It was a mixed week for equity markets, with modest gains in the UK and Europe and little change in the US while the Japanese and other Far Eastern markets ended the week lower. By Friday's close, the FTSE World index had risen by 0.3 per cent, leaving it 1.9 per cent higher since the start of the year.
A warning by the governor of the Bank of England that the UK housing market could be heading for a fall had a negative impact on housebuilders and was the main reason for the underperformance of mid-cap stocks, with the FTSE 250 index ending 0.4 per cent lower. However, it was a better week for large-cap stocks, with the FTSE 100 regaining the 4,500 level following a rise of 0.5 per cent while the FTSE Small Cap index ended unchanged.
In the US, the jury is still out as to how much interest rates will rise on June 30 following the latest consumer price inflation data which was in line with expectations although there was a sharp increase in the producer prices index. It was a quiet week for US equities, with the S&P 500 and the Nasdaq fallingby 0.1 per cent and 0.7 per cent respectively while the Dow Jones gained 0.1 per cent.
A strong showing by the oil sector helped the FTSE Eurotop 300 to a rise of 0.6 per cent, its fifth consecutive weekly gain, while in Japan the Nikkei's biggest one-day fall for a month on Friday left the index 1.5 per cent lower for the week.
Other Far East markets continued to underperform on fears of a slowdown in China. Shares in Hong Kong fell by 4.4 per cent while Korea's Kopsi index fell by 1.3 per cent.
It was a better week for bonds, with the FTSE All Stocks index gaining 0.5 per cent, pushing the yield on 10-year gilts down to 5.18 per cent.
In the currency markets, the dollar fell by 1.1 per cent against sterling following data showing a record first-quarter current account deficit while oil prices rose to a 10-day high after an attack on a pipeline in Iraq.