The FTSE ended the week with a gain of 2.4% to close at 4149.5, the intraday high for the week was 4317.6 and the low 3956.7. The Banks led the gains, the industry index showed an increase of 18% for the banking sector last week, whilst the Leisure Goods industry lost 13%.

All US indices were down slightly in the fourth consecutive week of declines.  The Dow fell 76.70 points, or 0.95%, to close the week at 8000.86. The S&P lost 6.07 points, or 0.73%, to 825.88. The NASDAQ was flat, down just 0.87 points to 1476.42.  Things were even worse for small cap stocks with the Russell 2000 losing 11.20%. January has proven to be a tough month for the S&P and Dow, which both fell about 9% the largest January sell-off ever for both indexes. The Nasdaq fell about 6% in January.

The Federal Open Market Committee decided to keep its target range for the federal funds rate at 0 to 1/4%. The committee commented that it is prepared to purchase longer-term Treasury securities if evolving circumstances indicate that such transactions would be particularly effective in improving conditions in private credit markets.

Investors had largely shrugged off massive layoff announcements and signs of increasing weakness in the housing market seeming relieved with reports that the government are contemplating a program to buy up the toxic assets of troubled banks. But the bad news continued, with a government report on Friday revealing that the gross domestic product shrank by 3.8% during the last three months of the year, the steepest contraction since 1982.

The pound bounced back from multi-year lows against the dollar and the yen as financial stocks recovered this week. Barclays issued an open letter in an attempt to restore confidence in the sector saying its profits would outstrip forecasts. Citigroup upgraded its recommendation on Lloyds Banking Group arguing full nationalisation was unneccessary, Lloyds shares rallied on the back of this. Sterling rose 3.7% to $1.4325 against the dollar, 4.9% to Y128.64 against the yen and 4.9% to £0.8958 against the Euro.

Gold rose 3% this week hitting a three month high on Friday reaching $926.90. Again, the rise in gold prices was driven by investors looking for a haven amid concerns about the outlook for the dollar and the flood of government bond issuance required to stabilise the banking system.

As for oil, March Brent rose 48 cents to $45.88 a barrell on Friday, but fell 5% on the week. March WTI was down 10% this week trading at $41.68 a barrel on Friday, front month WTI was trading at a huge discount to Brent at $4.80 a barrell.

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