Martin Flanagan: Uncertainties cloud the crystal ball for Footsie's fate in 2011

But I think the market's ambivalence is likely to continue through to the spring. Positives and negatives for equities are effectively cancelling themselves out after the rise in the FTSE 100 this year, with only a half-day's trading left today.

Why should that picture change sharply over the next two or three months, when only time will tell whether those positives or negatives have the ascendancy, dependent on unknown economic outturns?

On the plus side for shares, companies, now well over a year out of recession, have much stronger balance sheets, with costs cut and payrolls down.

Businesses are making decent profits and there is much greater visibility of earnings. These are good talismanic tailwinds for equities. Private equity deals are also a key test of business optimism, and the sector recovered notably in the second half of 2010.

Hamish Mair, who heads F&C's private equity operation in Edinburgh, is one of a host of sector players predicting a further sharp jump in MBO deals in 2011, and that would not be happening if private equity felt economic calamity was around the corner.

The year just ending has seen a four-fold rise in flotations, admittedly from a low base in 2009, and if that trend also continues next year it will boost overall market sentiment.

But, unfortunately, second-guessing equities' direction is complicated by substantial negative economic possbilities as well.

British companies' fortunes cannot be separated from what could be a difficult macro picture domestically, even if about 70 per cent of the FTSE 350's sales come from outside the UK.

A rise in interest rates looks increasingly likely by the spring. That would hurt both consumer and business sentiment.

Such a rise may be deemed necessary by the Bank of England to combat consumer price inflation. It is forecast to hit 4 per cent next year as the VAT increase bites next month and commodity prices - from copper to cotton and wheat - head north.

That probable inflationary backcloth through a fair chunk of 2011 may well turn investors towards gilts and corporate bonds as a hedge. That would act as a further brake on equities.

The unemployment fallout from the government's austerity programme will gather pace in the first six months of next year, and is a further negative imponderable for the stock market's fortunes.

With each new set of depressing jobless data, doubts grow as to whether the private sector can take up the slack from the public sector bloodletting.Sceptics say the wish is father to the hope.

Elsewhere, the high street believes it will largely tread water from here on in, amid various economic headwinds.

Meanwhile, leading economists believe there will be a further 5 to 10 per cent slide in house prices, traditionally a depressant on the stock market as well.

Richard Hunter, stock market guru at broker Hargreaves Lansdown, forecasts the Footsie finishing next year at 6,500. Some of his peers forecast the index will set a new high of 7,000, topping the 6,950 reached on the last day of 1999 before the dot-com firework fell to earth.

However, that higher figure looks fanciful in this uncertain climate. And me? I reckon, given the contradictory signs, we will be doing all right if the index finishes 2011 at 6,350.

Christmas comes late for John Lewis as sales figures hit record

KEEP calm and carry on. Sometimes middle-Britain department store John Lewis seems to epitomise grace under pressure in the high street.

The company revealed yesterday that it had seen a 26 per cent surge in sales in the first three days of its post-Christmas sale. In fact, both 27 and 28 December beat its previous record for a single day's sales, the former day's revenues reaching 27.8 million.

Even allowing for people restocking store cupboards at John Lewis's Waitrose subsidiary as the goodies ran low, or bargain-hunting among the flatscreens and clothing, it is a highly impressive performance by the retail icon.