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Investment Analysis

DAVID HAMBIDGE Investment director,Premier Fund Managers

Most of the world&#39s major stockmarkets continued to hover around their highs for the year last week without moving significantly in either direction. By the end of the week the FTSE World index was trading 0.8 per cent higher, a gain of 26 per cent since the start of the year.

In the UK, investors sold shares that have led the market higher over the last few months and, while oil and utility stocks were generally strong, the stockmarket as a whole lost ground. By the end of the week, the FTSE 100 was 0.4 per cent lower while the FTSE 250 fell by 1.5 per cent. Smaller companies fared somewhat better although still ended in negative territory with the FTSE SmallCap index losing 0.2 per cent.

The US was the best performing of the major markets last week, with the Federal Reserve confirming that interest rates would remain at 1 per cent. However, it also stated that the risk of deflation and inflation were more evenly balanced, which many saw as the first step to higher rates next year. Other news on the economy was slightly disappointing, with weaker than expected consumer confidence figures on Friday and an unexpected rise in jobless numbers.

But the latest retail sales figures provided some cheer and helped propel the Dow Jones through the 10,000 level for the first time in 18 months, leaving the index 1.8 per cent higher over the week. The S&P 500 gained 1.2 per cent while the Nasdaq ended 0.7 per cent higher.

In Europe, shares ended flat, with gains in oil and auto stocks offsetting weakness in clothes retailers after trading updates from some of the sector&#39s leading players.

Shares in Japan fell heavily at the start of the week although they recovered some of their lost ground after positive industrial production numbers while the latest Tankan survey showed business confidence at its highest level for more than six years. By the end of the week, the Nikkei 225 was 2 per cent lower.

Stocks had a generally positive week with Thailand, which has been the region&#39s strongest performing market this year, gaining 2.6 per cent while shares in Hong Kong and Korea ended the week more than 2 per cent higher.

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