We expect a weak economy and a partial break-up of EMU to weigh on UK equities through the end of next year – our forecast is that the FTSE 100 will end 2013 around the 5,000 mark. Although we are clearly cautious, one reason we do not expect a bigger drop in the index from its current level of around 5,870 is that valuations appear attractive, at least in relative terms. Indeed, once the darkest clouds over Europe have lifted, we expect the FTSE 100 to rebound to around 5,500 in 2014.
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