Economics
House prices appear to be overvalued and the buy-to-let market could be
a “source of weakness” in the coming months, Kate Barker said. The member of
the Bank of England’s Monetary Policy Committee said that the level of house
prices was “on many estimates” higher than market fundamentals would
suggest, in a speech which analysts saw as suggesting that she would not
support cutting interest rates next month.
Manufacturers’ confidence The quarterly Industrial Trends report
from the CBI showed a sharp drop in manufacturers’ confidence and the
weakest export orders in a year. Sentiment plummeted in the aftermath of the
run on Northern Rock, the mortgage lender. The report’s confidence index
declined to a balance of minus 13 in October, the lowest since January 2006
and down from minus 2 in July.
Eurozone manufacturing is likely to have had a good third quarter but
the strong euro, expensive oil and tighter credit pose risks to growth in
the fourth quarter, according to data published by Eurostat. Industrial new
orders in the single currency zone rose by 0.3 per cent during August and by
5.1 per cent year-on-year.
French consumer spending rose in September. The national statistics
office said that consumer spending on manufactured goods rose by 0.1 per
cent month-on-month, compared with a 0.4 per cent fall predicted by
analysts.
US economy Alan Greenspan, former chairman of the US Federal Reserve,
said that the US economy still faced pressure from a drawn-out housing
market slowdown but would “probably not” slip into recession as a result.
Chinese economy China’s central bank said that it would step up
monetary tightening measures to keep credit growth in check, while pressing
ahead with reforms such as gradually making the yuan currency fully
convertible.
Banking
& finance
Dresdner, the German bank, is considering joining three American banks
which have set up a special $100 billion (£50 billion) fund, or
“superconduit”, to offset lenders’ losses from the credit squeeze and the US
sub-prime mortgage crisis. Dresdner said that it had been invited to join
but has yet to make a decision.
Merrill Lynch Tim Carrington (Diary,
September 29) did not quit Merrill Lynch, but was made redundant. He
denies using a four-letter noun about his former boss.
Countrywide Financial, America’s largest mortgage lender, said that it
will begin calling borrowers to offer adjustments or re-financing on $16
billion in loans whose interest rate is set to adjust by the end of 2008.
The company has been under pressure since the early summer over fallout from
the American housing slump and mortgage crisis.
T Rowe Price, the US investment management group, said its third
quarter profits rose by 36 per cent to $174.8 million, compared with $128.3
million last time, thanks to fees from investment advice.
Prudential’s chief executive Mark Tucker admitted that the UK was
“a challenging environment” after sales in the insurer’s home market fell by
20 per cent in the first nine months of 2007. But 48 per cent growth in Asia
buoyed Britain’s second-biggest insurance company and its shares closed up
1.85 per cent.
Portman Building Society Robert Sharpe, the chief executive who led the
Portman Building Society into a takeover by Nationwide, creating Britain’s
second-biggest mortgage lender, will receive a £1.7 million payoff.
Rhinebridge, the $2 billion structured investment vehicle which is
sponsored by IKB, the German bank, has become the second fund of its kind to
begin a fire sale of its assets.
Construction
& property
Persimmon, the FTSE 100 housebuilder, has begun buying back shares in
the belief that the sell-off in housebuilders is overdone. Persimmon has
bought 250,000 shares at an average price of 953.57p and said that it will
continue to be opportunistic on further buybacks.
Consumer
goods
Whirlpool, the American home appliance maker, reported a boost of 50
per cent in third quarter profits to $175 million (£86.3 million), up from
$117 million last time, based on strong international growth and cost
controls.
Coach, the American luxury bag maker, said that its third-quarter
profits had risen by 23 per cent to $154.8 million, up from $125.6 million
last time, on higher sales of its autumn bags.
Umbro Nike, the giant American sportswear group which is set to buy
Umbro, the football kit maker, for £285 million, has committed to keep the
British brand’s double diamond logo on the England team kit until at least
2014. Shares in Umbro rose 25¼p as Nike revealed a recommended
193.06p-a-share all cash bid, well above expectations.
Scottish & Newcastle, the brewing group, has launched a pre-emptive
strike to derail a joint bid from Carlsberg and Heineken by seeking to
terminate its Russian joint venture with Carlsberg, its Danish suitor.
Engineering
Toyota Motor, the Japanese carmaker, announced plans to build its first
domestic assembly plant in more than a decade. The company said that the
plant, which is set to open in 2010, will produce 120,000 vehicles per year.
Volkswagen The European Court of Justice has cleared the way for
Porsche, the German luxury carmaker, to buy Volkswagen by ending a law that
had protected Europe’s biggest car manufacturer from takeover.
