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UK EQUITY MARKET INSIGHTS

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At the end of a busy trading session on Thursday the FTSE 100 index closed at 3,755.6, leaving it only 25.7 below i...
At the end of a busy trading session on Thursday the FTSE 100 index closed at 3,755.6, leaving it only 25.7 below its all-time high, and 55.9 points or 1.5% higher on the week. Market strength surprised many analysts, who had been expecting a quiet week ahead of the Easter break.

The index was boosted by take-over stories, concentrated in the media sector. Specifically, Pearsons, the media group which owns the Financial Times, was the subject of take-over rumours.

Dealers expect further activity this week as the major investment institutions begin to invest their second quarter asset allocations at the start of the new tax year. There could be some major shifts in existing portfolio positions, boosting the volume of shares traded, and driving the FTSE 100 index higher.

However, like the gilt market, the UK equity market will remain vulnerable to any major sell-off in the US, following much stronger than expected employment data for March. Modest economic growth in a low-inflation environment was one of the main factors propelling the US stock market higher through much of last year, and there are fears that a more buoyant labour market will put pressure on wages and prices.
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