Economics
Unemployment registered its sharpest rise since December 1992. The
claimant count of those out of work and receiving benefits rose by 32,500 in
August to 904,900, in the seventh successive rise. The alternative,
survey-based measure favoured by ministers showed that unemployment rose by
81,000 in the three months to July, reaching 1.724 million.
Average earnings rose at a subdued headline annual rate of 3.5 per cent
in the three months to the end of July, up from 3.4 per cent in June.
Excluding bonuses, average earnings growth was unchanged at 3.7 per cent.
Interest rates Minutes of this month’s meeting of the Bank of Enlgand’s
Monetary Policy Committee showed that Tim Besley, the committee’s arch-hawk,
abandoned his demand for a rise in rates, while David Blanchflower voted for
an immediate half-point rate cut.
The Special Liquidity Scheme set up by the Bank of England to ease
liquidity stresses on Britain’s banks will be extended until January, rather
than closing on October 21, marking a U-turn by the Bank’s Governor from his
opposition to extending the SLS expressed only last week.
Manufacturing The latest snapshot of industrial conditions from the CBI
showed that British factory orders fell this month at their fastest rate in
more than two years, triggering the sharpest drop in manufacturing groups’
confidence since the end of 2001.
The FTSE 100 index suffered its third consecutive day of heavy losses,
dropping by 2.3 per cent to take its decline so far this week to 9.3 per
cent. The blue-chip benchmark closed down 113.2 points at a new three-year
low of 4,903.3, which left it below the watershed of 5,000 for the first
time since June 2005. In New York, the Dow Jones fell by about 2 per cent,
or 220 points, by mid-afternoon trade, having earlier been down almost 300
points.
US construction starts on new homes fell to a 17½-year low
during August, dropping by 6.2 per cent to a seasonally adjusted annual rate
of 895,000, their lowest since January 1991.
The US current account deficit widened to $183.1 billion (£102.2
billion) in the second quarter, from $175.6 billion in the first three
months, official figures showed.
Oil prices Light, sweet crude oil for October delivery rose by $1.45 to
$92.60 a barrel in early trading on the New York Mercantile Exchange. Some
recovery in crude had been expected after the contract dropped by $10 in the
previous two sessions, bringing prices down by 8 per cent for the year.
Banking
& finance
Russia’s stock exchanges suspended trading for a second day as
share prices fell and as the central bank pumped $45 billion (£25.1 billion)
into the country’s three largest banks.
Lehman Brothers Barclays held out hope of a reprieve for the UK staff
of Lehman Brothers when the British group said that it was in talks with
teams from the defunct US investment bank.
AIG Henry Paulson, the US Treasury Secretary, used $85 billion of
federal money to seize control of AIG, the insurance group, the first
American nationalisation of a financial company since the 1930s. However,
the rescue package failed to reassure traders.
Goldman Sachs and Morgan Stanley shares fell by 14 per cent and
24 per cent respectively, fuelling expectations that the US investment banks
could be forced into a fire sale.
Construction
& property
Great Portland Estates, the property developer, said that the Great
Wigmore Partnership, its joint venture with Scottish Widows, had sold 180
Great Portland Street in Central London to Commerz Real
Investmentgesellschaft, of Germany, for £79.5 million, about 4 per cent
below the property’s valuation in June.
Minerva, the commercial property group responsible for two of the
City’s biggest office development projects, said that its full-year adjusted
net asset value per share had fallen by 33 per cent.
Consumer
goods
China Food Company, the London-listed branded condiments and animal
feeds group based in China, said that its first-half pre-tax profit had
fallen to £3.5 million, from £3.7 million last year, despite a 19 per cent
rise in sales, but added that it was confident about future growth.
Engineering
Invensys, the London-listed engineering group, said that Invensys Rail
Group, its subsidiary, has bought Quantum Engineering, the Florida-based
signalling and train controls company, for $38 million (£21.2 million) to
raise its profile in the US railroad business.
Health
Medical Marketing International, the embattled biotech company based in
Cambridge, said that GVX 3322, a prostate cancer vaccine, has been assembled
and the DNA sequence verified. Immunogenicity testing will start soon.
Ranbaxy shares fell by as much as 10 per cent after the United States
blocked the sale of more than 30 of its drugs amid safety concerns. The US
Food and Drug Administration has been investigating India’s largest generics
drugs company for two years.
Industrials
ArcelorMittal, the world’s largest steelmaker, plans to cut $4 billion
(£2.2 billion) in costs over five years, focusing on productivity, reducing
energy consumption and decreasing input costs. The group also said that it
was prepared to cut production by up to 15 per cent to maintain steel
prices.
HaiKe Chemical, the Chinese company, reported a first-half pre-tax loss
of $216,000, from an $8.42 million profit last year, even as revenues rose
by 85 per cent to $317.5 million. but said that it was confident of
achieving further growth despite high oil prices.
Leisure
Ryder Cup Skelwith Group, the York-based company developing a £60
million buy-to-let hotel and golf resort on a 300-acre site at Flaxby, North
Yorkshire, is to launch a bid to host golf’s Ryder Cup in 2018 or 2022.
Golf in Europe, the Middle East and Africa is worth €53 billion (£41.89
billion) in annual revenues, according to research by KPMG, supporting half
a million jobs and paying nearly €10 billion in wages.
