Economics
Alistair Darling admitted that Treasury fiscal rules are under review
as fears over rapidly worsening government finances were fuelled by a surge
in borrowing to levels not seen since the end of the Second World War.
Mortgage lending fell 3 per cent in June, taking the annual decline to
32 per cent, data from the Council of Mortgage Lenders show. The decline in
the mortgage market accelerated, with lending 21 per cent lower in this
year’s second quarter, against a year ago, after an 11 per cent
first-quarter fall.
UK house prices could slump by a further 20 per cent in the next two
years, experts said.
Chinese inflation rose at an annualised 7.1 per cent in June, against
7.7 per cent in May. Economic growth eased to 10.1 per cent, from 10.6 per
cent in the first three months of the year.
German producer price inflation in June accelerated by more than
expected to its strongest level since March 1982. Prices rose by 0.9 per
cent in the month, pushing the annual growth to 6.7 per cent.
The eurozone trade deficit rose by more than expected in May. The trade
gap of the 15 countries using the euro was €4.6 billion in May, after a
surplus of €2.5 billion in April.
Banking
& finance
Bradford & Bingley has seen three-month arrears on the £11 billion
of mortgages backing its covered bond programme rise this month to 2 per
cent, from 1.78 per cent last month.
Barclays’s largest investors are now based in Qatar after most of its
existing backers snubbed the bank’s £4.5 billion cash call — and
participation in HBOS’s £4 billion rights issue is tipped to be even less
than that for Barclays.
Aberdeen Asset Management, one of the UK’s mightiest institutional
investors, publicly backed the rebuilding of Britain’s tattered banking
sector, but said that executives must learn from “a very serious crisis”.
Martin Gilbert, chief executive of the £114 billion fund manager, said that
Aberdeen had decided to support Royal Bank of Scotland’s crunch rights
issue. He indicated that Aberdeen would support future rights issues from UK
banks, but not at any cost.
Fund managers want more time to decide whether to buy into rights
issues after big swings in bank share prices before recent capital raisings.
They have asked the Association of British Insurers, representing some of
the UK’s biggest fund managers, to look at notice periods.
Walker Crips, the financial services group, said that trading since
April 1, the start of its financial year, has remained profitable and in
line with expectations, despite uncertainty in financial markets.
Citigroup, America’s biggest financial services group, reported a
further $14.2 billion hit from the credit crunch in its second quarter,
taking it to a $2.5 billion (£1.25 billion) overall loss in the period.
Construction
& property
Kier Group is set to cut a total of 350 jobs from its housebuilding
division and close four of its five regional offices after a sharp fall in
sales and reservations in the year to end-June. The group, which in May
announced the closure of its office at Spalding, Lincolnshire, with the loss
of about 100 jobs, said it would be closing another three regional sites,
cutting its headcount by another 250 jobs.
Carillion has been selected as the preferred bidder for Kent County
Council’s New Line Learning Academy and Kent Batched Academies programme,
worth a total of £118 million. Carillion is a framework contractor for the
Government’s academies programme, part of the Building Schools for the
Future programme.
Consumer
goods
Associated British Foods’ proposed acquisition of a yeast business is
back under EU scrutiny. The European Commission said it is again looking at
ABF’s proposed acquisition of Netherlands-based GB Ingredients’ European
yeast business. It is to rule on the deal by October 16. The inquiry was
suspended on July 15 pending further information from the companies.
Engineering
Invensys said it had made a satisfactory start to its financial year,
with first-quarter operating performance in line with expectations. It said
it is confident of meeting expected financing requirements for the
foreseeable future.
Fenner said that trading since April has been in line with its
expectations, and that positive markets and “resilient” order books gave it
confidence in its full-year expectations. “Whilst medium and longer-term
prospects remain unchanged, the short-term opportunities to outperform are
more restricted,” it said.
The Renault-Nissan alliance said that it is investing €80 million (£63
million) at its Rosslyn plant in Pretoria, South Africa, as part of a
project to produce a new Nissan half-ton Pickup NP200 and the Renault
Sandero there. The two companies said that 300 jobs will be created at the
plant this year.
IdaTech, the fuel cell provider, said that it had signed a second
three-year agreement with Ballard Power Systems to supply fuel cell stacks.
The stacks will be used in the next generation of IdaTech’s commercial
critical back-up power supply product, the ElectraGen.
Health
Teva Pharmaceutical, the Israeli generic drug company, is to buy Barr
Pharmaceuticals, its American rival, for more than $7 billion (£3.5
billion).Sanofi-Aventis, the French drug group, said it has ended its
development and commercialisation agreement for the S-1 anti-cancer drug
with Japan’s Taiho Pharmaceutical. Sanofi said it is returning its territory
rights to Taiho for development of the drug.
Novartis expects sales by its pharmaceutical business to grow at a
mid-single-digit percentage rate in the third quarter and at a
high-single-digit rate in the fourth on a local currency basis.
Arthro Kinetics said that PolarisRx, its joint venture partner, has
submitted its safety application to Japan’s Ministry of Health seeking
approval to begin clinical studies for CaReS, its cartilage regeneration
product, in Japan.
AGI Therapeutics said it believes it is on track to report preliminary
data from a Phase III efficacy study for its Rezular drug in the first half
of 2009. It said it had met the US Food and Drug Administration’s
gastroenterology products division to finalise aspects of Rezular’s
development programme.
