London investors await interest rate clues

British stock market traders will digest minutes from the Bank of England's last policy meeting, as well as the latest inflation data and more annual earnings from major players. The FTSE 100 index of leading shares closed Friday at 4,189.59 points, down 2.38 percent or 102.28 points from a week earlier.
Shares fell on late Friday after Lloyds Banking Group warned its newly-acquired HBOS arm would suffer a pre-tax loss of ten billion pounds (11.2 billion euros, 14.5 billion dollars) in 2008 because of the credit crunch.
"A key event on Wednesday's release of the minutes of the February meeting of the Bank of England's Monetary Policy Committee (MPC)," said IHS Global Insight economist Howard Archer.
Archer said that economic growth and inflation forecasts made this week by the BoE meant that the British central bank was clearly on course to cut interest rates further in March after taking them down to a record low one percent this month.
"Nevertheless, the minutes of the February MPC meeting should still make very interesting - if depressing - reading," added Archer. "Attention will focus on whether all nine committee members were in favour of the 50 basis point reduction in interest rates from 1.50 percent to 1.00 percent that was enacted at the meeting, or whether any members wanted a larger cut. "It will also be interesting to see if there was any discussion of how low interest rates should go and on what other measures the bank should consider taking to try to boost the economy," said the London-based economist.
The BoE had said Wednesday that the recession-hit British economy risked shrinking by up to six percent later this year on a 12-month basis before possibly returning to growth in 2010.
In a further dose of bad news, official data showed that Britain's jobless total was fast approaching two million.
The BoE also forecast that annual 12-month inflation would remain below the British government's 2.0-percent target until 2012. However, there was a possibility that inflation could turn negative in 2010 and 2011, sparking deflation - or a prolonged period of falling prices, it added.
Inflation for January data will be published on Tuesday. Meanwhile among companies publishing annual results next week are BAE Systems, the maker of military weapons, and mining group Anglo American.