Expected rate cuts help market shrug off bearish news

The last day of a tough week saw UK equities extend their rally to a third consecutive session, shrugging off the debilitating effects of a week-long list of bearish news as investors pinned their hopes on another round of interest rate cuts in the US, the UK and Europe next week.

The first of the crucial meetings takes place on Tuesday when the US Federal Reserve's open market committee meets in Washington, followed by the Bank of England's monetary policy committee and the European Central Bank's Council, both of which will announce their decisions on Thursday.

The bad news included further grim economic data from the US, as well as political fall-out from the war against terrorism. In the background was the threat posed by the Argentina debt worries.

On the domestic front, there was a continuation of the depressingly familiar profit warnings and job losses.

The latest economic data from the US, the October non-farm payroll report, was even worse than most economists and commentators had forecast, with 415,000 jobs lost during the month, driving the US unemployment rate up to 5.4 per cent.

Unusually for a Friday, there was plenty of company news to keep the market ticking over. And the news was mostly viewed as positive, with Prudential, the insurance group, leading the FTSE 100 winners table after announcing the expected sale of its general insurance arm to Winterthur, the insurance arm of Credit Suisse, as part of a general restructuring. Those moves were accompanied, however, by news of big job cuts.

BSkyB was not far behind Prudential, as the market gave a positive response to its first-quarter figures. Unilever's third quarter numbers were also given the thumbs up by the market.

Over the week, the FTSE 250 and the Techmark 100 were the worst performers, losing 1.5 per cent apiece, with the SmallCap down 1.4 per cent and the FTSE 100 1.1 per cent lower.

Turnover in equities was a respectable 1.86 billion shares, with Vodafone accounting for 280 million shares, or 15 per cent of the total. Between them the oil majors, BP and Shell, accounted for another 80 million shares.