Economics
Trade deficit Britain’s trade in goods deficit widened from £6.5
billion in June to £7.1 billion in August, worse than expected. The increase
was driven by lower exports and higher imports from non-EU countries and by
a deterioration in the oil deficit. The services trade gap was unchanged at
£2.6 billion. The overall trade deficit of £4.4 billion was the highest in
11 months.
Mortgage borrowing fell to its lowest level for three months, data from
the Council of Mortgage Lenders showed. The figures showed $34.1 billion was
advanced for mortgages in July, down from £34.8 billion in June.
Shares rose higher on both sides of the Atlantic, as hopes that the US
Federal Reserve will underpin global financial markets with a cut in US
interest rates next week soothed investors. The FTSE 100 registered its
sharpest one-day percentage gain for three weeks, as it rose 146.6 points,
or 2.4 per cent, to close at 6,280.7.
Borrowing rates In London, three-month Libor rates for loans between
commercial bank rose for the tenth day to their highest since November 1998.
Breaching the watershed level of 6.9 per cent, the Libor rates were fixed at
6.90375 per cent.
The dollar hit a 15-year low against a basket of major currencies for
the third trading day, extending a fall sparked by weak US jobs data last
week, which fuelled expectations of interest rate cuts. The dollar index
fell as low as 79.787, its lowest since September 1992.
Oil prices Opec, the oil cartel, agreed to raise its production quotas
by 500,000 barrels per day from November 1, in a move that failed to bring
down oil prices.
Chinese inflation rose to 6.5 per cent in August, an 11-year high and
up from 5.6 per cent in July. Inflation was driven by an 18.2 per cent rise
in the cost of food, with meat prices rising by 49 per cent year on year.
Chinese stocks registered their biggest drop in two months, with the
Shanghai Composite Index falling by 4.5 per cent.
Banking
& finance
Overdraft charges Banks are making up to £3.5 billion a year from
overdraft penalty charges, the Office of Fair Trading said. The penalty fees
are levied when account holders exceed their authorised overdraft limit.
Mortgage rates The Bank of England said that mortgage borrowing costs
for households rose during August. It found that the average interest rate
being charged for a standard variable rate mortgage had risen by a full 0.25
per cent to 7.69 per cent, which is substantially higher than the Bank’s
base lending rate of 5.75 per cent.
Barclays Capital has thrown a $1.5 billion (£738 million) lifeline to
Golden Key, a highly geared fund that ran into trouble in the global
liquidity squeeze.
Construction
& property
Redrow, the housebuilder, has cut back on its plans to produce about
2,000 of its cheap starter homes each year, dealing a blow to government
efforts to help first-time buyers.
Derwent London, the property developer, said that it was well placed to
deliver strong growth after its £2.5 billion investment portfolio delivered
an underlying valuation surplus of £204.3 million for the five months to
June 30.
Savills, the property agency, boosted its first-half underlying pre-tax
profits by 27 per cent to £32.5 million, but its chief executive said that
the deal flow for City offices had started to slow.
Consumer
goods
Wheat harvest Spring rains that had been forecast for last weekend in
Australia failed to arrive in the wheatbelt, causing Australia’s Grain
Council to forecast another poor harvest of just 15 million tonnes of wheat.
Australia, one of the big exporters, had been expected to produce more than
26 million tonnes of wheat in the 2007-08 crop year.
Engineering
Cobham, the aerospace company, said that its 4.5 per cent fall in
first-half revenue was due to the disposal of some businesses and a weaker
dollar and that on a like-for-like basis, revenues would have grown by 6 per
cent.
Armor Holdings, the US engineering and defence group that was bought by
BAE Systems, the UK group, for $4 billion (£1.9 billion) two months ago, has
covered its purchase price after winning an order to build 10,000 lorries
for the US Army.
Health
Pfizer, the American pharmaceuticals group, said that it will close its
manufacturing operations at Sandwich, Kent, with the loss of more than 400
jobs.
Symbion Health Shareholders in Symbion Health, the Australian
healthcare company, have narrowly rejected a A$2.9 billion (£1.2 billion)
offer from Healthscope, its rival.
Merck, the German drugs maker, saw its shares rise after it released
successful new study results for Erbitux, its cancer treatment.
Industrials
Tata Steel, the Indian steelmaker, which bought Corus, the Anglo-Dutch
steel group, for $12.9 billion (£6.4 billion) earlier this year, said that
it was setting up a ferro chrome plant in South Africa with an investment of
4 billion rupees (£48.5 million).
Leisure
David Lloyd Leisure The Office of Fair Trading has invited comments on
the acquisition of David Lloyd Leisure and Next Generation Clubs by HBOS,
the banking group. It also said that it will consider whether such a merger
will warrant reference to the Competition Commission.
Media
Mecom Group, the UK-based European newspaper publisher, has been forced
to admit that a freesheet war in Denmark meant that profits there would fall
short of company targets, causing its shares to fall by 4.8 per cent.
ZenithOptimedia, the media buying agency owned by Publicis, has
upgraded its UK advertising spending forecasts for 2007 and 2008 as
traditional media show signs of recovery and the internet continues to boom.
Pearson, owner of the Financial Times, is preparing to sell its
half-interest in Financial Times Deutschland as it continues with its
strategy of focusing on English language financial news. The publisher is
understood to be in discussions with the owner of Der Spiegel, and other
groups, about offloading its stake in the loss-making German title after
years of heavy investment.
Natural
resources
Gazprom, the Russian gas group, will announce a second foreign partner,
in addition to Total, of France, to help to develop the Shtokman field.
Retailing
Next, the clothing retailer, said that sales were likely to fall over
the coming months as interest rate rises begin to hit consumers.
Support
services
Just Car Clinics, the collision repair group, said that first-half
pre-tax profits rose by 43 per cent to £555,000, from £388,000 last year,
and added that its current trading is ahead of last year and in line with
expectations.
Jarvis, the engineering support services group, is to share up to £1.5
billion in rail renewal work over the next three years. Jarvis said that the
deal would be worth an additional £15 million a year to the company’s
turnover.
Technology
Microsoft, the US software group, has stepped up its presence in car
software by announcing a computerised system that will allow drivers to
monitor their vehicles’ carbon emissions.
Telecoms
BT, the telecoms group, said that it expects revenues from its Indian
operations to reach $250 million (£123 million) by 2009.
3 Italia, the 3G mobile operator, has been put up for sale in a move
that may pave the way for its owner, Hutchison Whampoa, to shed its UK
sister business.
Transport
Aer Lingus, the Irish airline and takeover target, said that the appeal
filed by Ryanair, its low-cost rival, over its proposed takeover would fail,
as the European Commission had concluded that it presented monopoly
concerns.
Air Berlin, the German carrier, saw its shares rise by almost 6 per
cent after it said that Deutsche Bank had raised its stake in the airline to
16.36 per cent.
London Underground is considering breaking up Metronet’s £30 billion
contract for maintaining Tube lines and stations. Metronet was granted
30-year contracts under a public private partnership, but went into
administration in July.
Utilities
Tokyo Electric Power, the Japanese utility, said it expects to restart
the No 2 gas turbine unit at its Yokosuka plant in eastern Japan to help to
stabilise power supplies. The unit was decommissioned since March 2006.
sectors@thetimes.co.uk
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