Economics
Inflation expectations Britons’ expectations of future inflation surged
to a record high of 4.3 per cent in May, above market expectations and more
than a percentage point above the actual rate, figures from the Bank of
England showed. Britons’ perceptions of the current rate of inflation rose
to a record 4.9 per cent in May, from 3.9 per cent in February.
Food inflation Within the consumer price index, food inflation eased to
19.9 per cent in the year to May from 22.1 per cent in April, the National
Bureau of Statistics said. Non-food inflation declined to 1.7 per cent, from
1.8 per cent in April.
Mortgages approved for house purchase rose by 9 per cent in April to
50,700, from 46,400 in March, according to the Council of Mortgage Lenders,
but this was down from the 80,500 seen in April last year. Overall gross
mortgage lending in April rose by 8 per cent to £26.1 billion after two
consecutive months of decline, although this was 5 per cent down on April
last year.
US retail sales rose by 1 per cent in May as Americans splurged on
petrol, consumer goods and restaurant meals, a government report showed.
Core retail sales, which strip out vehicle sales, increased by 1.2 per cent.
Chinese inflation fell in May to 7.7 per cent, confounding economists
who had forecast a rise to 7.9 per cent.
Banking
& finance
3i Infrastructure, which is partly managed by 3i, the private equity
group, said that it had outperformed its first-year targets thanks to a
strong infrastructure market and added that it had raised £115 million to
invest in global assets.
Citigroup, the US investment bank, is to close its Old Lane Partners
hedge fund, co-founded by Vikram Pandit, its chief executive, less than a
year after buying it for more than $800 million (£412 million).
Jarvis Securities, the London-listed financial services company, said
takeover talks have been terminated and added that it is no longer engaged
in any discussions regarding a potential offer for the group. The company
said no offer was made, reflecting the underlying value of the business and
that it continues to trade ahead of management expectations.
Charles Stanley Group, the stockbroker, reported a fall in its
full-year pre-tax profits to £12.4 million, because of one-off acquisition
costs and the difference in the value of investment disposals.
Lehman Brothers, the Wall Street brokerage, has replaced its finance
director, Erin Callan, just six months into the job, and removed Joseph
Gregory, its chief operating officer, as it sought to appease investors
after the announcement on Monday of a much larger than expected
second-quarter loss.
Financial Services Authority It is understood that the Financial
Services Authority, the City regulator, is digging in its heels over calls
by the US Commodity Futures Trading Commission to restrict trading on the
British energy market by introducing daily price limits on some oil futures
contracts.
Construction
& property
KDD Group, the Ukrainian property developer, reported a fall in
full-year pre-tax profits to $143.1 million (£73.6 million), because of the
lower value of investment property over the past year, but said it expects
more opportunities in 2008 after a “very successful 2007”.
European Land, the developer controlled by David and Simon Reuben, the
billionaire brothers, and the Jarvis family, has pre-let to Marks &
Spencer 160,000 sq ft of office space under construction in Paddington
Basin, West London, next to the retailer’s existing headquarters, on a
30-year lease at on average £53.50 per sq ft.
Persimmon The FTSE 100 ejected Persimmon, the last remaining
housebuilder, from its blue-chip ranks when it relegated it to the FTSE 250
in the index’s latest quarterly reshuffle. Persimmon has seen its market
value decline from £4 billion to £937.7 million in just over a year.
Barratt Developments, the debt-laden housebuilder, has yet to complete
a vital £400 million refinancing deal one month after telling shareholders
that it had struck an outline agreement with its main lenders. Mark Clare,
chief executive of Barratt, and Mark Pain, the finance director, had said
that the new facility was likely to be in place by the end of this financial
year, which ends in just under three weeks.
Consumer
goods
Carlsberg, the Danish brewer, said that the DKr30.5 billion (£3.25
billion) rights issue, launched to repay debt taken out to fund the
acquisition of part of Scottish & Newcastle, had been fully subscribed
by shareholders.
InBev, the Belgian maker of Stella Artois and Beck’s beers, is tipped
to raise its offer for Anheuser-Busch to as much as $50 billion (£25.6
billion) in an effort to persuade the brewer’s board to recommend a deal.
Engineering
Cobham, the aerospace group, said its helicopter joint venture has won
business worth £55 million. The group will supply training services to
support AgustaWestland overseas contracts, based on RAF extended search and
rescue training. The contract also includes instrument rating training and
simulator training.
TT Electronics, based in Surrey, said that its trading outlook for the
year remained unchanged and reiterated its expectations that first-half
results will be lower compared with last year.
Health
GlaxoSmithKline, the UK’s biggest drugs maker, said the European
Commission has granted a conditional marketing authorisation for Tyverb, its
oral treatment for metastatic breast cancer, in the European Union.
Angel Biotechnology, the biomanufacturing specialist that is based in
Northumberland, has announced a deal with Novolytics in Coventry under which
Angel will manufacture and supply materials for clinical trials for a
treatment for MRSA.
Industrials
ArcelorMittal, the steelmaker, has held talks about taking control of
its affiliate Dillinger Huette, the German steel supplier that is valued at
about €3.5 billion (£2.8 billion) and specialises in plate for energy
pipelines, according to local reports.
