Economics
Interest rates The Times Monetary Policy Committee, which tracks the
work of the Bank of England’s Monetary Policy Committee, voted by seven
votes to two to keep interest rates on hold this month, with the two
dissenting voters calling for an immediate quarter-point cut in rates. The
Bank’s MPC is expected to keep rates unchanged at the conclusion of its
monthly meeting today.
Services sector The CIPS purchasing managers’ index for the services
sector fell to 56.7 in September, from 57.6 in August, on a scale where any
figure above 50 indicates rising levels of activity. The figure was the
lowest since August 2006. The average prices charged sub-index climbed to
53.5, from 53.1 in August, its highest level since April. Average input
prices rose to a strong reading of 58.0, from 57.5 in August.
The eurozone services sector is experiencing a marked slowdown in
growth, with Germany being hit particularly hard, a new report showed. The
purchasing managers’ index for the eurozone services sector fell to a final
reading of 54.2 in September, from 58.0 in August. The services PMI was
revised up 0.2 points from the provisional estimate reported last month, but
was still at its lowest level since August 2005.
US services sector The US Institute for Supply Management said that its
index on services activities had slipped to 54.8 in September, its lowest
since March and below expectations, and also down from 55.8 in August.
Banking
& finance
ABN Amro The consortium led by Royal Bank of Scotland that is stalking
ABN Amro, the Dutch Bank, cleared its final regulatory hurdle when the
European Commission approved the proposed acquisition of part of ABN Amro by
Fortis, the Dutch-Belgian bank, as long as it sells some Dutch operations.
Carnegie, the investment bank, said its chief financial officer was
leaving in the wake of a trading scandal. The resignation of Ulf Fredrixon
follows the exit of the bank’s chief executive last week as Sweden’s
financial watchdog fined and sharply criticised Carnegie over a scandal
involving inflated trading profits.
Morgan Stanley Contrary to our report “Borrowers
and banks hit as credit crisis takes toll of homeowners” (October 3),
the consolidation of Morgan Stanley’s three US residential mortgage units
into a single operation will not include Advantage, the bank’s UK mortgage
business.
Old Mutual, the South African insurance group, said that it is planning
to buy back shares to a total value of about £350 million. It added that the
buyback will be financed through its own internal resources.
Visa The European Commission has continued its campaign to inject more
competition into the financial services sector by fining Visa, the credit
card company, €10.2 million (£7 million) for applying restrictive business
practices over more than six years.
Hedge funds London’s burgeoning hedge fund industry is facing a wave of
consolidation thanks to the turmoil in the credit markets, industry experts
said. Leading figures predicted that as many as 150 of the estimated 1,000
hedge funds that operate in London could collapse over the next 12 months.
Liffe The credit crunch continues to drive volumes at Liffe, the London
financial futures market, which has reported its busiest September so far.
Liffe traded 95.7 million futures and options contracts last month, an
increase of 46 per cent year on year. It follows the record August total of
103 million, a 75 per cent rise year on year.
Northern Rock Citigroup, the US banking group, is ready to provide well
over £5 billion in financing to ease the way for a takeover of Northern
Rock, the troubled UK mortgage lender. It is understood that at least four
serious bidders remain in the auction, including JC Flowers and Cerberus,
the US private equity groups.
Merrill Lynch Osman Semerci, the Turkish-born global head of Merrill
Lynch’s fixed income, commodities and currencies division, has reportedly
resigned from the banking group, The departure will spark speculation that
Merrill is likely to report heavy losses from sub-prime collateralised debt
obligations. It had said last month that it might have to book losses from
these investment vehicles.
Construction
& property
DLF, the Indian property group, said that it has won a contract for a
township development project from the Karnataka Government, adding that the
project will generate value in excess of $12.5 billion (£6.1 billion).
Commercial property The Royal Institution of Chartered Surveyors has
reduced its forecast for commercial property returns this year from 8 per
cent to 3 per cent after pencilling in a 5 per cent annual fall in the
prices of buildings.
Savills, the property agent for prime Central London properties, said
that house-hunting has gone on hold for London homes in the £2 million to £5
million price bracket as nervous City bankers fret over the size of their
next annual bonus.
Consumer
goods
Cadbury Schweppes, the confectionery and soft drinks group, has ended
more than 160 years of chocolate-making in Bristol by announcing plans to
close a key factory, to cut 700 jobs and to transfer a large amount of its
British manufacturing operation to Poland.
Beiersdorf, the German cosmetics group best known for its Nivea brand,
has agreed to buy an 85 per cent stake in the hair-care business in China
owned by C-Bons Holding, the international conglomerate, for €269.45 million
(£187.4 million).
Shepherd Neame, the Kent brewer and pub operator, rejected a fresh
attack on the board from Stuart Neame, its former vice-chairman, who claims
that some of its corporate governance falls short of required standards.
