Over the week the FT-SE 100 rose 15.2 points to end above the 3,700 mark at 3,704.5. Meanwhile, the Mid-250 outperformed the senior index, jumping almost 50 points to 4,071.2, boosted by a host of bid rumours that triggered big gains across a number of sectors and stocks. Share markets in the UK and on the continent were boosted by speculation about further interest rate cuts, while the US remained an erratic influence as sentiment about the prospects for resolving the budget dispute fluctuated between hope and despair.
The most influential domestic data in the coming week are likely to be November's manufacturing output and industrial production figures, due to be published on Thursday. The market is likely to react positively to more news of subdued activity because this will increase the likelihood of a further interest rate cut later in the year.
In the longer term, the UK stock market is likely to be side-tracked at times by concerns about an early general election which, at least according to the polls, Labour seems destined to win.
A series of retailers' results and trading statements this week should give a clearer picture of how UK stores traded in the important Christmas period.
Dixons, the UK's biggest electrical retailer, is forecast on Wednesday to report a strong increase in pre-tax profits in the six months to November. On Thursday trading statements from Boots and Sears are expected to present a mixed picture, while on Friday Argos and Next are expected to report strong pre-Christmas sales