BRITISH investors will train their sights this week on the Bank of England where current interest rates are expected to be maintained as the second half of the financial year got under way on a negative note.

The London FTSE 100 index in the first week of the new semester gave up more than 2 per cent from a week ago to finish at 5412.80.

Market sentiment was dented two weeks ago by sharp falls at Taylor Wimpey, which failed to secure a refinancing package, and retail giant Marks & Spencer, which issued a profit warning.

With Wall Street not reopening until tomorrow after the July 4 long weekend, investors in London were already looking ahead to this week's decision on British interest rates.

The Bank of England makes its latest monthly rate call on Thursday, with analysts expecting it to keep borrowing costs at 5 per cent as it seeks to battle soaring inflation, which came to an annual 3.3 per cent in May, and sliding economic growth.

Attention will also focus on several economic indicators, such as industrial production for May.

Analysts at Calyon bank forecast a decline of 0.1 per cent from April and 0.8 per cent from May last year.

British trade figures will be published on Wednesday.

Among the few companies reporting this week are the London Stock Exchange, broadcaster BSkyB and the Man financial group.