Rate-setters split on interest

All eyes will be on the Bank of England's Monetary Policy Committee (MPC) chaired by Mervyn King, the Governor of the Bank of England, on Thursday after recent signs that the members are divided on interest rates.

Adam Posen, one of three committee members who said last week that it was not time to tighten monetary policy, suggested that he will vote against any attempt to raise interest rates. Fellow rate-setter Paul Fisher agreed: "We need to be sensitive to the risk of tightening policy prematurely, stifling the nascent recovery. In that case, some of the flexible response to the recession could be swept away, delivering higher unemployment."

At last month's meeting, Dr Andrew Sentance voted for an increase from the current 0.5 per cent. However, his was a lone hawkish voice.

Next week will also see trading updates from housebuilders Persimmon and Bovis Homes. The market will be keen to see if house sales have continued to improve, as investors look for signals that the UK can avoid a double dip recession.