UK stock market looks to rate news next week

08 May, 2006

London investors, shrugging off high commodity prices, will be guided next week by a key release from the Bank of England that might provide clues on the next step for British interest rates.
On Friday, London's FTSE 100 index of leading shares ended the week at 6.091,7 points - a rise of 1.14 percent or 68.6 points from the previous week.
On April 21 the FTSE 100 had closed at 6,132.7 points - the highest level since February 15, 2001 - as record high oil and metals prices boosted energy and mining companies.
Analysts warn that rising commodity costs do not benefit all companies because they increase costs and eat into earnings.
According to ABN Amro analyst Lars Kreckel, British companies in sectors such as travel and leisure, automaking, and food and beverages, have the greatest exposure to rising commodity prices.
"With oil above 70 dollars per barrel and many other commodities from metals to soft commodities reaching new highs, dependence on commodities... is in focus," he said.
Next week's centrepiece economic release will be Wednesday's quarterly Inflation Report from the Bank of England, detailing its forecasts for economic growth and inflation.
Market participants are hoping for insight into the BoE's decision this week to freeze the cost of borrowing in Britain at 4.50 percent for the ninth month in a row, against a backdrop of steady economic growth.
Other economic releases include producer prices on Monday and manufacturing data on Thursday.
With few corporate results on the agenda, investors will track recent take-over speculation.
On Friday, London's banking sector was lit up by bid talk after newspaper City AM reported that Banco Santander Central Hispano (SCH) was in "exclusive" talks to buy British rival Alliance and Leicester.
Shares in Alliance and Leicester leapt nearly 14 percent at one point after the paper said it would accept an offer of around 6.7 billion pounds (9.8 billion euros, 12.4 billion dollars).

Read Comments