Economics
Eurozone economic growth halved in the last three months of 2007, but
was still stronger than market expectations. GDP grew by 0.4 per cent,
compared with 0.8 per cent in the third quarter, the EU statistics office
said.
German economic growth more than halved in the fourth quarter. GDP
increased by 0.3 per cent, compared with an increase of 0.7 per cent in the
third quarter.
French GDP grew by 0.3 per cent in the fourth quarter, after an
increase of 0.8 per cent in the third quarter. That brought the total GDP
growth for 2007 to 1.9 per cent, just below the Government’s minimum target
of 2 per cent.
The US annual trade deficit fell for the first time in six years in
2007 to $711.6 billion (£362.9 billion), from $758.5 billion. In December
the trade deficit fell to $58.8 billion, from a revised $63.1 billion in
November, the Commerce Department said.
US economy Ben Bernanke, Chairman of the US Federal Reserve, provided
the clearest indication yet that he intends to fight America’s looming
recession as he pledged to act “as needed” to shore up the flagging US
economy. In remarks that economists said reinforced the case for a further
interest rate cut, Mr Bernanke said the economic outlook had deteriorated in
recent months and pinned much of the blame on the credit crunch.
Japanese GDP baffled the experts when government figures showed that it
had grown at an annualised 3.7 per cent rate over the October to December
quarter of last year.
Banking
& finance
UBS, Switzerland’s biggest bank, revealed a surprise $26.6 billion
(£13.6 billion) worth of additional exposure to American mortgages, after
admitting that losses on US sub-prime loans had pushed it into a SwFr4.4
billion (£2 billion) loss in 2007.
Standard Life, the life insurer, said its 2008 profits will receive a
£100 million boost as a result of a new deal with Canada Life International
Re to reinsure its £6.7 billion UK annuity book.
Barclays, the banking group, is considering buying a controlling stake
in Expobank, the Russian retail and commercial bank, for about £200 million,
according to reports. Barclays will report its full-year results next week
and is expected to reveal increased writedowns on its investments in US
sub-prime mortgages.
Investec, the South African investment bank, gave warning that it would
not meet profit targets for the year because of “weakened” trading
conditions in the UK, South Africa and Australia.
Société Générale, the French bank, faced fresh
embarrassment after a claim that Jérôme Kerviel, the man at the centre of
the rogue trading scandal, had run up €2.2 billion (£1.6 billion) in losses
six months before he was denounced by the bank. Mr Kerviel was detained in
custody last week after SocGen said his positions had cost it €4.9 billion
when they were unwound.
Natixis, the French bank, has declared more than €1 billion of
writedowns linked to the credit crisis. Natixis said that its full-year
posttax net income would be about €1 billion.
Northern Rock Leading shareholders in Northern Rock are preparing to
vote down a rescue proposal from Sir Richard Branson’s Virgin Group, despite
the threat that the beleaguered mortgage bank will be nationalised if a deal
fails.
FGIC Moody’s has downgraded FGIC, one of the largest American bond
insurers, by six levels and warned that further cuts could follow. FGIC is
the first bond insurer to be downgraded from triple-A by all three of the
leading ratings agencies.
Construction
& property
Shaftesbury, the FTSE 250 property company, said 12 per cent of its
stock was being lent out by institutional investors to traders investing via
contracts for difference. It added that it has fixed £220 million of debt at
5.15 per cent for 20 years.
Circle Anglia, the social housing group which consists of seven
registered social landlords, has secured £1.7 billion to refinance £800
million of existing debt and to provide funds for building 10,000 new homes
over the next five years.
Housebuilding targets The Government’s housebuilding targets are under
threat after official figures revealed a fall in home construction last
year. In the last quarter of 2007 construction work started on 40,735 new
homes in England, down from 45,563 starts in the same period in 2006, or an
11 per cent decrease.
Consumer
goods
Diageo, the world’s biggest drinks company, reiterated its full-year
guidance of a 9 per cent rise in organic operating profits helped by a
first-half return to growth for Guinness in Britain and Ireland.
Greencore, the convenience food group, said it was comfortable with
market expectations after reporting a 22 per cent rise in full-year
operating profits.
Molson Coors, the American brewer, said its proposed US joint venture
with SABMiller would be based in a neutral location such as Chicago, Atlanta
or Boston, rather than in Denver, where Molson Coors is based, or Milwaukee,
the home of Miller.
Engineering
BAE Systems The decision by the Serious Fraud Office to drop its
investigation into possible corruption in the arms dealing of BAE Systems,
the defence company, with Saudi Arabia is being challenged in the High Court
by two campaign groups.
