The Bank of England this week made a 50 basis point cut, putting interest rates at an historic low of 1%. As expected the European Central Bank held rates at 2%.

On Firday US Non-farm payrolls for January showed a loss of 598 000 jobs- the biggest drop since December 1974. Unemployment is now at 7.6% in the US, the highest level in 16 years.

Friday’s jobs figures failed to put a dampner on the markets as poor data raised hopes for a speedy passage of President Obama’s US economic stimulus package. The FTSE 100 closed the week up 3.43% at 4291.9, its biggest weekly gain this year. The strongest industry sector was industrial metals with a gain of more than 20% as base metals prices increased.

In the US, tech and financial stocks were strong last week. The Dow closed Friday at 8280.59, a gain of 3.5 % for the week. The Nasdaq finished at 1591.71, up 7.8 %. The S&P ended the week up 4.17%.

Meanwhile, Sterling recovered against the Euro, it climbed to its highest level in two months after sliding close to parity at the end of last year. As the Bank of England cut rates and the ECB held, the pound rose 0.9% to 0.8736 against the Euro and 1.7% to 1.4722 against the dollar. The dollar rose against the Yen last week, also up 1.7% to 91.52.

Base metals had a strong week boosted by hopes for a rapid recovery in the Chinese economy. China’s latest manufacturing purchasing managers’ survey fuelled hopes that the government’s measures to stimulate the economy were working.

Crude oil prices fell on Friday on the back of the US unemployment data which added to concerns about demand for oil. WTI sank below the $40 a barrel level to a low of  $38.60, ending the week down 4.5%. March Brent fell $1.46 to $45.00 a barrel, down 1.9%.

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