London calling

London remained hamstrung by concerns that high oil prices will curb economic growth, with the market little changed over the week ahead of the Spring Bank Holiday long weekend.

Quentin Smith from OMAM UK reports that economic growth slowed for the first time in a year during the first quarter as manufacturing production slumped and the pace of expansion in service industries eased.

Real GDP rose 0.6% in the first three months of the year after a 0.9% percent gain in the fourth quarter of 2003, against expectations of a rise of 0.7%.

From a year ago, the economy grew 3%, the fastest pace since the third quarter of 2000 and an improvement on the 2.7% expansion in the final three months of 2003.

Manufacturing output fell 0.5% in the first quarter, after a gain of 0.3% in the previous three months, as sterling strength hurt exporters.

House prices rose in May at the fastest annual pace in 12 months, according to Nationwide Building Society.

The average cost rose 1.9% in May, following a 2.1% rise in April, giving a rise of 19.5% from a year ago.

Nationwide believes that although the rise has been sustained into May, there is scope for a period of low activity and low price growth, given the high levels of existing debt and high prices that are keeping first time buyers out of the market.

Consumer confidence was unchanged in May after the Bank of England lifted interest rates for a third time in seven months, according to a survey by research company Martin Hamblin GfK.

The index of household confidence stood at -2 in May, the same as in from April, after falling to -3 in March.

Over the week the All-Share and FTSE 100 indices ended unchanged, with midcaps and smallcaps both making gains of just under 1%. The strongest sector performances came from technology and cyclical services, while telecoms and consumer staples were the weakest area.

Power distributor Scottish Power (+4.5% to 396½p) reported a 7.6% rise in fourth quarter profit after it added 600,000 clients in Britain.

The company, which controls 10% of the UK power market, is winning between 40,000 and 50,000 new clients from rivals every month and now has 4.24m customers in the UK and 1.5m in the US, where its Oregon-based PacifiCorp unit generates more than half of the company's profit.

Scottish Power plans to invest £1.2bn this year, half of which will be focused on internal growth.

Barclays (-5.7% to 475½p) reported a significant rise in first quarter pretax profit, driven by record income at its investment bank.

In a statement, Barclays said that interest income, fees, commissions and trading profit all advanced from the year-earlier quarter, while provisions for loan losses fell.

Investment bank Barclays Capital is adding commodities trading and equity derivatives to its range of services and is considering buying businesses in the US and Europe to counter slower growth in the UK. Barclays Capital had record income as client activity increased and markets rose.

Pharmacy chain Boots Group (+4.5% to 658p) reported a 38% rise in annual earnings as it cut prices on toiletries to fuel demand and benefited from the absence of a one-off loss on a disposal the year before.

The company also plans a £700m share buyback. Last year Boots reduced the price of 2,000 products by an average of 18% to compete with supermarket chains and is stepping up a store modernisation program, which it expects to reduce profit by about £140m this fiscal year.

Boots plans to add 40 out-of-town stores and 20 neighbourhood pharmacies this year, creating about 3,000 jobs.