was being added by some to this week's Olympics victory as a reason for buying Balfour Beatty, the engineering project expert, whose shares were up 1.75p to 349p. IG Group, the financial spread-betting firm which reported a busy day, was up 2.5p at 152p. And Eruma, a little company which makes bomb-proof blinds, which floated last week, jumped 0.75p to 7.75p.