'Which is the merchant here, and which the Jew?" The first question in court from the disguised Portia (Kate Forbes) provoked sniggers from the Swan Theatre audience on Tuesday night.

What kind of brilliant legal mind was it that could not distinguish between two men so obviously dissimilar - one wearing a black skullcap, the other in prison garb-cum-hospital gown and all too obviously ready to surrender a pound of his flesh? A young Daniel? More like Mr Magoo.

Perhaps the scene was being deliberately played for a laugh, though. This is certainly the case with much else in the brilliant modern-dress production of The Merchant of Venice, which the New York-based company Theatre for a New Audience has brought to Stratford in an all-too-short run that ends tomorrow. The play is, after all, a comedy, despite the darkness inherent in its central theme.

The hateful anti-semitism shown by so many of the 'good' characters has rarely been so starkly revealed as it is in this gripping and lucid account of the play. Portia emerges as a racist, too, from the shudders of distaste with which she sees off her first failed suitor, the Prince of Morocco, after he has selected gold from among the three caskets, which are cleverly replaced here by laptop computers: "Let all of his complexion choose me so." As played by Ezra Knight - as a supercool dude with bleached blond hair who parachutes into Belmont in a pink jump suit - the prince adds hugely to the fun, as does his male attendant who strikes up a warm rapport with Portia's prissy servant Balthazar (Arnie Burton).

A bravura performance as Shylock by the celebrated film actor F.Murray Abraham ensures that he is seen more as victim than villain. As he is presented here, living among spivvy financial whizz-kids of 'the near future' he is clearly a man no more concerned than anyone else with money and the main chance. Calm and reasoning in his early scenes, he reveals his bitter fury against the persecuting 'Christian' world in the terrifying explosion of anger (preceded by a thrillingly long pause) that follows taunting questioning from Salerio (Matthew Schneck) about the value to him of Antonio's flesh, "What's that good for?" "To bait fish withal," he thunders.

If the Christians rarely seem to show much Christian spirit, he at least is strong in his religion. When it is taken from him as part of Venice's punishment after his plot fails, this is shown in his howls of anguish to matter more, much more, than his ducats. We share his outrage.

Felicitous touches supplied by director Darko Tresnjak include the transformation of Solanio (Cameron Folmar) - and, to an extent, Salerio too - from disinterested observers into malicious stirrers, rejoicing in the discomfiture of Antonio (Tom Nelis). Surely, too, there is an element of queenly jealousy involved - for, as is usual in modern productions, there are strong homoerotic overtones to the philanthropic merchant's relationship with Bassanio (Saxon Palmer), expressed most clearly in a lingering full-on-the-lips kiss - in a courthouse too! - when it looks as if the older is doomed to die. That he doesn't owes everything to the brilliance of Portia, in her role as the lawyer Balthazar. Presenting her as having no clue about how to conduct the case and thinking on her feet as it proceeds, like the dizzy heroine of a US sitcom, was a directorial touch of which I did not approve, for all that it was rather funny.