Economics
FTSE 100 Leading shares began the second half of the trading year on a
sour note, with the FTSE 100 index dropping 146 points, or 2.6 per cent,
amid mounting investor fears over economic prospects. The latest losses came
after the FTSE fell by nearly 13 per cent in the first half following five
consecutive annual gains.
Manufacturing industry The latest CIPS purchasing managers’ survey
showed that the headline index of overall manufacturing activity fell by 3.7
points in June, its largest monthly decline since January 2000, to 45.8, its
lowest level since December 2001. Any figure under 50 indicates contraction.
Output, orders and employment all fell, according to the survey data.
House prices fell for the eighth month in a row in June, dropping by
0.9 per cent to stand 6.3 per cent down on a year earlier, marking their
sharpest annual decline since December 1992, according to Nationwide
Building Society.
Inflation expectations among households rose to another record high in
June, according to the monthly YouGov poll for Citigroup. The public’s
expectations of inflation over the coming 12 months rose to 4.6 per cent,
from 4.1 per cent in May.
Corporate profitability The total net rate of return achieved on
companies’ investment, a key gauge of profitability, edged down to 15.3 per
cent in the first quarter, from a record high of 15.4 per cent in the third
and fourth quarters of last year. But the rate of return achieved in
manufacturing fell to 4.9 per cent, from 7.8 per cent in the fourth quarter
of 2007. Profitability was boosted by a further surge in returns for oil
companies to 57.6 per cent, from 51.3 per cent.
The construction sector The Royal Institution of Chartered Surveyors,
in its latest snapshot of the sector, said that construction workloads fell
in the three months to June at the fastest pace since 1995, with activity in
private residential construction dropping at its fastest rate in the
survey’s 14-year history.
Private sector pay deals are running at relatively high levels, Incomes
Data Services, the pay consultancy reported. It said that the average pay
rise in the private sector was 3.8 per cent in the three months to the end
of the May. The average for the whole economy was revised down to 3.5 per
cent, helped by lower settlement in the public sector.
Eurozone manufacturing activity fell for the first time in three years
in June, according to the latest purchasing managers’ survey from
RBS/Markit. The headline index of activity dropped to 49.2, from a May
reading of 50.6. Any figure over 50 indicates expansion.
Eurozone unemployment is rising again after three years of declines,
official data showed. The jobless rate for the 15-nation bloc was revised up
to 7.2 per cent in May and earlier months.
Eurozone interest rates The European Central Bank came under renewed
political pressure to have a rethink over an increase in eurozone interest
rates that it is expected to order tomorrow. President Sarkozy of France
said that raising interest rates would do little to quell inflation which is
being driven by soaring oil and commodity prices.
US manufacturing staged an unexpected rebound in June, the Institute of
Supply Management found in its latest survey of the sector. Its headline
reading for US manufacturing activity climbed to 50.2, from 49.6 in May,
taking it back above the 50 market that signals expansion.
Oil prices rose sharply again with benchmark US light crude rising by
$2.02 to $142.02 a barrel. World oil supplies will rise more slowly than
previously expected in the next five vears, the International Energy Agency
said.
Global poverty Soaring oil and food prices threaten to make global
poverty even worse, especially in middle-income and developing countries,
the International Monetary Fund said. It called for countries to reduce
barriers to trade and to increase financial aid to poor nations.
Banking
& finance
Banking system Alistair Darling confirmed plans to increase the
guarantee on bank depositors’ savings to £50,000 if their bank fails, but
said the bill for any payout would be met initially by taxpayers and not by
the banking industry.
UBS The US Government has taken the unprecedented step of seeking legal
help to obtain the names of up to 20,000 customers of UBS, the Swiss bank,
whose wealthy American clients are allegedly using the bank to avoid paying
taxes.
Moody’s Investors Service said that it has dismissed the head of
a key division and has also pledged to discipline other staff after an
investigation concluded that employees at the US credit agency knowingly
rated about $1 billion (£502 million) of securities incorrectly.
Arc Fund Management shares have been suspended temporarily on London’s
junior AIM at the request of the company, pending the publication of its
annual audited report and accounts.
Construction
& property
Morgan Sindall, the construction group, suffered a fall in shares of
more than a fifth as it said that it would switch production to social
housing units because of a marked downturn in the housing market.
Countrywide Financial Bank of America said that it has completed the
acquisition of Countrywide Financial, the largest American mortgage lender,
based in California, clearing the way for thousands of job cuts.
Consumer
goods
Anheuser-Busch shareholders have filed lawsuits seeking to force the US
owner of Budweiser beer to consider fairly the $47 billion (£23.6 billion)
takeover bid for the company from InBev, the Belgian brewer of Stella
Artois.
Edrington Group, the privately owned maker of The Famous Grouse and
Cutty Sark Scotch whiskies, reported a 17.5 per cent rise in full-year
earnings to ££38.9 million. It added that it expected to receive £45 million
from Rémy Cointreau after the French group’s decision to leave Maxxium
Worldwide, their distribution venture.
