Europe and Britain
Investors in Europe and Britain are not immune to the ongoing geopolitical crisis. Britain is on high alert and Parisians are stocking up on duct tape. The London FTSE 100, Paris CAC and Frankfurt DAX all managed to finish in positive territory despite a rocky week fraught with distractions. It was Friday's boost to the CAC and DAX that switched what would have been another weekly decline into gains as Hans Blix, the chief UN weapons inspector in Iraq, toned down fears that war was imminent. Dr Blix said that his team of inspectors had not found any weapons of mass destruction, but added that many forbidden materials remained unaccounted for.

Deutsche Börse, the operator of the Frankfurt stock exchange, decided to leave the composition of the 30 components of the DAX index unchanged. The Börse said after a meeting of its index committee that none of the potential candidates for promotion into the DAX at present clearly fitted the bill in terms of ensuring long-term index continuity. The next index review will take place on May 8th.

In its February quarterly Inflation Report, the Bank of England revised its economic growth forecast downward because of the weakening the global economy. The report also played down an above-target inflation forecast over the short-term. The BoE expects inflation to remain above its 2.5 percent target in the short-term due to higher oil and house prices. The uncertainty relating to the duration of a possible war with Iraq added to the risks surrounding the latest set of forecasts.

Asia
Equity markets were mixed in Asia, with three of six indexes ending the week on a positive note while the rest fell. The Nikkei and Topix ended a shortened trading week up for the second week. The Hong Kong Hang Seng also rose for the first time since the week ending January 10th.

In Japan, investors finally had something to celebrate! Stocks were buoyed on Friday by a surprise increase in gross domestic product. Analysts had been virtually unanimous in their projections that GDP would decline. (See Indicator Scoreboard for GDP details.) GDP rose on stronger-than-expected exports and this had a salutary affect on exporters' stocks, pushing the Nikkei to a three-week high.

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