Investors on the British stock market eagerly await crucial economic data that may give clues to the future direction of local interest rates, analysts said. The FTSE 100 index of leading shares closed on Friday at 4,232.97 points, down 131.99 points or 3.02 percent from the previous Friday.
In the coming week, traders will pay particular attention on Wednesday when the Bank of England publishes minutes from this month's meeting of its rate-setting Monetary Policy Committee (MPC) panel.
The British Central Bank slashed its key lending rate on November 12 by a record 1.5 percentage points to 3.0 percent, the lowest level in more than half a century amid spreading concern about an imminent recession.
The BoE's huge surprise rate cut left borrowing costs at their lowest level since 1955. The size of the reduction was the biggest since March 1981 when rates were slashed by two percent under a different regulatory framework.
"In the UK, the prevailing mood is that rates need to be slashed further," said Investec economist Philip Shaw.
"Wednesday's minutes may help to quantify these thoughts with a little more clarity." In addition, investors will seize on monthly October inflation and retail sales numbers that are published on Tuesday and Thursday respectively.
British 12-month inflation stood at a 16-year high of 5.2 percent in September but it is set to tumble in the coming months owing to sliding energy and food prices, analysts said.
The BoE's chief task is to keep 12-month consumer price inflation close to a 2.0-percent target. Public finance data was also due for publication on Thursday.
On the earnings radar, no-frills airline easyJet will post its annual earnings on Tuesday, while British bank Barclays issues a trading update on the same day.
The Barclays update may shed more light on the bank's bid to raise seven billion pounds (11 billion dollars, 8.5 billion euros) from Middle Eastern investors.
The cash injection would see Abu Dhabi's Sheikh Mansour Bin Zayed Al Nahyan, a new investor, owning as much as 16.3 percent of Barclays, while the Gulf state of Qatar could ramp up its stake from 8.1 percent to 15.5 percent. The Bank of England warned this week that the British economy was probably already in recession and faced a distant risk of deflation as a global financial crisis takes its toll.
The central bank's governor, Mervyn King, said the Bank of England was prepared to cut interest rates again. Britain is not officially in recession unless it reports two quarters running of negative gross domestic product (GDP) growth, or contraction.
The country's economy shrank 0.5 percent in the three months to September from the previous quarter, marking the first contraction since 1992, according to recent official data.
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