Harare — POST-CHRISTMAS trading was rather subdued as the holiday fever was still within investors although the main index recorded a steady rise.

Today, the new year begins and trends experienced last year in the market are expected to persist as inflationary pressures should keep the stocks on the roll.

At the beginning of 2006 inflation was at just under 600 percent, soaring to over 1 098 percent by November.

On the other hand, the main index took off 2006 at just a mere 18 000 points, but leapfrogged by a huge 2 800 percent to end last Thursday trading at 546 068 points powered mainly by inflation.

The mining index increased by an even higher margin adding on 5 400 percent year-on-year, reflecting the excellent performance by the resource counters last year.

The low interest rate regime adopted by the monetary authorities in 2006 did not do any favours for the money market as negative real rates haunted the markets, leading to the constant demand for shares.

In its bid to support the productive and agriculture sector with a long-term view of boosting the supply response, the central bank tried to keep the rates at affordable levels.

Last year also witnessed a two-week standoff on the bourse between stockbrokers and the Zimbabwe Revenue Authority that saw the indices sliding lower due to the impasse.

Although the year was characterised by persistent demand for shares, pockets of profit-taking would creep into the market occasionally as investors locked in gains from earlier trading.

Just like in the period before Christmas, the money market was mainly characterised by huge deficit conditions emanating from significant cash withdrawals and the purchase of cash by banks from the central bank.

Meanwhile, as in the previous weeks, the central bank was on the money market on each trading day with two 365-day Treasury bill tenders.

However, no bids were received on all tenders conducted as investors continued to deem the paper unattractive. There were no maturities that were recorded to improve the liquidity shortages.

As a result of the tight liquidity conditions, short-term interest rates were indicated firmer, with 90-day Negotiable Certificates of Deposit and Bankers' Acceptances of the same tenor ranging between 100 percent and 250 percent, while the interbank overnight rate was quoted well above the 400 percent level. However, call rates were still indicated unchanged from 3 percent to 4 percent.

Going forward, trading should resume tomorrow on buying strength as investors should be taking advantage of lower prices following the pre-holidays profit-taking.

Internationally, United States stocks closed weaker on Wednesday, dampened by profit-taking in transport-related shares. The blue chip Dow Jones Industrial average shed 0,06 percent to 12 463,81 points, the Nasdaq Composite slipped by 0,8 percent to 2 427,61 points, and the broader Standard & Poor's 500 eased 0,14 percent to end at 1 423,53 points.

European stocks were indicated mixed in early trade amid takeover activity from Swedish telecom equipment maker Ericsson and steel giant Arcelor Mittal. The London FTSE 100 shed 0,09 percent to 6 198,60 points, while the Frankfurt Xetra Dax firmed 0,51 percent to 6 586,91 points.

In Asia, the Japanese Nikkei 225 average advanced by 0,22 percent to settle at 17 047,83 points led by exporters such as Toyota Motor Corp, after the yen weakened against the US dollar to the lowest in more than a month as speculation decreased that the Bank of Japan would boost interest rates in the next quarter.

Meanwhile, in early trade, South Africa's JSE All-Share Index was quoted 1,20 percent firmer at 24 406,73 points.