The FTSE 100 index of leading U.K. shares has climbed back above the 5,000 level after dropping below the psychologically important barrier for the first time since October 1998.

By early afternoon, about £40 billion had been wiped off the value of Britain’s biggest companies by the FTSE 100 index’s downward spiral, down 100 points or 1.9% at 4,970 at 1412 GMT.

Opening rises on Wall Street lent support to London stocks, taking the FTSE 100 back up to 5,010 at 1440 GMT. But market watchers warned against optimism, saying the most likely direction for London stocks is downwards.

Sharp falls on world markets in the past few days were prompted by worse than expected U.S. unemployment data.

A series of gloomy economic indicators and poor company results have also dragged down share prices as the global slowdown spreads.