Last Week in London
One year on from the pre-Gulf War low, London stocks had a disappointing start to the weak on Wall Street weakness amid concerns over slower profit growth as new job creations fall short of expectations.
The US decline was most noticeable among tech stocks, with the Nasdaq Composite Index hitting a new low for the year.
Weakness was compounded by Thursday's terrorist attack in Madrid which left 170 dead and 600 injured, with insurance and tourism-related stocks the worst hit.
The trade deficit widened to a record £5.58bn in January as exports fell 9%, the most since June 2002, and imports rose 0.9%. The majority of the decline came from exports to countries outside the European Union, mainly the US, suggesting that sterling strength is holding back exports.
Over the week the All-Share and the FTSE 100 both lost 1.8%, with midcaps off 1.6% and smallcaps underperforming with a fall of 2.4%. Defensive areas such as consumer staples accounted for the best sector performers, with beverages and tobacco among just a handful of sector gainers, while transport and insurance came under pressure following the terrorist attacks.
Lloyds TSB (-4.8% to 432¾p) reported an 82% rise in full year profit after it sold businesses in New Zealand and Brazil. Lloyds has sold more than $4.6bn of assets since September to focus the bank on its UK businesses.
The company is trying to cut costs by moving as many as 1,500 jobs to India, where salaries can be as little as a tenth of those in London, New York or Hong Kong.
Royal & Sun Alliance (-12.7% to 93p), the UK's second largest non-life insurer, reported a narrowing full year net loss - its fourth consecutive one - as writedowns shrank and investment returns improved.
The loss was worse than had been expected. RSA is eliminating jobs, divesting units and underwriting fewer policies after three years of losses caused by asbestos claims, US workers' compensation payouts and falling stock markets. Revenue was helped by a £960m share sale in October and rising premium rates.
Finally, the Budget takes place this week, with the Chancellor unlikely to make any significant changes to existing forecasts, although there may be some attempts to stabilise the housing market.
