Economics
The pound continued to fall against the US dollar, reaching a low of
$1.7771, a level not seen since April 2006.
Mortgage costs The average interest rate on a two-year fixed-rate
mortgage has dropped from a peak of 7.08 per cent at the beginning of July
to 6.39 per cent, its lowest level since July 2007, according to
Moneyfacts.co.uk, the financial website.
Oil prices have dipped below $108 a barrel after Hurricane Gustav did
not significantly disrupt output. New York crude fell by 2.39 cents to
$107.32, with Brent crude down $1.44 at $106.90. Prices peaked at more than
$147 a barrel in July.
Eurozone services sector The Markit Eurozone Services Purchasing
Managers’ Index rose to 48.5 in August, up from July’s five-year low of 48.3
and just above economists’ forecasts of 48.2.
The eurozone economy shrank by 0.2 per cent from April to June,
confirming initial estimates of the fall in GDP. The economy grew just 1.4
per cent year-on- year, a revision from the 1.5 per cent rate of expansion
reported last month.
Eurozone retail sales fell by 0.4 per cent in July, taking the annual
decline to 2.8 per cent. The figures were worse than economists’ forecasts
of a fall of 0.2 per cent on the month and a drop of 2.1 per cent over one
year. Sales tumbled by 0.9 per cent in June.
US economic activity has been slow but there has been some relief from
high commodity and energy prices, the Federal Reserve said in its Beige Book
report on the state of the economy.
Working hours A report by the European Foundation for the Improvement
of Living and Working Conditions showed that full-time UK workers put in a
41.4-hour working week — one hour and 24 minutes longer than the average
across all EU members, including the 12 recently admitted Eastern European
countries.
Banking
& finance
Lehman Brothers Tokyo Mitsubishi UFJ, Japan’s biggest megabank, is
poised to enter the bidding for a substantial stake in Lehman Brothers, and
may even seek control of the ailing Wall Street bank. Tokyo Mitsubishi is
expected to wait until after Lehman announces its third-quarter results next
week.
Prudential Cable & Wireless, the telecoms group, has struck a deal
to offload £1 billion of its pension liabilities to Prudential, the
insurance group. The deal marks the largest transfer of pension liabilities
from a company to a specialist insurer this year.
Pearl, the insurance group, confirmed that it is to close two of its
offices, in Glasgow and Peterborough, in a move that will affect 480 staff,
following its £4.98 billion takeover of Resolution, the life insurance
group, earlier this year.
Société Générale Jérôme Kerviel, the
rogue trader, has been brought face to face with Thomas Mougard, the
assistant who, he says, helped him to cover up the illegal deals that led to
losses of €4.9 billion (£3.9 billion) in Société Générale, the French bank.
Dresdner Bank Martin Blessing, chief executive of Commerzbank and the
architect of its takeover of Dresdner Bank, pledged that there would be no
favouritism for Commerzbank staff as he sought to cut about 1,000 London
jobs across the two groups. He added that no one would be sacked before the
¤(£8.1 billion)<NO>deal was completed.
Negative equity The Government’s £200 million mortgage rescue package
will do little to ease the problems of homeowners in negative equity,
commentators have given warning, as they could be effectively barred from
the scheme.
GMAC, the US financial services group, said that it plans to cut 5,000
jobs in its Residential Capital mortgage unit, equivalent to 60 per cent of
the work force, and will close its 200 GMAC Mortgage retail offices, as it
combats the weak credit and housing markets.
Credit Suisse Julian Tzolov and Eric Butler, former brokers with Credit
Suisse, the Swiss bank, each face a $5 million (£2.8 million) fine and up to
20 years in jail after being charged in a US court with fraudulently selling
complex US securities to clients in order to boost their commissions.
Ospraie Management Oil price fluctuations are thought to have
contributed to the closure by Ospraie Management, the US hedge fund, of its
$3 billion flagship commodities fund. Ospraie said the fund had fallen by 27
per cent in August as a result of losses in energy and mining stock. It is
thought it was down by almost 40 per cent over the whole year.
Norwich Union More than 2.4 million Norwich Union with- profits
policyholders will miss out on cash payouts averaging £2,000 after the
insurer moved to cut its final bonus rates.
Construction
& property
A&J Mucklow, the property investment company, reported a full-year
pre-tax loss of £26.7 million after writing down £41.2 million in the value
of its portfolio, against a pre-tax profit of £33.4 million last year, and
said it expects a further decline in property values over the next 12
months.
Consumer
goods
Coca-Cola, the US soft drinks maker, has stepped up its plans for
dominance in Asia by making a $2.5 billion (£1.4 billion) takeover offer for
China Huiyuan, the country’s largest maker of fruit juices. If Coca-Cola
overcomes the regulatory hurdles, its bid would be the biggest takeover of a
Chinese company by a foreign group.
Engineering
Rolls-Royce expects sales of its luxury cars in the Greater China area,
which includes Hong Kong and Macau, to continue strong growth this year
despite a doubling of the mainland’s consumption tax for large vehicles.
Hamworthy, the Dorset-based engineering group, said that an
investigation at its inert gas systems business has revealed an
overstatement of £4.6 million in inventories and related balance sheet
accounts in accounting periods ending on March 31 this year.
QinetiQ, the defence technology group, has won a 15-year contract worth
£150 million to supply maritime testing and design services for the Ministry
of Defence.
