_{Tuesday 25th May 2010}

Although the markets have declined amidst a wave of uncertainty over the past few weeks, analysts are urging all investors to hold their nerve and just to sit tight as shares are giving their strongest signal to buy since 2003.

Last week the FTSE 100 in London fell 3.8% for the week to finish at 5.063, the lowest since November 2009 and 13% below this year’s high of 5,825 in April. In addition, further falls to around 4,500 have not been ruled out as the European sovereign debt crisis drags on.

The further falls that have been predicted have emerged this morning with European falling sharply on opening as European woes and tensions between North and South Korea take their tolls. The FTSE fell 126 points to 4,944.30 a loss of 2.5% - the second time in three sessions since October 2009.

However, experts say that shares are now cheap in comparison to gilts which was the case in both the 2003 and 2008 markets which saw rallies on both occasions. This is why investors have been told to hold tight for the time being. UK equities are now yielding more than gilts which was a clear indicator in 2003.

Sentiment towards financials is fragile and was further exacerbated over the weekend after Spain’s central bank took control of CajaSur, a regional lender.

It is unlikely that we will experience a double dip recession if earnings season in the US is anything to go by. Over 80% of companies have beaten expectations this quarter which is actually a record. The wider picture in Europe and the UK also looks strong.

The suggested approach to investing at this time is to to hold a level of cash and then a diversified portfolio of funds including shares, fixed interest and commercial property, according to experts.

If you would like more information about how your investments or money is coping through the eurozone crisis, or would like general advice on which investments are best for you, please contact us.

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