Europe’s biggest bank HSBC announced that it has written off $3.2bn (£1.6bn) in the first quarter of 2008, as a result of the US sub-prime market.

The write offs are lower than the final quarter of 2007 and are in line with HSBC’s predictions. It is also reported that a further $2.6bn is to be written off in its global banking sector.

The bank has stated that profits in the US had fallen this year but profits in other markets had remained sturdy. This latest writedown has taken the total amount of bad debts sustained by the bank to $14.6bn in the US during the last year.

Analysts say that a deal for Countrywide Financial to sell itself to the Bank of America could be at risk. The mortgage lender, which is the third largest in the US, last week announced a loss of $893m in the first three months of 2008, adding to speculation that the Bank of America could renegotiate of walk away from a deal altogether.

In a statement the bank made clear that the deal was still on by saying that the $4bn transaction was “on track to close as agreed”.

Oil firms Shell and BP have announced combined first-quarter profits of over 7bn. Shell made a profit of £3.9bn and rival BP made a staggering £3.31bn in the first three months of the year. The quarterly profits come amidst global concern over the price of petrol.

In the UK the average price is now 109.8p a litre for petrol, which is equivalent to nearly £5 a gallon (4.55 litres) according to the AA. In the US, where fuel taxes are much lower the average price is $3.60 (£1.80) for an American gallon (3.79 litres).

Tesco has announced an annual profit of £2.846bn, an 11.8% increase for 2007. Although Tesco admit prices had risen by around 1.5% across the board, the increase on food prices masked price cuts on non-food items.

Tesco has stood strong as the UK high street has suffered as households have been hit by higher mortgage costs, fuel prices and food bills.

Eurotunnel’s new owners Groupe Eurotunnel announced its first annual profits this week, amidst its huge restructuring programme for its debts. The company has struggled with its debt since opening in 1994, but brokered a deal with its creditors last year. This agreement cuts Eurotunnel’s debt from 9.2bn Euros to 4.2bn Euros.

Groupe Eurotunnel’s restructuring plan involves getting shareholders to swap their shares to the new company, which saved the organization from bankruptcy, but this means that shareholders no longer get unlimited free travel.

As most analysts predicted earlier on in the week The Bank of England today lowered the interest rate from 5.25% to 5% in an attempt to kick start the economy amidst the global credit crunch. It’s the third time the Bank of England has cut in interest rates since early December.

Recent problems in the money markets coupled with declining house prices have attributed to the decision. Business groups welcomed the decision and called for further reductions to shore up growth.

House prices in the UK have suprisingly remained unchaged from last december. The January figures exceeded most people's expectations. This financial news came from the Halifax UK who are a banking group.

Mortgage lenders are still saying that there are continuing signs of weakness in the housing market.The UK econcomy is still growing remember but there are thoughts that the market will remain flat this year.

At the beginning of the month or in fact the year we see the release of a report on Global risks for 2008 brought to us by World Economic Forum (WEF)

The report focused on deregulation causing the financial markets to evolve in the last two decades,innovation came from multiple economies and finance opened up globally.