Glenmorangie, the Scotch whisky group controlled by LVMH, the French
luxury goods company, plans to move its headquarters from Broxburn to
Edinburgh and to upgrade two distilleries as part of a £45 million
investment to cash in on the booming sales of Glenmorangie and Ardbeg. It
will sell its Glen Moray distillery at Elgin.
Engineering
Tanfield Group, the electric lifts to vehicles engineering company, has
issued a profit warning after reporting a “marked slowing” in its markets
during June.
Health
Alliance Pharma, the drugs maker that is based in Wiltshire, said that
it may receive about £700,000 from HM Revenue & Customs for tax
credit claims for 2006 and 2007. It has already received £440,000 for its
claim for 2006.
Industrials
ArcelorMittal, the steelmaker, said that it has signed a mandate
through its Frecolux subsidiary with Exane BNP Paribas for the repurchase of
44 million shares, a programme which it announced in December.
Leisure
PartyGaming, the online gambling operator, is to launch a financial
spread-betting website to be called PartyMarkets.com, through an alliance
with City Index Group, the provider of retail derivative trading services.
City hotel A Grade-I-listed former Midland Bank headquarters in the
City that provided the backdrop to the James Bond film Goldfinger is to be
turned into a luxury hotel by Vladimir Chernukhin, a Russian tycoon.
Rosinter Restaurants, the Russian restaurant and coffee shop operator,
has appointed Tony Hughes, formerly managing director of Mitchells &
Butlers’ restaurants division, as a non-executive director.
Cineworld Group, the British cinema chain, said that it had performed
“as expected” during the first half, with total revenues up by 0.7 per cent,
and added that its outlook was encouraging.
Media
Setanta, the pay television broadcaster, said that it had agreed a new
distribution deal with Top Up TV, the digital television platform. Under the
terms of the deal, Top Up TV will sell Setanta Sports on its digital
television recorder and will offer Setanta’s sports coverage alongside its
Top Up TV Anytime and Picture Box movie subscription services.
Informa, the exhibitions group, has received an approach from a private
equity consortium led by Providence Equity, valuing the company at £2.15
billion.
Natural
resources
John Wood Group, the oil services provider, said that it would enter a
$3 million (£1.51 million) contract with Edison, the Italian energy group.
Gulfsands Petroleum, the AIM-listed oil and gas explorer, said that it
had completed its 10,000 barrels per day early production facility at its
Khurbet East Field in Syria, with commercial production expected next month.
Central African Gold said that trading in its shares on London’s junior
Alternative Investment Market had been suspended, pending publication of its
annual report and accounts.
Retailing
Carpetright Lord Harris of Peckham, the founder and chairman of
Carpetright, fears the high street is facing one of its toughest years for
half a century.
HMV, the music and video games retailer, said it was ahead of schedule
in its three-year recovery drive after reporting a 25.2 per cent rise in
full-year pre-tax profits to £56.6 million.
N Brown, the home shopping group, said that it was planning to launch a
“nostalgic” gift shop, with products such as Brut aftershave and John Wayne
figurines. A trading statement showed that sales across the business were up
by 12.3 per cent in the 17 weeks to June 28.
Shopping centres The number of people visiting out-of-town shopping
centres dropped by nearly 6 per cent in June, according to figures released
by Experian, which said that the reduction was “almost certainly” because of
higher petrol prices.
EBay A US intellectual property lawyer has predicted that a ruling
against eBay, the online auction site, this week will trigger other lawsuits
from designers in America seeking to block the sale of fake goods on the
internet.
Support
services
Babcock International, the defence sector support services company, has
won a submarine contract from the Canadian Government worth up to £750
million. The initial contract is for five years.
Southern Cross, the care homes company, suffered a fall in shares of 27
per cent after it announced that it had gained an extra month to negotiate
how to pay back a £46 million debt.
Technology
Nokia, the Finnish manufacturer of mobile telephones, has added Warner
Music Group’s catalogue for its forthcoming music service.
Galileo The European Commission will award contracts connected to the
operation of its Galileo satellite navigation system. The indicative value
of the contracts will be about €2.1 billion (£1.7 billion), a spokesman
said.
Telecoms
Alternative Networks, the business-to-business telecoms group, reported
a 32 per cent rise in first-half sales and proposed to return £4 million of
surplus cash to its shareholders.
AT&T US consumers who want the new iPhone but cannot or do not want
to sign up for a two-year contract with AT&T will eventually be able to
buy it for an extra $400, AT&T said.
Transport
Stobart Group, the transport company based in Cumbria, has acquired the
chilled and ambient goods operations of Innovate Logistics for an unknown
sum from BDO Stoy Hayward, the administrator.
Indian lorry drivers As many as five million Indian lorry drivers plan
to go on strike to protest at a surge in fuel prices and a claim for
trillions of rupees in tax arrears. The action threatens to cripple the
country’s transport network.
Utilities
Severn Trent, the water company, could be forced to return up to £40
million to customers as Ofwat prepares to bring further sanctions against
the utility. The regulator said that it intends to deal with the company’s
misreporting of water leakage levels, for which Severn has been fined £2
million.
