Traders will next week feast their eyes on Britain's major banks as Barclays unveils annual earnings and details the size of bonuses for staff amid public anger over bankers' high pay. The London market will also closely watch the latest inflation data amid worries about soaring prices in Britain at a time when the country has failed to maintain growth following recession.
London's FTSE 100 index won 1.09 percent over the past week to finish at 6,062.90 points on Friday, as dealers reacted to mixed earnings, a freeze for British interest rates and consolidation among global exchanges.
The London Stock Exchange, which runs the FTSE, launched a merger with its Toronto counterpart Wednesday, creating a global leader for the raw materials and energy sector.
The same day, rivals Deutsche Boerse and NYSE Euronext revealed they were in "advanced discussions" on merging to produce the world's largest stock exchange operator by revenues and profits.
Next Tuesday, Barclays bank kicks off the banks' earnings season when it publishes 2010 results under controversial circumstances. Britain's government this week struck a deal with all of the country's major banks on bonus pay and overall lending, as it seeks to curb executive excess and strengthen a fragile economic recovery.
Finance minister George Osborne said total bonuses paid to British-based staff of the biggest banks would be lower than last year as part of the deal, brokered after weeks of talks with the Conservative-led coalition.
The country's top five banks - Barclays, HSBC, Lloyds Banking Group (LBG), Royal Bank of Scotland (RBS) and Santander UK - have agreed to ramp up total lending to £190 billion (225 billion euros, $305 billion).
However, the banking agreement - dubbed Project Merlin - was swiftly followed by news that state-rescued lenders RBS and LBG have agreed to pay their chief executives a combined annual bonus of almost £3.5 million.
Traders will next week also track official inflation numbers for January and the latest inflation and growth forecasts from the Bank of England (BoE).
There is also British unemployment and retail sales data for January and full-year earnings from defence giant BAE Systems and global miner Anglo American. The BoE kept its key interest rate at a record low 0.50 percent Thursday after a vote likely to have been close as Britain struggles with an uncertain economic recovery and soaring inflation.
Annual inflation stood at 3.7 percent in December, already way above the central bank's target of 2.0 percent. While rising costs have increased pressure for higher interest rates, the Bank of England is also wary about Britain's fragile recovery from a recession that ended in the final quarter of 2009.
British gross domestic product (GDP) surprisingly shrank 0.5 percent in the three months to December, the first drop in economic output since the third quarter of 2009.
The figure has stoked fears that Britain could be heading for a fresh recession as deep spending cuts introduced by the Conservative-Liberal Democrat coalition bite.