Porsche, the German carmaker, said that its sales in North America had
nearly halved to 1,516 vehicles during August as demand for its core 911
sports coupé plummeted ahead of the model’s facelift.
General Motors, the US carmaker, has extended its pricing discount
programme for employees by an extra month through September and added a
number of 2009 year vehicle models to the offer. GM launched the scheme in
August to boost sagging sales and clear out stock.
Health
Novartis, the Swiss pharmaceuticals group, said that Tekturna, its
blood pressure treatment, had proved to be effective on patients with
obesity, heart failure and diabetes. Tekturna, known as Rasilez in Europe,
reduced blood pressure significantly in obese patients.
IS Pharma, the specialist hospital medicines group based in Chester,
said it expects its full-year results to be materially ahead of its
expectations after a deal was agreed to sell Haemopressin, its blood
treatment, in North America. This will give the company an immediate payment
of $1.25 million (£704,000) and royalties once the brand is launched.
Industrials
ArcelorMittal, the world’s largest steelmaker, said that it was
confident that steel prices will remain strong and added that the recent
price cuts in South Africa were because of local factors.
DS Smith, the packaging company, said that its first-quarter trading
had met expectations with “tough” conditions in Britain being offset by its
performance elsewhere in Europe.
Leisure
Punch Taverns, the pubs group, said it would not pay a dividend to
shareholders after seeing sales fall over the year to August. Punch
emphasised that its balance sheet remained strong, but said that it was
mindful of the challenging market conditions and the need to invest in its
pub estate.
Media
DHX Media, the Canadian independent television producer, said its
family drama series Mahalia, commissioned by Vision TV, has been granted
broadcast rights for Canada. It consists of six episodes and will be
produced by DHX Media’s Halifax Film subsidiary.
Natural
resources
Rosneft, Russia’s largest oil company, has delayed the launch of an
east Siberian field and cut its output forecast, casting doubts over
Russia’s ability to avoid a production decline this year.
Talisman Energy, the Canadian oil and gas company, said it had
performed a successful test from the Utica shale in its Gentilly well,
located south of Quebec City.
Retailing
Marks & Spencer The TUC has criticised Marks & Spencer after
the high street retailer sacked an employee who “blew the whistle” on its
plans to cut redundancy terms for staff. The employee will receive only
eight days’ holiday pay — about £750 — after 25 years of service. A deal on
his pension is still to be agreed.
Signet, the jewellery giant that owns H Samuel and Ernest Jones,
reported a 27.8 per cent fall in half-year pre-tax profits to $78.7 million
(£44.2 million). A strong performance in the UK, where like-for-like revenue
rose 2.3 per cent, was undermined by weak trading in the United States where
comparable sales fell by 5.2 per cent, dragging total like-for-like turnover
down by 3.4 per cent.
Aldi, the German discount chain, has hired Phil Vickery, the celebrity
chef, for a £10 million advertising campaign. Mr Vickery, who is a regular
on BBC One’s Ready, Steady, Cook, has signed an initial two-year deal to
promote recipes centred on products bought from the store.
DSG International John Browett, chief executive of DSG International,
said that fears of widespread job cuts had created a crisis of confidence
among consumers as he reported a heavy fall in sales at PC World and Currys.
He said that demand had “switched off” and that there was little sign of a
revival until 2010. Like-for-like sales across the group fell by 7 per cent
in the 16 weeks to August 23, while margins were 0.75 per cent lower.
Support
services
NETeller, the electronic money and payments service which is based on
the Isle of Man, reported a first-half pre-tax profit, as lower website
maintenance costs and bad debts boosted its margins, and added that it was
on track to announce a maiden dividend with its full-year results.
Technology
Gresham Computing said it has disposed of Redstone Software, its
testing and automation business, but added that it will raise only a nominal
amount on the transaction after wiping off the debt of about £500,000.
OMG said its US defence business has won a $300,000 (£169,023) software
development contract from the US Government. The unit, 2d3 AIG, will develop
3D mapping software for unmanned aerial vehicles and the contract will run
for four months.
Nokia, the Finnish telephone handset maker, said that it has started
shipping its flagship phone, the N96. Some analysts had said that it might
be delayed.
Oracle Larry Ellison, chief executive of Oracle, the US software group,
deliberately destroyed or withheld e-mails and did not preserve tape
recordings that he should have handed over to lawyers acting for investors
who are suing him, a US judge has ruled.
Telecoms
Mobile operators’ revenues Vivane Reding, the European Union
Commissioner for Telecoms, is proposing to cut the cost of sending text
messages between EU states by more than 60 per cent, squeezing the revenues
of mobile phone operators.
Transport
British Airways said that its passenger load factor — an indication of
how full its planes are — fell to 77.3 per cent in August, 2.7 percentage
points lower than the same month last year. The figure for July had been
75.8 per cent, which was down 5.4 percentage points from last year. Premium
passenger traffic rose by 2.2 per cent in August, while non-premium fell by
2.1 per cent.
Utilities
British Energy The Heysham 2-7 nuclear power reactor owned by British
Energy was running at about a third of its capacity after output was cut for
refuelling.
Renewable Energy Holdings, the AIM-listed operator of renewable energy
technologies, said that it is well placed to take advantage of opportunities
and added that the “headline news for the group has been largely very
positive”.
