LONDON, Aug 9: Trading on the London stock market is set to wind down next week as the summer lull sets in and earnings reports slow to a trickle, leaving economic data to move back to the fore, analysts said.

The British FTSE 100 index rose 49.4 points, or 1.2 per cent, this week to close on Friday at 4,147.8 points.

Volumes trailed off towards the weekend and more of the same is expected next week.

Jeremy Batstone, strategist at stockbroker Fyshe Horton Finney, said the British stock market was likely to see a “very quiet week”.

“Economics is going to be centre stage.

“Global investors are going to look very closely at the Fed,” he said, referring to US Federal Reserve’s monthly policy meeting on Tuesday, noting that the central bank was expected to leave interest rates unchanged.

“But if you are looking for a surprise you may very well find it in the UK inflation figure,” added Batstone.

Statistics are expected to show on Tuesday that underlying inflation dipped to an annual pace of 2.6 per cent in July from 2.8 per cent in June, economists said.

While most futures markets are betting that the next move in interest rates would be upwards, a benign inflation figure could cause investors to reappraise their view, analysts said.

Economists will also be delving into the Bank of England’s quarterly inflation report on Wednesday, amid speculation that the central bank might lower its growth forecasts for the British economy.

On the corporate front, British satellite broadcasting giant BSkyB is likely to arouse the most interest with annual results on Tuesday.

But with markets already pricing in an optimistic outlook for company profits, shares might struggle to shake off the summer torpor in the coming weeks, analysts said.

“It wouldn’t surprise us in the near term at least for share prices to churn sideways at best, maybe even come off a little bit,” said Batstone.

“Valuations in the equity market are very much predicated on a very aggressive improvement in productivity, perhaps even more than can be justified by the operating fundamentals.” —AFP