The FTSE 100 Index endured a turbulent 2007, but experts are hopeful of a brighter picture for this year, albeit with some further volatility along the way.
The Footsie see-sawed its way through as the turmoil in credit markets led to an unusual amount of volatility in markets.
On Monday the market finished its final session in negative territory as blue chips limped the last leg of a difficult period for UK stocks.
The FTSE 100 Index closed down 20 points at 6456.9, marking a gain of 3.8 per cent over the year - in stark contrast to the near 11 per cent rise seen in 2006.
The start of this year is expected to see more of the same, with the tightening in credit markets potentially continuing well into 2008.
But market commentators are on the whole looking for a far more positive end to the year as the forecast interest rate cuts for next year are set to help shares rebound.
Brewin Dolphin is the most optimistic, with a target of 7200, while Investec too is looking for a close at the key 7000 level, which would set a new record for the index.
Mike Lenhoff, chief strategist and head of research at Brewin Dolphin, believes the blue chip index could swing between a range as wide as 6100 to 6600 in the first six months, after which he predicts the credit markets may ease.
"Right now everyone is pre-occupied with the slowdown and the credit squeeze, but by the middle of the year most of the bad news and earnings downgrades will be behind us.
"By then interest rates will also be quite a bit lower than they are now and we'll start to see a pick up in earnings estimates."
He added: "It seems like a tall order to reach 7200, but it takes no time for markets to clamber up."
While the market was largely driven by a frenzy of mergers and acquisitions activity earlier this year, there is little prospect of the same level of deals next year, according to Investec.
The credit crunch has seen the primary source of private equity funding largely dry up, making highly leveraged deals such as Kohlberg Kravis Roberts' £11.1 billion takeover of Alliance Boots the last of its kind that markets will see for some time, said Roger Cursley, Investec UK equity strategist.
He believes we may instead see a number of bolt-on acquisitions by larger companies and also small-cap M&A activity, as smaller companies find it too expensive to raise funds for expansion amid the credit woes.
Mega deals may be possible in the oil sector, while he said much of next year's action may come from sovereign wealth funds - government-owned investment funds - looking to make strategic investments in firms.
This has already kicked off in earnest, for example with Borse Dubai, the government-controlled exchange, buying Nasdaq's 28 per cent stake in the London Stock Exchange earlier this year - potentially the first of many such deals.
Mr Cursley said a close at the end of next year at 7000 is a distinct possibility, with a second half surge in the FTSE 100 being helped by a recovery in heavily weighted banking stocks once the credit storm passes.
Property and real estate stock too will bounce back, while better lending conditions will boost markets as well.
"Latterly in the year consumers and corporate Britain should start to feel a bit more optimistic about borrowing and the outlook - the markets will then move up rapidly."
Despite forecasting the FTSE to end 2008 at 6900, Hargreaves Lansdown is of the opinion there could be a tumultuous start to the new year.
Richard Hunter, head of UK equities at Hargreaves Lansdown, said: "For 2008, continuing concerns regarding the full extent of credit write-downs among banks is likely to weigh heavy on shares, particularly for the first six months.
"Global markets will also be hoping that the US can avoid falling into a recession, while in the UK, the economic outlook remains balanced on a knife edge.
"Meanwhile, retailers are well aware of the potential stalling of consumer demand and will therefore be looking to the Christmas season to at least provide them with a strong start to the what could otherwise be a challenging year."
But Charles Stanley head of research, Jeremy Batstone-Carr, is hoping for a soft landing for the economy, with the anticipation of a return to economic health in 2009 pepping up shares. He cautions that this is the "most benign, but by no means the most likely outcome".
Morgan Stanley has forecast two possible outcomes for London's leading share index, with a near 1,000 point range between them - confirmation that the FTSE is subject to short, sharp and unpredictable corrections.
Last year, the index suffered a number of wobbles, with the first mini-meltdown seen in February amid fears over the steps that China would take to rein in its runaway economy, which led to heavy losses.
The concerns saw the index suffer hefty losses.
The next wobble came just a month later when billions of pounds were wiped off the value of the UK's blue-chip companies when investors became anxious over the US economy, triggered by the rising default rates in America's sub-prime mortgages - also the catalyst for the credit crunch.
These persistent worries resurfaced in July, when the market was once again sent reeling.
But the Footsie also scaled dizzy heights throughout the year, breaking the 6700 barrier in June, July and October, seemingly putting its all time high above 6900 within reach.
Morgan Stanley admits that it can be fairly "futile" to give a specific target for the FTSE, given the possibility for dramatic change.
It is also downbeat over prospects, with a year close of 6300 pencilled in and a "bear case" target of 5350 - the lowest of the forecasts by far. The group "advocates a cautious approach to equities in 2008".
Corporate profitability is set to stall as economic growth slows and earnings will contract, forecasts Morgan Stanley.
Falling house prices, weaker sterling and a credit crunch-impaired economy are on the cards, said the group.
It believes there is just a 20 per cent chance of a rebound and in fact warns that its bear case target could be the "more plausible scenario".
The 900-point gap between the Footsie forecasts suggests that the market's fortunes in 2008 are far from certain.
What does seem clear is that the crisis in credit markets is set to continue well into the New Year with more pain to come before markets regain their poise.
"Brewin Dolphin is the most optimistic, with a target of 7200, while Investec too is looking for a close at the key 7000 level ..SUPL: