NEW YORK (AP) — Shares took a breathtaking plunge yesterday as the Dow Jones industrial average collpased by 800 points — its biggest drop ever during a trading day — before a late rally to end 370 lower on the day.

Around the world the story was worse. Japan's Nikkei average lost more than four per cent. And then the losses spread across Europe — nearly six percent coming off the UK's FTSE-100, representing the biggest single day loss for that market. Germany's DAX lost seven per cent and there was a drop of more than nine percent for France's CAC-40.

Somehow Wall Street managed a big afternoon rally in yet another day of extreme volatility and worldwide worries about the financial crisis and stubborn credit, even after the $700 billion US bailout. Yet, the Dow finished below 10,000 for the first time since 2004 and lost more than three-and-half per cent for the day, and there were no signs fear and unpredictability were leaving the stock market any time soon.

Almost every Bermuda insurer and reinsurer was hurt by the torrid day of trading. Allied World Holdings dipped by more than 11 per cent, while Axis had it worse with 12.5 per cent of its value being lost, while shares in ACE and XL also headed south.

The Dow's low came just before the last hour of trading, and the decline was an ominous sign for investors who worried the market would tip even lower in the final stretch of the day. Late-day sell-offs are seen as a sign of fleeting confidence.

At its worst point, the Dow was down 800.06, an intraday record. The stock market rallied during the final 90 minutes of the trading day, and the Dow finished down about 370 points at 9,955.50.

The average is down almost 30 percent from its all-time high of 14,164.53, set almost exactly a year ago.

Speculation among traders that Wall Street's pullback had been severe enough to force the Federal Reserve into taking other steps to soothe the markets helped stocks rebound from their lows.

"If you can't say that we're oversold now I don't know what you say. You're at least due for a bounce if nothing else," said Bill Stone, chief investment strategist for PNC Wealth Management.

n Markets – Business, Page 15