Health
AstraZeneca, the Anglo-Swedish drugs maker, has confirmed widespread
speculation that it will spin out its gastrointestinal unit, which is based
in Gothenburg, Sweden, to a consortium of venture capital investors led by
Nomura Phase4 Ventures.
Industrials
Lafarge, the French cement giant, said that it has suspended €1 billion
(£743 million) in new cement plant projects in Europe until it has more
details on new European Union regulations on carbon dioxide gas emissions.
The cement industry produces more than 5 per cent of global carbon dioxide
emissions.
Nitol Solar, the chemicals and silicon gas company, which is based in
Russia’s Irkutsk region, said that it has decided to postpone the initial
public offering of its ordinary shares because of market conditions.
Leisure
Thomas Cook, the tour operator, said that its summer holiday bookings
continued to be “encouraging” and announced the acquisition of Hotels4U, the
internet bed bank founded by Haim Perry, for an initial sum of about £25
million, of which Mr Perry will reinvest about £3 million in the company.
Orient-Express Hotels, the luxury hotel and train operator, saw its
shares rise following calls from DE Shaw, an institutional shareholder with
a 5.7 per cent stake, for the Orient-Express board to clarify its position
in the event of a “fair and equitable” bid for the company.
Media
WPP, the advertising group, said it has acquired a 75 per cent stake in
HeathWallace, the website design and development agency, in line with its
strategy to develop networks in fast growing sectors.
Pearson, the publishing group and owner of the Financial Times, has
agreed to sell its data management business to M & F Worldwide for $225
million (£114.7 million).
News Corporation James Murdoch, the head of News Corporation's European
and Asian operations, is set to receive an annual salary of about $3.4
million (£1.73 million), according to a regulatory filing. News Corp is the
parent company of The Times.
Publicis, the French advertising group, has failed to meet its forecast
for underlying full-year revenue, but said that it had more than $1.3
billion in new business booked in January.
Natural
resources
Royal Dutch Shell has put on hold plans to restructure its vast oil
operations in Nigeria amid concerns that the changes will lead to large job
losses. Separately, the oil group called for government intervention in the
energy sector on a global scale to achieve reductions in greenhouse gases.
ExxonMobil A US federal judge in Manhattan confirmed the freezing of
$300 million (£152 million) held by Venezuela’s state oil company, finding
it likely that ExxonMobil, the US oil group, will win a compensation claim
against Venezuela over the nationalisation of an oil project.
Vale, the Brazilian miner, and Glencore, Xstrata’s largest shareholder,
are understood to be discussing terms for a possible £45 billion takeover of
the UK- listed miner. Analysts said that the final bid would probably value
Xstrata at between £43 billion and £45 billion.
Retailing
Stylo, the footwear retailer, said that it had struck a deal with KPMG,
the administrator of Dolcis, to purchase the stricken shoe chain’s trading
stock and brand name. It will allow about 300 Dolcis staff to keep their
jobs.
Ideal Shopping Direct, the TV shopping group, in response to the recent
rise in its share price, confirmed that it has received a "very
preliminary approach which may or may not lead to an offer being made for
the company”.
Support
services
Southern Cross, the provider of care-home services, said its
first-quarter sales rose by 29.6 per cent to £262.6 million compared with
last time, and added that trading remains strong.
Electrocomponents, the electrical and industrial distributor, said that
group sales had grown by about 6 per cent in the year and added that it
expects full-year pre-tax profits to be in line with expectations.
Jarvis, the infrastructure services group, which played a large part in
the new year railway travel chaos in the Midlands, is predicting its best
set of results for five years, largely on the back of the success of its
rail business.
Amey, the services division of Ferrovial, the Spanish conglomerate, has
won three new contracts in the UK worth a total of about €1 billion (£743
million). Ferrovial said the contracts are with the Home Office, Hampshire
Highways and Hertfordshire Highways.
Technology
Capgemini, the IT services provider, said that full-year net profits
rose to €440 million (£327 million), from €293 million last time, but said
that it may be hit by difficulties in the banking sector.
Telecoms
European telecoms The European Union’s telecoms regulator said that
Britain will be allowed to scrap a number of EU telecoms market rules in
parts of the country where competition in broadband services is strong.
Transport
Air France-KLM, the Franco-Dutch airline, has reported third-quarter
pre-tax profits above forecasts. However, it said its net profit had fallen,
hit by currency effects, higher oil prices and recent strikes.
British Airways will pay $140 million (£71.4 million) in compensation
to passengers affected by the carrier’s fixing of ticket prices after
settling a US class-action lawsuit.
Utilities
RWE, the German utility, is to buy half of Excelerate, the US liquefied
natural gas transport group, for $500 million (£255 million), as it seeks to
benefit from the increasing demand for fuel.