Carlsberg, the Danish brewer, announced the closure of a brewery in
Loulé, southern Portugal, as part of a restructuring of Unicer, the
Portuguese beer producer, in which it has a 44 per cent stake.
Engineering
Siemens, the engineering and electronics giant, could face strike
action from thousands of its British workers over its plans to close the
final salary pension scheme to all members. Unite, the biggest union at the
group, said that the action is unnecessary because Siemens is profitable but
the company, which is undergoing an international reorganisation, said that
it must tackle its British pension deficit of £539 million.
Health
Johnson & Johnson, the US drugs group, said that an experimental
treatment for psoriasis had proved safe and highly effective in a late-stage
trial, positioning it as a potential strong rival to current treatments.
Pfizer A high court in northern Nigeria has adjourned until November 6
a criminal case concerning an alleged illegal drugs test which has been
brought by the Kano State Government against Pfizer, the US pharmaceuticals
giant.
Industrials
Mechel, Russia’s sixth-largest steel maker which is listed in New
York, has boosted its first-half net profits by 169 per cent to $489.5
million (£239.8 million).
Leisure
Gaucho Grill, the Argentine steak house chain, has announced plans to
raise £50 million via a £100 million stock market flotation.
Carluccio’s, the Italian deli- dinning operator, has delivered a
strong trading update, saying that it expected its full-year pre-tax profits
to be “slightly ahead” of expectations.
Media
BMG The music merger between Sony and BMG has been approved for the
second time by the European Commission in a judgment that, in theory, paves
the way for a Warner/EMI merger. EMI was recently bought by the Terra Firma
private equity group, leading to speculation that it may be sold to Warner.
Natural
resources
Gazprom The European Commission said that it will convene a
co-ordination group to evaluate the dispute over gas supplies between
Gazprom and Ukraine. The Commission added that it will invite participants
from Russia and Ukraine to the meeting.
BP stock fell 8½p as analysts cut their earnings expectations and
issued lower price targets for the oil company’s shares, reflecting
nervousness that the company might report worse than expected third-quarter
results.
Retailing
ASOS, the online clothing retailer, said its full-year profits were
likely to be “slightly ahead” of expectations after an 80 per cent rise in
half-year sales.
Lookers, the car dealer, has boosted its number of Ford outlets with
the acquisition of Dutton Forshaw in a deal worth up to £60 million. Dutton
Forshaw is the motor retail division of Lloyds TSB Asset Finance.
Topshop Sir Philip Green is to go it alone with the expansion of
Topshop in America after being unable to find a suitable partner. The
billionaire entrepreneur has been looking for suitable sites in New York for
his flagship young fashion chain for several years. This year he opened in
several Barney’s department stores.
Support
services
Ernst & Young, the accounting firm, said that it would look to
emerging markets to drive growth in 2008, amid an expected slowdown in
British market activity, and also reported a 9 per cent rise in UK revenues
to £1.23 billion in the year to June 30.
Premier Farnell, which provides electronic products repair services,
said that it has signed a letter of intent with Hynetic Electronics, the
Indian group, to acquire its distribution business in India.
Carter & Carter John Green, the finance director at Carter &
Carter, Britain’s largest motor manufacturing training company, has resigned
after the group suspended trading in its shares while it tries to clarify
its finances.
Technology
Microsoft, the US software giant, has revamped its line of Zune digital
music players in an effort to compete with Apple’s iPod. The gadgets are
scheduled for a US release next month.
Google, the internet group, plans to challenge Microsoft’s domination
of office software tools by more than doubling the storage capacity of its
corporate e-mail service and unveiling new security features.
Telecoms
O2, the UK’s biggest mobile operator, said that it is to enter the
competitive fixed-line broadband market with the launch of O2 Broadband.
BT, the telecoms group, will escalate its fightback against Britain’s
mobile operators by significantly extending its wireless broadband service
and will unveil plans to boost wi-fi coverage for its 3.7 million retail
broadband customers.
Transport
BAA, the airports owner, has threatened to cut investment after failing
to secure the passenger price increases that it was seeking. The probability
that BAA will speed up the sale of core assets, which may include Gatwick,
also increased after the Competition Commission published its report into
the airport operator's future charges. BAA was bought last year by
Ferrovial, the Spanish conglomerate.
The Panama Canal reported its busiest year so far in the past 12
months, according to figures released by the Panama Canal Authority which
manages the waterway. It said that transits though the 50-mile (80km)
waterway were up 3.7 per cent to a record 14,721, from 14,194 last time.
Royal Mail Last-minute talks were being held to avert the longest
strike at Royal Mail for 11 years. Postal workers are due to walk out today
in a two-day strike. A further two-day strike starting on Monday will mean
that mail posted today will not be delivered until next Thursday.
Utilities
Statkraft, the Norwegian state-owned electricity group, said that it is
to build the world’s first osmotic power plant, a renewable energy source
that makes use of the pressure built up between sea water and fresh water.
