In a turbulent week, shaken up by news in the banking sector, the end to the short selling ban in the UK, and a European interest rate cut, the FTSE was down 6.7% on the week closing friday at 4147. Thursday ended the FTSE’s longest losing streak in more than four years. The Dow fell just over 3.5% on the week despite gaining 69 points on Friday. The S&P lost 4.5% on the week and the Nasdaq was off 2.7%.

Banking shares suffered their worst week since the peak of the financial crisis last Autumn. Deutsche Bank AG reported a record loss, Anglo Irish Bank Corp. was nationalised and on Friday Bank of America and Citigroup both reported multi billion dollar losses. Bank of America received a fresh $138 billion funding lifeline from the US government, and Citigroup confirmed plans to split itself into two parts.

The last hour of trading in London saw banking shares fall dramatically. Barclays were the worst hit ending the week at 98 pence, their lowest level since 1993. Lloyds TSB saw its shares drop over 25% in anticipation of the completion of its merger with HBOS on Monday.

Democratic leaders in the US unveiled an $825 billion tax cut and spending package that they hope will help Obama reverse the economic slump.

The European Central Bank lowered its benchmark lending rate by half a percentage point to 2 percent on Thursday, matching the lowest rate since the ECB took charge of monetary policy in 1999. The Euro fell to a five week low of $1.3025, but bounced back on Friday, possibly showing some resilience as a result of ECB President Jean-Claude Trichet dismissing the idea of cutting interest rates to zero. The dollar and yen both weakened on Friday. Sterling reached a session peak of 1.4980 but retreated rapidly when Barclay’s shares tumbled in late trading on Friday.

Treasury 10-year notes posted their first weekly increase in a month.

Gold prices rose nearly 3 percent on Friday, breaking above $840 an ounce, on a sharply lower dollar against the Euro. Demand for gold remains strong as turmoil in the financial markets and fears over the outlook for the global economy boost bullion’s appeal.

The weakening economy and falling global demand kept benchmark oil prices near $35 a barrel Friday, after trading as low as $33.20, a five-year low. Nymex oil prices have fallen about 30 percent since touching $50.47 a barrel last week as gloomy economic and corporate results stoked investor fears that a drop in demand may be worse than expected.

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