"The market lacks volume, its nervous and prone to sharp movements in these conditions," a trader said. Prices were mixed at the close. Front month December, which fell eight pounds to a new contract low at 980 pounds per tonne in early morning trade, was six up at 994 stg after touching a high of 997.

The four nearby months all rose between five and nine pounds respectively, although the distant contracts were down. December led the volume with 2,350 of the 6,425 lots traded.

One trader said at midday the market was in a bear trend after December hit a contract low during the morning, continuing a five-month slide from a 1,200-pounds peak on May 15 in which it has lost 18 per cent of its value.

But another trader said during the afternoon session that that the market was unpredictable and easily influenced at present.

"I thinkyou've got to look at New York," he said. "A few stops were touched as it went down through yesterday's lows, then it went up and stops were touched on the upside.

"I think that's all it is," he said of the London market's afternoon recovery. In fundamental news, Ghana's COCOBOD signed a $320 million loan deal with a syndicate of 24 foreign and local banks in London to finance the 1998/99 cocoa harvest.

COCOBOD chairman John Henry Newman said the farmgate price paid to producers would be raised to about 57.5 per cent of FOB from 54 per cent last year.

Newman estimated Ghana's 1998/99 crop at 370,000-380,000 tonnes, down from 390,000-400,000 tonnes in 1997/98.

US traders forecast that the third quarter 1998 cocoa grind due out on Friday is likely to be little changed from last year's third quarter. Trade forecasts ranged from five per cent up to five per cent down.