During much of the fourth quarter of 1991, stock prices in most markets were weak, reflecting signs of economic slowdown in Japan and continental Europe while earlier hopes of recovery in the United States and United Kingdom faded. In Europe, increases in official short-term interest rates accentuated this weakness, but reductions in official interest rates in the United States and Japan prompted a sharp year-end rally, which more than offset the earlier decline in the US market. Pacific Basin equity markets rallied in the middle of the fourth quarter, with the exception of Japan, and were among the best performing markets over the year as a whole. Concerns about the situation in the fonner Soviet Union also periodically affected markets. Equity markets ended the year on average about 15% higher than a year earlier and almost as high as levels before the Gulf War. Reflecting the stage of the cycle, there has been considerable divergence in the perfonnance of different groups of shares; in the United States, for example, the share prices of technology companies and securities brokers showed strong advances in the fourth quarter, but the shares of heavy industries (including oil and autos) fell back.