By Rob Arkwright Hargreave Hale Ltd THE MARKET has been treading water this week, still unsure which way to go.

After all the recent pessimism, there have been some upbeat analyst statements and hopes that the worst may be over. Technology stocks have shown good signs of recovery with some positive sentiment returning to the sector.

Many investors still find these stocks hard to resist with the potential of such quick profits, due to their volatility caused by such rapid and large price movements. However, following their collapse over the last year, investors are much more wary over how dangerous and unpredictable they are.

Huge losses can be incurred just as quickly as gains, as many investors have come to realise, after being drawn into these stocks and having their fingers badly burned. Extreme caution must be exercised with these stocks, but if investors get their timing right, the rewards can be great.

The week's downside has come from new data over the state of Britain's manufacturing sector, suffering its worst decline in growth for two years. With continuing job losses, a recession in manufacturing is looking more and more inevitable.

This has fuelled hopes that the Monetary Policy Committee will cut interest rates by a quarter point at next week's monthly meeting.

On a positive note, Whitbread, which has recently sold off its bars and pubs operation and is now a hotels to health clubs group, is to create more than 4,000 jobs over the next three years. Its new focus on leisure and hotels has given profits a boost and the company is in line to meet its annual sales growth targets.

Finally, British Telecom has agreed to sell its interests in Japan Telecom, J-phone and Airtel to Vodafone for £4.8 billion in cash. This is a positive step by BT to tackle its huge debt problem and was well greeted by investors. It will also help reduce pressure on BT to seek more than £5 billion from shareholders in a deeply discounted rights issue.The shares rallied back over 600p in response.