Media
Channel 4, the commercial broadcaster, needs between £60 million and
£100 million a year in extra support to survive in its existing form,
according to Ed Richards, chief executive of Ofcom, the industry regulator.
Chrysalis, the music group, confirmed that it had received “very
tentative” approaches from a number of parties over deals, including a
possible full takeover offer, but emphasised that talks were at an early
stage.
Natural
resources
African Copper said that its mining to date had shown higher mixed ore
at better grades than previously modelled at its Mowana mine in Botswana.
The mining operations are continuing to perform well, with more than 850,000
tonnes of ore stockpiled, including 300,000 tonnes at 1.74 per cent copper.
Kalahari Minerals the AIM- listed exploration group, reported a
first-half pre-tax profit of £10.1 million, compared with a loss of £3.48
million last year, adding that its portfolio of projects is delivering on
its early promise.
Retailing
Woolworths Steve Johnson, the new chief executive of Woolworths, plans
to cut the company’s final-salary pension scheme, reduce jobs and sell
stores after the ailing high street retailer reported a record £100 million
half-year loss. Mr Johnson said there needed to be a “radical” bearing down
on costs.
Inditex, the Spanish clothing group behind Zara, plans to open its
4,000th store around the world in Tokyo, after reporting a 3 per cent
increase in first-half net profit to €406 million (£321.5 million).
The British Retail Consortium has urged the European Commission to
shelve plans to extend an import duty on leather shoes from China and
Vietnam after 15 member countries voted against it.
Julian Graves The US owner of Holland & Barrett has bought Julian
Graves, adding a further 345 health food stores to its UK portfolio. Julian
Graves was put up for sale by Baugur, the Icelandic investor, this summer.
Inchcape, the London-listed car dealership, has completed the sale of
five of its six Volvo franchised retail businesses in the UK to Mill Garages
North East for £3 million. It added that it would retain ownership of the
properties involved in the sale.
Support
services
Morson International, the London-listed technical contract staffing
provider based in Manchester, reported a lower first-half profit of £4.1
million, as the cost of moving its head office offset a 9.3 per cent rise in
sales. It added that it was confident about its prospects for the full year
and beyond.
Technology
Tata Consultancy Services, India’s largest software exporter, relies on
financial companies for more than 40 per cent of its revenues and employs as
many as 2,000 workers on projects for Merrill Lynch alone. With the former
Wall Street bank in the process of being bought by Bank of America, which
has its own in-house IT operations in Hyderabad, the combined group is
expected to cut its technology budget.
Phorm The Government said that Phorm, the service that tracks internet
users’ behaviour as they browse, conforms to European data laws but can be
used only with people’s consent. It was revealed earlier that Phorm, listed
in the United States, had carried out secret trials of its technology for
companies, including BT.
Nortel Networks shares fell by as much as 45 per cent after the US
telecoms equipment maker cut its revenue, sales and profit forecasts and
added that it could get rid of more jobs and sell one of its businesses.
Telecoms
Blyk, the Finnish mobile operator funded solely through advertising,
has increased its members to 200,000, double the number it had in April. The
company was launched in Britain last year, offering customers aged 16 to 24
a number of free text messages and call minutes in return for accepting up
to six advertising messages per day.
NTL Telewest Business, the communications services provider, has signed
a £4 million deal with the Royal National Lifeboat Institution to create a
next generation network for voice, data and video services. The new system
will link the RNLI’s 258 sites, including 235 lifeboat stations, across the
UK, the Republic of Ireland, the Channel Islands and the Isle of Man.
Telecoms watchdog The Body of European Regulators in Telecoms, a
planned European Union telecoms watchdog, will be funded with a mix of EU
and national government money, under a cross-party deal by the European
Parliament.
France Télécom has launched a mobile phone service under its
Orange brand in Kenya, as it seeks to expand its presence in the
fast-growing African telecoms market. Telkom Kenya, 51 per cent-owned by a
consortium led by the French operator, said that it would sign up 1.5
million customers to its fixed and mobile lines within a year.
Transport
BAA, the airports operator, has put Gatwick up for sale, although it
pledged to continue its fight against a decision by the Competition
Commission that it should sell one of its three London airports.
Alitalia After predictions of its collapse, Alitalia’s unions have been
given a “final” deadline to accept or reject a rescue offer for the bankrupt
airline. Forty flights on Italian and European routes were cancelled because
of a strike by CUB, a small union, but an Alitalia spokesman emphasised that
the cancellations had nothing to do with rumoured fuel shortages.
Olympic Airlines Greece is set to privatise the loss-making Olympic
Airlines, ending years of wrangling with Brussels over illegal state
subsidies but setting a collision course with powerful unions. The European
Commission ruled that Olympic must give back €850 million euros (£672
million) in illegal state aid that it received between 2005-07, but Greek
officials suggested that only a fraction of this was ever likely to be
repaid.
Utilities
Sutton and East Surrey Water Ofwat, the water regulator, is examining
an application from Sutton and East Surrey Water to raise its prices in
2009-10. The company said that it was experiencing a substantial shortfall
in revenue because of a material increase in its own energy costs.
British Energy The supervisory board of EDF, the French
state-controlled energy group, has not yet decided on a possible fresh bid
for British Energy, the nuclear power company, according to sources. British
Energy investors rejected a £12 billion all-cash bid by EDF in August as too
low.
