Wall Street stocks soared in euphoric relief, racking up their second-best gain ever as US-led forces launched a devastating air and missile attack on Iraq.

Investors dumped gold as if it was white hot, and oil prices dropped by one-third.

That was then - the immediate trading on world financial markets after the Gulf War began on January 17, 1991. It was a so-called "relief rally" after months of uncertainty.

Many analysts and investors are banking on a reprise if Gulf War Two, Son of Gulf War - or whatever a new conflict with Iraq is dubbed - takes place over the next few months.

But will history repeat itself? There is nothing that financial markets hate more than uncertainty, and the "will they", "won't they" and "what ifs" of the period leading up to a possible US-led attempt to disarm Iraq has dictated world investments for months now.

Investors are holding back from buying stocks, uncertain about the war and in effect waiting for a rally to start.

Those who held off until the war started more than a decade ago as the United States geared up to lead a multinational force to drive Iraq out of Kuwait missed out on some of the rally. The "low" actually came in October, three months before fighting began.

The Dow Jones Industrial Average slumped more than 18 per cent after Iraq invaded Kuwait in August 1990 until it closed at 2365.10 on October 11.

It then rose gradually as the direction of events seemed to take shape, before slumping again as troops massed in the weeks of uncertainty before the actual attack.

The Dow lost more than six per cent from Christmas to January 9, when it closed at 2470.30 - what turned out to be its low for 1991 but still more than four per cent above the October low.

After that, it was off to the races. On the day the war started, the Dow, which had risen a little bit from its January 9 low, gained 114.60 points, or 4.6 per cent - at the time the second largest gain in history.

Although there were a few blips during the war itself, the Dow climbed above its invasion level and ended up hitting its year high at the end of 1991 - up 20 per cent on the year and nine percent above its pre-invasion level.

Oil, which had shot up to to more than $40 a barrel in October 1990, fell more than $10 a barrel when the shooting started - around 33 per cent to just below what it had been when Iraq invaded Kuwait.

Gold fell from around $403 an ounce to around $380, confounding those who had assumed it would rise at the outbreak of war in its traditional safe haven role.

The explanation for what at the time was seen as strange behaviour by the markets was that the actual outbreak of war had ended uncertainty. It was very soon apparent that the conflict would be short and favourable to the United States.

Analysts say the markets have been pricing in a short war this time around as well, hence the falling stock markets throughout January.

But to what expected a "relief rally" takes off again if and when fighting starts is a matter of debate.

Analysts have been warning of the potential for either a surprisingly long war or a long, unsettled post-war period to unnerve investors.

ING, the Dutch investment bank, for example, said in a note that the prevailing view of a short war was optimistic, predicting a conflict of around two months with the United States deliberately taking its time.

Others, such as US brokers Cantor Fitzgerald, have expressed concern about what happens after the war, seeing a potential for a long period of instability and US occupation of Iraq.

And then there are the other problems, including investors battered by the long bear market and the worries about economic growth.

Investment bank Dresdner Kleinwort Wasserstein has warned that even if there is a relief rally, the shaky state of the US economy could still come back to haunt investors.

It turns out this is not entirely a new thought. "This is euphoria on good news," Ken Lucas if Newbold Hopper Soliday told Reuters as markets rallied when the Gulf War broke out in 1991.

"Unfortunately we will eventually get bad news (and) we still have a terrible economy to worry about."