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Investment analysis

Most of the world&#39s stockmarkets responded well to news from Iraq, which showed coalition forces making good progress. However, investors had to take on board weaker than expected economic data from around the globe and the Sars virus continued to affect Asian markets.

In the US, the markets were hit early in the week by broad-based profit-taking and poor economic data – the Chicago purchasing managers&#39 index showed a bigger than expected fall in business activity. The Dow, which fell back below the 8,000 level on Tuesday, managed to claw back into positive territory and gain 1.6 per cent over the five days, ignoring the weak employment numbers which came out on Friday. The S&P Composite advanced 1.8 per cent and the Nasdaq 100 edged up by 0.4 per cent.

After a faltering start due predominantly to the insurance sector, European equities performed well. The culprits at the start of the week made back the losses and more while strong US sales figures saw German car manufacturers BMW, DaimlerChrysler and Porsche drive markets forward. The FTSE Eurotop 300 rose by 3.2 per cent, France&#39s CAC40 gained 3.8 per cent and the German Dax enjoyed the sharpest rise of 9.5 per cent. How-ever, economic news was not so encouraging,with eurozone manufacturing activity, which had looked promising earlier in the year, contracting in March.

In the UK a decline of 2.6 per cent on Monday left the primary index perilously close to the 3,500 level but advancing coalition forces and a four-day rally helped the FTSE 100 gain 2.9 per cent. Mid and small-cap stocks lagged behind but the FTSE 250 and FTSE Smallcap indices still managed to gain 1.1 per cent and 0.6 per cent respectively. Markets shrugged off CBI data, which showed that retail sales in March had fallen at their highest annual rate in more than a decade.

The one major market to buck the upward trend and again show its non-correlated qualities was Japan, where the Nikkei 225 ended down by 2.5 per cent. The index managed to edge back over the 8,000 level but failed to recover following a sharp sell-off on the last day of Japan&#39s fiscal year which saw it lose 3.7 per cent.

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