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mpc: 6 Equity prices had risen further in the major markets over the past month. The main indices were now between 4% and 8½% higher than in November in local currency terms; the fall in real interest rates over the period helped to explain perhaps half of this increase. The FTSE250 had increased significantly more than had the FTSE100, perhaps partly reflecting the increasing pace of merger and acquisition activity among mid-sized companies. Investment analysts had reported improvements in expected corporate earnings, particularly in the United Kingdom (perhaps influenced in particular by the prospects for UK oil companies). In addition, the equity risk premium might have fallen; and developments in global credit markets suggested that investors' appetite for risk had increased.