The London stock market will look to extend its recent rally next week, when the Bank of England is expected to again slash interest rates as Britain stands on the brink of recession. The FTSE 100 index of leading shares closed Friday at 4,561.79 points, up 345.2 points or 8.19 percent from December 24 when the market closed for Christmas.
London's main index reopened this week on Monday, before shutting Thursday for New Year's Day. Despite a strong start to 2009, the FTSE last year suffered its worst annual performance in its 24-year history, losing 31 percent of its value.
Stocks around the world were rocked in 2008 by the international credit crunch, banking crisis and house market slump. London's dire performance surpassed 2002's 25-percent decline amid the dotcom crash.
Last year's fall was the London stock market's second biggest ever annual slide, overshadowed only by the 55-percent fall for the FTSE All-Share index in 1974. Stricken British banks HBOS and Royal Bank of Scotland were among the worst performers in 2008.
The two groups were forced to call on the taxpayer for a multi-billion pound rescue bailout after suffering in the aftermath of the credit crunch - a crisis that slashed the value of HBOS shares by 90 percent and by more than 80 percent for RBS. In a bid to spur Britain's struggling economy, the Bank of England has been slashing interest rates in recent months. On Thursday the BoE meets for its regular policy meeting and is widely expected to again take the knife to borrowing costs.
Some analysts are predicting a cut of 100 basis points or more for a third month running. British interest rates currently stand at 2.00 percent - the lowest level since 1951.
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