Economics
Housing market Builders began work on 32,100 homes in England in the
first quarter — 24 per cent below the same period in 2007 and the lowest
figure since 1996, according to the Department for Communities and Local
Government. Despite this, Caroline Flint, the Housing Minister, said that
government targets for building 240,000 new homes a year by 2016 were
“challenging, but remain achievable”.
Money market interest rates Three-month sterling Libor, the benchmark
rate used to price many loans, rose by 0.04 percentage points to 5.84 per
cent, taking its rise to 0.08 percentage points in two days.
Eurozone GDP growth in the first quarter rose to 0.7 per cent, up from
0.4 per cent in the previous three months. However, Jean-Claude Trichet,
President of the European Central Bank, said that growth was now likely to
slow.
Eurozone inflation eased to an annual rate of 3.3 per cent in April,
from 3.6 per cent in March, but remained far above the European Central
Bank’s target of “close to, but below” 2 per cent.
Eurozone sentiment over prospects for the eurozone economy fell to a
five-year low in the second quarter, according to a survey by Germany’s Ifo
institute. Its index of the eurozone economic climate fell to 76.3 for April
to June, from 81.4 for the previous three months.
German GDP growth surged in the first quarter to 1.5 per cent, more
than twice as fast as the 0.7 per cent expansion in the final quarter of
last year and double the pace expected by economists. The jump was driven by
a fivefold rise in corporate investment.
France’s economy accelerated in the first quarter to register GDP
growth of 0.6 per cent, up from 0.4 per cent in the final quarter of last
year, official data showed.
Credit crisis The worst of the global financial sector crisis is over
but the impact on the broader world economy will probably drag on, Dominique
Strauss-Kahn, managing director of the International Monetary Fund, said.
US industrial production fell by 0.7 per cent in April, the biggest
drop in the manufacturing sector since September 2005, the US Federal
Reserve said.
US banking practices Ben Bernanke, Chairman of the US Federal Reserve,
has called on America’s banks to improve their risk management practices and
also sounded a warning that banking groups should guard against the threat
of further liquidity disruptions that could impair their access to funds.
The UN global forecast said that growth in developing countries
this year was now expected to be about 5 per cent, down from the 7.3 per
cent reported in 2007, and would probably slow further next year to 4.8 per
cent.
Banking
& finance
Barclays, the banking group, said that its first-quarter profits were
down on the figures reported a year ago, as it revealed a further £1.7
billion hit from the credit turbulence.
Blackstone, the American private equity group and property investor,
reported a first- quarter loss of $93.6 million (£48.1 million), compared
with a profit of $957.8 million last time.
Thinc Group The Financial Services Authority, the City regulator, has
levied a record £900,000 fine on Thinc Group, the mortgage broker, for
serious failures in its selling of sub-prime mortgages.
Crédit Agricole, France’s biggest retail bank, said that its
quarterly net profits had fallen by two thirds to €892 million (£709.4
million) as it took further writedowns of €1.2 billion. Separately, Natixis,
the French investment bank, reported first-quarter earnings down 88 per cent
to €69 million because of its exposure to US sub-prime mortgages.
Construction
& property
Commercial property prices fell another 1 per cent in April, bringing
the 12-month decline to 16.2 per cent, according to the Investment Property
Databank.
Marshalls, the paving stone manufacturer and sponsor of the Chelsea
Flower Show, reported robust commercial business for the year ahead but said
its forward bookings in April for domestic paving were down on last year.
Mace, the construction group, has drawn up an initial costing of about
£400 million for its outline deal to build the Shard of Glass, the
skyscraper to go over London Bridge Station,. But this is 10 per cent above
the £350 million budget demanded by the site’s owners in a fixed-price
contract, according to Construction News.
Consumer
goods
SABMiller, the brewer behind Peroni Nastro Azzuro and Miller, reported
robust full-year results, but said that beer prices would continue rising to
offset the increasing cost of raw materials.
Carlsberg, the Danish brewer, said that Baltika Breweries, its Russian
subsidiary, had agreed a deal to acquire the Baku-Castel brewery in
Azerbaijan, subject to regulatory clearance.
