Concern over UK debt

In the UK, there was further concern over government debt, amplified by an opinion poll that suggested a high risk of a hung parliament in the general election. It is thought that an indecisive outcome will make it more difficult for the budget deficit to be reduced.

Economic data showed that the latest Purchasing Managers' Index for the services sector was stronger than expected, increasing to 58.4 in February from 54.5 the previous month. This was the highest figure for three years.

Also this week, the Bank of England held rates at 0.50%, which was in line with expectations. There was also no expansion of the quantitative easing programme from the £200bn level already committed.

In the eurozone, the Greek government announced fresh budget cuts of €4.8 billion to curb the country's ballooning budget deficit.

In line with expectations, the European Central Bank left the main refinancing rate unchanged at one per cent. The bank continued to gradually remove some of the longer-term liquidity measures it had introduced during the crisis, but maintained other shorter-term measures in place until at least October.

The eurozone's Consumer Price Index (CPI) inched up from 0.9% year-on year in January to one per cent last month.

Unemployment rose by 38,000, leaving the unemployment rate flat at December's downwardly revised 9.9%. In France and Italy, unemployment rose, while in Germany the rate was unchanged.

US economic data published last week continued to be mixed. ISM manufacturing data was slightly weaker than expected with a dip to 56.5 for February from 58.4 the previous month. In contrast, the ISM data for the services sector was stronger than expected with an increase to 53.0 for February from 50.5 the previous month.

Non-farm payrolls on Friday were better than expected as US employers slashed 36,000 jobs in February, much less than the 50,000 expected by analysts. This left the unemployment rate steady at 9.7%, bolstering expectations that the market was closer to the point of creating jobs.

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