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US against UK domains

HI Guys

I have a website that is setup in the UK and has a basic target market of UK customers. I am quite confused over the use of the domain name. I have the option of opting for a .co.uk domain or a .com domain. What is the benefit of either? Also should I go with a UK based hosting service or US based hosting service? Does it make any difference at all? I believe that the UK based domain would be beneficial for the search sites based in UK. But is that all? Are there any more issues that I should be concerned about?
Thanks a lot

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