Moving into the finals moments of an unspectacular day for the UK’s leading index, the FTSE looks set to hold on to most of the headway made earlier in the week. 

A strong performance by mining company Rio Tinto helped keep the FTSE on a fairly even keel, and by 4pm the miner’s share price was up just over 18% to 1487. The bounce came after Rio announced job cuts of 14,000 in an attempt to make a $5bn dent in a net debt totalling around $39bn. The news sparked a spate of increases for other industrial businesses, with metal producers Vedanta and Antofagasta posting double-digit percentage gains and energy service company John Wood Group up 9%. The Dow opened positively, up 1% by 4pm (London time), as US policymakers seem to be nearing a deal to save the ‘Big Three’ car manufacturers with a controversial $15bn bailout.  

Yet despite a pretty positive week for financial markets on both sides of the Atlantic thus far, the wider economic picture in the UK continues to belie the FTSE’s relative sturdiness. Prospects for longer-term economic recovery in the UK were dealt a double-barrelled blow today. With sterling hitting an all-time low against the euro and NIESR statistics suggesting the slowdown is worsening - the UK economy shrank 1% between September and November – we could see investors’ nerves tested in the final half of the week. As the steady flow of recessionary news continues, UK investors must surely be asking themselves when – not if – this week’s display of market buoyancy will begin to dissipate in earnest.

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