Cadbury, the confectionery group, said that after the demerger of
Americas Beverages, the new company is off to a strong start with first-half
revenues expected to be above the top end of its goal range and trading
margins about 150 basis points ahead.
Greene King, the Suffolk brewer, said that Stuart Ross, managing
director of Belhaven, its Scottish business, would step down to take a
consultancy role by the end of this year.
Engineering
Invensys, the engineering group, reported a 19 per cent increase in
full-year operating profits and said it is confident of making further
progress in the new financial year.
General Electric, the US conglomerate, is preparing to sell its
appliances unit, ending more than a century as the first name in American
household goods.
Health
Smith & Nephew, the orthopaedics specialist, has signed a
distribution deal for its negative-pressure wound therapy products with
Apria Healthcare, the US supplier of home medical equipment.
Industrials
ArcelorMittal The Indian unit of ArcelorMittal, the steelmaker, will
invest in two coalmines as part of plans to build electricity generators
that will power two new steel plants in India, local reports say.
Leisure
Thomas Cook, Britain’s second-biggest tour operator, said it saw no
sign of any weakening demand and was on track to meet full-year forecasts,
despite an estimated hit of up to €40 million (£31.8 million) from currency
translation.
Paddy Power, the Irish bookmaker, said it expected full-year operating
profits to rise by 14 per cent to €82 million after a strong run of
favourable sporting results, but that this would be offset by a currency hit
of €5 million.
Luminar, the UK’s biggest nightclub operator, reported resilient
trading in the past ten weeks, with like-for-like sales up by 1.9 per cent
in its dancing division and by 7.5 per cent in its branded venues.
PartyGaming, the internet gambling operator, said that Michael Jackson
would step down as non-executive chairman and Jim Ryan, chief executive of
St Minver, the internet gaming services provider, would succeed Mitch Garber
as chief executive.
Media
ITV, the commercial broadcaster, reported net advertising revenues up
by 2 per cent in the first three months of this year.
News Corporation A US federal court jury has broadly cleared the NDS
unit of News Corporation of satellite television piracy charges in a suit
brought by DISH Network. News Corporation is parent company of The Times.
Natural
resources
Vedanta Resources, the London-listed mining group, reported an 11 per
cent increase in its full-year earnings to $3 billion (£1.54 billion),
beating market expectations.
Cadogan Petroleum, the Ukrainian oil and gas group, plans to float on
the London Stock Exchange and is looking to raise about $260 million.
Retailing
Clinton Cards, the high street retailer, said quarterly like-for-like
growth had slowed to 0.6 per cent.
Findel, the home shopping group, reported a £1 million rise in
full-year underlying pre-tax profits to £57 million.
DSG International, the group behind Currys and PC World, is to halve
its dividend and close 77 Currys stores as part of a turnaround plan to
reinvigorate the electrical goods retailer.
Dobbies Garden Centres, the AIM-listed group at the centre of an
ownership struggle between Sir Tom Hunter, the Scottish billionaire, and
Tesco, the supermarket group, will proceed with its £150 million rights
issue after Sir Tom failed in a legal attempt to block the move.
Support
services
G4S, the security group, said that it has sold its German manned
security and monitoring business to a unit of Securitas, its rival, for £27
million.
Technology
Yahoo! Carl Icahn, the activist investor, has launched a boardroom coup
against Yahoo!, the US internet search engine, to force it to accept a $47
billion (£24.1 billion) offer from Microsoft.
Telecoms
BT’s chief executive, Ben Verwaayen, is leaving the telecoms group on a
high note after unveiling a 3 per cent rise in full-year underlying profits
to £5.78 billion.
Transport
Aer Lingus, the Irish carrier, gave warning of first-half operating
losses, but revealed higher revenue and passenger numbers for the first four
months of 2008.
British Airways The pressure on Willie Walsh, chief executive of
British Airways, is set to intensify when he gives a further profit warning
and faces a pilots’ strike that could ground the airline.
Utilities
National Grid, the utility group, is considering a possible €1 billion
(£795 million) bid for the high-voltage transmission business put up for
sale by E.ON, the German utility.
Trading Emissions, which invests in environmental permits, is to buy
Econergy International, the AIM-listed renewable energy producer, for £27
million to develop projects in Latin America.