Medical House said that offer talks for the company have ended, adding
that it cannot rule out interest from other parties. The drug-delivery
specialist also said it has signed an agreement to customise its
autoinjector technology for Dr Reddy’s Laboratories in a deal that will
generate revenue of about £5 million over five years.
Industrials
Evraz, the Russian steelmaker, has been confirmed as buyer of a 16 per
cent stake in Australia’s Cape Lambert Iron Ore. In a filing, Cape Lambert
said Evraz now has 72.08 million shares, or 19 per cent.
Leisure
Regent Inns, the embattled operator of Walkabout has received bid interest
from Luminar, Britain’s biggest nightclub group, The Times has learnt.
Choice Hotels International, the US owner of the Quality and Comfort
brands, has signed a deal with Kasterlee, its Irish franchisee, for the
development of at least 16 hotels under its upmarket Clarion brand in the
UK, Germany and Russia over the next eight years.
Media
Eros Multimedia, the Indian arm of UK-listed Eros International, said
it has agreed a content and distribution deal with Hungama Mobile, the
India-based digital entertainment media company. The two-year minimum
guarantee output deal with Hungama is for the development, distribution and
marketing of Eros’s music content for download on mobile phones.
Rambler Media said that it has agreed to sell ZAO Begun, its contextual
advertising company, and related subsidiaries to Google for a total of $140
million (£70.1 million).
Avanti Screenmedia Group, the digital screen media specialist, said it
has secured further funding through the issue of £400,000 of convertible
loans, and added that Neo Media Group, the digital out-of-home group, has
subscribed for £300,000 of the new convertible loans. Neo Media’s
subscription, upon conversion, will represent up to 42.1 per cent of voting
rights in the company. Avanti said that it has ended discussions on selling
parts of its business because of the new relationship with Neo Media.
Natural
resources
Dwyka Resources said diamond drilling at its Daguma coal project in the
Philippines is expected to start by the second week of August. The nickel
and gold explorer said it has hired Sedgman to do a pre-feasibility study on
the project.
KazMunaiGas Exploration and Production, the second-largest oil producer
in Kazakhstan, lifted first-half output by a fifth to 5.9 million tonnes,
equivalent to 238,000 barrels a day, after acquisitions.
Retailing
John Lewis has had weeks of falling trade reversed by bargain-hunters.
The department store chain’s clearance sale drove revenue up 5.9 per cent
and its sister business, Waitrose, reported soaring sales of cake and wine.
John Lewis Partnership, the employee-owned group behind the two chains,
reported total sales up from £127 million to £130.7 million for the year’s
24th week, to July 12.
Formata, the Russian retailer being bought by X5 Retail for about $940
million (£470 million), has ended guarantees in support of a potential issue
of corporate rouble bonds by Hyperfinance LLC. X5 said that Formata has told
Russia’s Federal Markets Services that information in the bond prospectus is
therefore misleading. X5 said the bonds were worth 5 billion roubles (£107
million).
Support
services
Electrocomponents, the distributor to engineers, unveiled a 1 per cent
rise in first-quarter sales but noted a decline in the UK and on the
Continent amid tough economic conditions. It said organic growth rates had
slowed from levels seen in last year’s first half.
ILX Group, the business education company, said that trading remains
robust and prospects for the forthcoming year are excellent.
Spice, the utility support services company, said it has completed
acquisition of British Power International for up to £10.25 million.
TurfTrax, the horse racing data group, said it has appointed Begbies
Traynor as administrator to its TurfTrax Racing Data subsidiary. The move is
part of TurfTrax’s restructuring plans, which are progressing as previously
announced.
Technology
Google’s UK turnover fell during the second quarter, for the first time
since it began reporting as a public company, as the dominant internet
search engine showed it was not immune to the impact of the economic
slowdown.
Detica, the security technology group, has received an approach that
may lead to a bid for it. Its shares earlier closed up 7.8 per cent at 303p,
valuing it at £348 million.
Logica has won a three-year applications services contract from
Michelin, the French tyremaker. Logica will be applications services partner
for supply-chain management across Europe and North America.
Anite’s annual pre-tax profits fell to £15 million after weakness in
its wireless testing division. Its travel and public sector segments did
better than had been expected.
Sopheon, the software company,said it expects both its earnings before
interest, taxes, depreciation and amortisation and its revenue for the first
half of the year to show good growth compared with 2007.
Sony Ericsson, the Swedish-Japanese mobile phone maker, reported a €2
million (£1.58 million) operating loss, in line with expectations, hurt by
weaker demand for its more expensive phones. It is to cut 2,000 jobs
worldwide.
Telecoms
Cable & Wireless investors holding more than 12 per cent of the
telecoms group refused to endorse salary and bonus arrangements for its
directors.
Softbank Mobile, the Japanese operator, has signed a frame agreement
with Ericsson, the telecom equipment maker, for expansion and and upgrading
of networks covering Tokyo and Osaka.
Transport
Virgin Blue, Sir Richard Branson’s Australian airline, is to ground a
further two aircraft as it tries to ease the pinch of soaring fuel bills.
The 3 per cent reduction in route capacity takes Vigin Blue’s overall cuts
to 12 per cent since June.
Utilities
Britain’s energy market has been left like a “house of cards”
through a lack of adequate gas storage, John Hall, an energy analyst, said.
E.ON and Dong Energy will, over the coming days, acquire the stake
Royal Dutch Shell has vowed to give up in their joint London Array wind farm
project, according to reports. The three groups, each owning a third of the
project, jointly planned the 1,000 MW off-shore wind park, but Shell in May
said that it would withdraw from it.
