Most of the world's stockmarkets endured another miserable week with concerns over the increasing probability of war with Iraq keeping investors on the sidelines.
In the UK, the FTSE 100 fell by 5.7 per cent, taking the number of consecutive declines to 10, its longest sequence of losses since the index was formed in 1984 and its lowest level since late 1995. Mid and small-cap stocks fared somewhat better although still ended the week lower, with the FTSE 250 index falling by 2.3 per cent and the Hoare Govett Smaller Companies index by 1.8 per cent.
The preliminary reading of UK gross domestic product for the fourth quarter showed a rise of 0.4 per cent, which was in line with consensus forecasts and resulted in an economic expansion of 1.7 per cent for 2002 as a whole.
In spite of better than expected earnings news from a number of companies, the Dow Jones and the S&P 500 returned to levels not seen since October, ending the week 5.3 per cent and 4.5 per cent lower respectively. Technology stocks, which have outperformed over the last few months, again held up relatively well, with the Nasdaq falling by 2.1 per cent.
The picture was no better across Europe, with the FTSE Eurotop 300 ending the week 5.9 per cent lower as investors continued to worry over the situation in Iraq and the health of the global economy. In Germany, the Dax produced the biggest decline while in France the CAC40 ended 5.2 per cent lower.
The one market to buck the downward trend was Japan where the Nikkei 225 recouped some recent losses to end 0.5 per cent higher. However, elsewhere in the Far East, the mood reflected that of most other markets, with the Hang Seng in Hong Kong falling by 1.6 per cent while in Korea stocks fell by 4 per cent.
Bond markets remained buoyant, with UK gilts trading at their most expensive level relative to equities since 1967.
In the currency markets, the dollar continued to slide, hitting a three-year low against the euro for the eighth consecutive session on Friday while many commodities continued to surge, including gold which broke through $360 an ounce for the first time since 1997.