The index of leading shares closed 6.2 points down at 3483.8, its 12th day of decline in 13 days, after being almost 100 points lower at one stage.On Wall Street, the benchmark Dow Jones index ended the day in positive territory after the Federal Reserve opted to keep US interest rates on hold at 1.25 per cent. The widely expected decision helped the Dow recoup an early 143-point fall to end up 21.9 at 8110.7.The Fed said that rising oil prices and geopolitical risks ­ a reference to a possible war with Iraq ­ have restrained spending and hiring by businesses. However, "as those risks lift, as most analysts expect, the accommodative stance of monetary policy, coupled with ongoing growth in productivity, will provide support to an improving economic climate over time", it said. Analysts said investors were increasingly unsettled by the likely aftermath of a possible US-led attack against Iraq after President George Bush's State of the Union speech heightened fears that a war was inevitable."Now we're focusing on the post-war environment and it's not too pretty," said Clive McDonnell, strategist at Standard & Poor's "War in Iraq will destabilise the Middle East. Bush is likely to win the battle in Iraq but lose the bigger war."In the UK the mood was gloomy as investors continued to fret about insurance companies dumping shares to stay within solvency requirements. There was some relief when Britannic said it had taken action to maintain solvency.

But bank shares suffered on bad debt fears."Until the uncertainty in the Gulf is resolved I can't see any impetus for anybody to buy," Jeremy Batstone, a director of NatWest Stockbrokers, said. "Who is going to buy when you don't know how long it will last, how wide its scope will be and how messy?" Robert Parkes, UK equity strategist at HSBC, added: "Uncertainty is the big factor. There are geopolitical concerns about Iraq, terrorism and the global economy. On the domestic side there are concerns about the housing market and consumer spending."But there was some optimism in London yesterday. Mr Parkes said: "When the market is being driven by fear it could drift lower.

But we feel there is strong support around these levels." Mr Batstone agreed: "In the very near term I can't see any catalyst to get investors buying again. But I'm sure that at the end of 2003 we'll say this was a great buying opportunity."Wall Street's move into positive territory helped the dollar pare some losses against the euro last night to trade at $1.0835 per euro, after earlier falling to fresh three-year lows of $1.0899. Gold prices, which are at six-year highs amid war fears, also eased in late trade.But oil prices jumped another 3 per cent, as a drop in US fuel stocks combined with worries about the Gulf. The price of a barrel of Brent Crude for March delivery rose 75 cents to $31.02.. He has long been reported to be unhappy with his diminished role since the merger with AOL, but AOL chief Richard Parsons said Turner wanted to spend more time on his philanthropic endeavours.His exit coincides with the pending departure of Chairman Steve Case, the America Online co-founder.Whether Mr Turner - who owns more than 3 per cent of the company - will remain on AOL's board at all will be determined in the next few weeks, spokeswoman Mia Carbonell said.Analysts had been expecting AOL take a goodwill writedown but were surprised by its enormity. It included a $10 billion (£6.7 billion) charge to reflect the lower value of AOL's cable assets.The announcements were made after the US stock markets closed.Executives said they expect 2003 revenue to grow "in the mid-single-digits" and earnings before taxes and depreciation to be essentially flat. Analysts had been forecasting roughly 5 per cent growth in revenue.Two years after AOL and Time Warner's merger, which could be considered the crowning moment of the Internet boom, the company has been forced to justify the rationale for the deal and overcome questions about its accounting.The bright spot has been Time Warner's media properties, which include CNN, Warner Music, Time and People magazines and the Warner Bros film division that boasts blockbuster franchises like Harry Potter and Lord of the Rings The weak link has been the AOL online division..