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Investment analysis

It was a mixed week for global stockmarkets. A drop in US consumer confidence in July and the release of a disappointing economic report on employment in the world&#39s leading economy dampened investor confidence and provoked some profit-taking around the globe. By Friday&#39s close, the benchmark FTSE World index had fallen by 1.5 per cent. However, European and Asian markets continued to advance.

In the US, markets were swayed by economic data. The release of the Conference Board&#39s monthly index on Tuesday showed that confidence in the US had slipped to a level last seen March, when the US was in the middle of its war on Iraq. The employment report issued on Friday also surprised many economists who expected America&#39s employers to have added jobs to their payrolls rather than incur losses of some 44,000. There was some positive data, with a US Commerce Department report showing economic growth up in the second quarter at an annualised rate of 2.4 per cent but despite this, the Dow, S&P 500 and the Nasdaq 100 fell by 1.4 per cent, 1.9 per cent and 1.1 per cent respectively.

It should have been a better week for the UK&#39s primary index after most of the FTSE 100 constituents that reported last week met or exceeded expectations. However, the focus was on economic news from across the Atlantic, which led the footsie to a loss of 0.6 per cent over the five days. ICI was by far and away the best blue chip, gaining 27.8 per cent over the week after second-quarter results outstripped forecasts and it announced 1,400 job cuts. The more cyclical and domestically-oriented FTSE 250 also enjoyed some good results – United Business Media, Cookson and George Wimpey to name three, and held on to a weekly gain of 2.2 per cent. The FTSE small cap index rose by 1.8 per cent.

European markets had a better week on the back of encouraging economic news and a further batch of mostly bullish company results – the benchmark FTSE Eurotop 300 index which touched a sevenmonth high during the week moved forward by 1.3 per cent, with Germany&#39s Dax and France&#39s CAC40 advancing 2.4 per cent and 1.9 per cent respectively.


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