Lockheed Martin, the world’s largest defence group, said its
third-quarter earnings had risen by 22 per cent to $766 million (£377.7
million), from $629 million last time, as sales and profits rose in all of
the company’s units.
Suzuki Motor, the Japanese motorbike maker, has joined forces with
Intelligent Energy, the Loughborough-based technology group, to produce the
Crosscage — a hydrogen-powered motorbike.
Health
GlaxoSmithKline, Europe’s biggest pharmaceuticals giant, said that it
had settled a lawsuit with Mylan, the American generic drug developer. Mylan
will now be able to sell generic versions of Paxil, the antidepressant
treatment, and has 180 days of market exclusivity.
Industrials
Dupont, the American industrial chemicals giant, said that its
third-quarter profits had risen by 8 per cent on higher sales from its
agriculture and nutrition divisions and greater overseas growth. The company
saw its profits rise to $526 million (£259 million), compared with $485
million last time.
Leisure
Unibet’s chief executive, Petter Nylander, was arrested in the
Netherlands on a French warrant over internet gambling laws, putting France
on a fresh collision course with Brussels.
EasyHotel, Stelios Haji-Ioannou’s budget hotel franchise, has signed a
deal to open at least three hotels in Austria over the next four years and a
further six in Central Europe.
Media
Galleon Holdings, the media group, said it plans to purchase Hong
Kong-based Phoenix Investment Global, an interactive broadcast television
services provider in China and South East Asia. The all-share deal has a
potential value of £5.5 million.
Natural
resources
BP, the oil giant, saw its third-quarter headline profits plunge 45 per
cent, despite near record oil prices, to $3.87 billion (£1.89 billion),
compared with $6.89 billion last time, amid falling production from US
refineries and the closure of a North Sea pipeline.
Cairn Energy BP was rumoured to be eyeing a possible £3.6 billion bid
for Cairn Energy. Shares in Cairn, the former FTSE 100 explorer, rose by
nearly 8 per cent, or 158p, to £22.69, valuing the group at just under £3
billion.
Retailing
Flying Brands, the home shopping group, said the recent Royal Mail
strikes have contributed to losses of up to £1.5 million. Its Flying Flowers
division is Britain’s largest flowers-by-mail service.
Debenhams said that sales had begun to pick up across the business and
insisted that the UK’s second-largest department store group could cope with
the high street downturn.
Tesco, the supermarket group, has withdrawn plans to appeal to the
European Court of Justice in a trademark dispute with Metro, its German
rival.
Support
services
Petards Group, the security and surveillance equipment maker, said its
Petards Joyce-Loebl division had won a contract worth more than £1 million
from the Ministry of Defence for an airborne chaff and flare dispensing kit
for rotary-winged aircraft.
Technology
Autonomy, the business software company, said that it will buy Merido
Holdings, a Northern Ireland-based software supplier. The deal is expected
to be worth about £20 million.
Microsoft, the US software giant, said it had released a lower-priced
version of its XBox 360 video game console named Xbox 360 Arcade. The
console has been in fierce competition with the Wii from Nintendo, its
Japanese rival.
Cisco Systems, the maker of computer technology, has agreed to purchase
Navini Networks, a Texas-based broadband wireless technology company.
Nokia, the Finnish group which is the world’s largest mobile phone
maker, said that the $8.1 billion (£3.99 billion) deal that it had made
earlier this month for Navteq, the American digital maps supplier, had been
worth the price.
Apple shares hit an all-time high following the release by the US
computer group of forecast- beating results, rising to $188.60, their
highest level in at least 20 years, before falling back to $185.94.
Telecoms
France Télécom said that it had agreed to open its cable
transmission ducts to other telecoms operators in an attempt to boost the
expansion of its networks. The company said the new access will allow other
companies to build their own networks.
AT&T, America’s largest telecoms company, reported third-quarter
profits up by 42 per cent, based on the completed merger with Bell South Co.
and higher wireless sales. The company said that it had taken in a net
income of $3.1 billion (£1.5 billion), up from $2.2 billion last time.
The Post Office hopes to win 600,000 customers for a new broadband
service by April, targeting Britain’s growing army of “silver surfers” and
going head-to-head with providers such as BT, its former sister company.
Vodafone, the mobile phone group, said that it expects to get the
go-ahead from the European Commission for its €775 million (£541 million)
acquisition of Tele2's assets in Spain and Italy before the end of the year.
Transport
Braemar Shipping Services, the shipbroking company, said its interim
pre-tax profits had risen by 73 per cent for the six months to the end of
August to £7.1 million, from £4.1 million last time.
Utilities
E.ON and RWE, the German utilities which are members of the European
Energy Exchange, said that they are planning to trade CO2 emissions and
products in partnership with Eurex, the international derivatives exchange.