Leisure
Gala Coral, the gambling operator, is to close its Gala Bingo club in
Great Barr, Birmingham, this month because of the impact of the smoking ban
and new laws banning big-jackpot gaming machines.
Guoco Group, the Malaysian gaming operator that owns London’s Clermont
Club, continued its stake-building in Rank Group, the casino and bingo club
operator, lifting its holding to 12.67 per cent from 12.02 per cent.
Starbucks has signed a licensing deal that will see more than 150 of
its coffee bars open in railway stations and airports across Europe over the
next three years. The agreement with SSP, the travel concession arm of
Compass, the catering group, comes as Starbucks looks to offset a slump in
the United States.
Mitchells & Butlers Robert Tchenguiz, the property entrepreneur,
has taken advantage of share price falls to lift his interest in Mitchells &
Butlers, the pub company, to 29.77 per cent by buying further contracts for
difference (CFDs). Violet Capital Trust, owned by the Tchenguiz family, now
has a 3 per cent stake plus CFDs representing 26.77 per cent.
Media
Mirada, the interactive media and games group, has agreed a contract to
provide ITV, the commercial broadcaster, with digital television bingo
services, which it expects to lead to a “significant increase” in revenue at
its B2B gambling business. It also said that it has opened its first office
in Italy.
Natural
resources
Expro International, the London-listed oil services group, said it has
agreed to acquire the oil and gas metering business of Cidra, the US
company, for $60.5 million (£31 million). The acquisition will form the
basis for a new business called Expro Meters, which will develop
cost-effective flow meters for the oil and gas market.
John Wood Group, the energy services provider, has secured a 12-year
contract with Golden Valley Electric Association in Alaska worth $19.5
million.
Royal Dutch Shell, the Anglo-Dutch oil group, said it will not be able
to honour the June and July contracts from its Bonny oil terminal in Nigeria
after a militant group sabotaged its key crude oil supply pipelines.
Rio Tinto, the London-based mining group, is talking to the Libyan
Government about the feasibility of building a $2.5 billion aluminium
smelter in the country that would be capable of producing more than 360,000
tonnes of metal a year.
BP, the oil group, has for the first time openly criticised the Russian
Government for its failure to intervene in its escalating dispute with its
TNK-BP joint venture partners. TNK-BP is Russia’s third-biggest producer of
crude oil.
ExxonMobil, the US oil company, said it will sell the 2,000 or so
service stations that it still owns and will get out of the retail petrol
business in the United States, citing the “very challenging” business
conditions.
Retailing
Home Retail Group, the company behind Argos and Homebase, reported flat
first-quarter sales. Homebase delivered a 12 per cent fall in like-for-like
sales over the 13 weeks to May 31 after poor weather hit sales of garden
furniture. Argos sales were flat over the three months, but only after
strong demand for video games offset low orders for furniture and homewares.
Woolworths, the high street retailer, has been fined £350,000 by the
Financial Services Authority, the City watchdog, for waiting too long to
disclose price-sensitive information to the stock market. The fine is the
second-biggest of its kind imposed by the regulator.
Carphone Warehouse, the mobile phone retailer, gave warning that it
expects to see lower growth in its broadband business as the sharp slowdown
in the housing market, combined with strong sales of mobile broadband, start
to take effect.
Support
services
Aer Lingus, the Irish carrier, said that it has taken a further step
towards cutting its aircraft maintenance bill by more than €20 million
(£15.8 million) by signing deals with SR Technics, which provides support
services to commercial airlines.
Technology
SciSys, the software group which is based in Wiltshire, said it expects
its first-half results to be in line with market expectations and added that
the problems affecting its business have now been substantially overcome.
Yahoo! shares slumped by more than 10 per cent on Wall Street after the
online search engine effectively ruled out any future deal with Microsoft,
the US software group.
Telecoms
European telecoms operators Viviane Reding, the European Union’s
Telecoms Commissioner, said that she will cap the cost of texting and
downloading data while travelling abroad unless mobile operators cut their
roaming prices.
Ofcom, the communications regulator, said there will be further
spectrum on offer, which can be used for new low power services, once the
switchover to digital television is complete.
O2, the mobile phone operator, has lost its four-year battle with 3,
its rival, over the use of its bubble trademark in a television
advertisement. The judgment, by the European Court of Justice, found that 3
could use robust but fair advertising that incorporates the bubbles as long
as it does not cause consumer confusion.
Transport
United Airlines, the American carrier, said that it will charge a $15
service fee to check one bag for domestic travel, citing record-breaking
fuel prices.
Finnair, Finland’s flag carrier, plans to cut about 500 jobs to counter
soaring fuel costs and a sharp fall in demand, sending its shares to their
lowest in three-and-a-half years.
Utilities
British Energy The £10 billion auction of British Energy was dealt a
fresh blow as one of the last remaining bidders, Iberdrola of Spain, pulled
out of the race, saying the price was too high. EDF of France, whose bid of
680p to 700p per share was rejected by British Energy, remains the only
serious potential bidder.
