UK Economy continues to shrink

A second official estimate of GDP has confirmed that the UK economy shrank by 0.2% in the last quarter of 2011, marking a sharp reversal in economic growth from the third quarter of 2011.

The fall in GDP was largely driven by the biggest drop in business investment for a year, as business investment shrank 5.6%.

Another UK bank has posted losses; Lloyds TSB (40% taxpayer owned) posted a deficit of minus £3.5BN. This was mainly in line with analyst expectations, however has leapt up from the £320 million net loss it reported in 2010.

In Europe markets remain cautious despite Greece's second bailout deal because of risks that governments won't fully carry out austerity measures they had embarked on.

Italian borrowing costs fell significantly Friday compared to a month ago as it sold the maximum planned €3 billion worth of bonds.

Italy, Germany, Spain and France will join Belgium in selling government bonds next week, offering up to €25 billion between Monday and Thursday.

American new home sales fell in January as more Americans bought previously owned property amid an uncertain economic climate. New-home sales dropped 0.9%, the first in 5 months.

However consumer sentiment rose in February to the highest level in a year on strong awareness of improving employment, figures rose to 75.3 in February from 75 in January, achieving a sixth month of improvement.

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