THE WEEK

UK shares rallied in the wake of John Major's re-election as Tory leader, with the FT-SE 100 ahead 45.7 points the day after at 3394.9, and closing the week at 3462.9, its highest level this year. Gilts also rallied on hopes of interest rate cuts. Professor Stephen Littlechild, the electricity regulator, was embarrassed by the leaking of his report on new pricing controls for regional electricity companies.

At their regular monthly meeting, Chancellor Kenneth Clarke and Bank Governor Eddie George left interest rates unchanged.

The US Federal Reserve trimmed its short-term interest rates by quarter of a point to 5.75 per cent.

Abbey National made a pounds 285m agreed offer for FNFC, a finance company.

Contract caterer Compass announced it was poised to become the world's largest with the FFr4.5bn (pounds 580m) acquisition of Eurest International from Accor, the French hotel and catering group.

Seven years after the collapse of Barlow Clowes, the DTI inspectors' report on the saga was published. The inspectors recommended further regulatory tightening for the protection of investors.

Further doom and gloom descended on home-owners as the Halifax Building Society's house price index for June was published. Prices fell by a seasonally adjusted 0.4 per cent to a level 1.8 per cent lower than a year ago.