Economics
Central banks around the world announced massive and immediate
injections of funds in an attempt to calm financial market turmoil and
unblock moneymarkets.
Markets slump Shares fell across the globe as the financial turmoil
intensified. The FTSE 100 tumbled by 7.8 per cent, the third-biggest fall on
record, to close at 4,589.2 points. The Dow Jones industrial average fell
3.6 per cent to close below 10,000 points for the first time in four years
at 9955.5. The pan-European FTSEurofirst 300 index fell 7.8 per cent to
close at 1,004.90 points, a bigger fall than the 6.3 per cent decline on
September 11, 2001.
Oil dropped more than $5, dipping below $89 a barrel amid expectations
that the financial crisis will curb demand for fuel. US crude fell to $88.57
a barrel before rising slightly, while London Brent Crude fell by $5.30 to
$84.95 a barrel.
Euro values tumbled against the dollar, falling below $1.35 to a fresh
13-month low, as concerns over the health of the European financial system
increased. The pound fell to a 2½-year low against the greenback, at $1.73.
Emerging stocks Investors in Brazil, Russia, India and China suffered
some of their worst one-day losses ever. Exchanges in Russia and Brazil were
forced to halt trading as their benchmark indices plummeted by 18 and 10 per
cent respectively. India’s Sensex index lost nearly 6 per cent as foreign
investors fled amid fears a serious global downturn beckons. China’s CSI 300
Index lost more than 5 per cent to extend its losses for the year to 60 per
cent.
Group of Seven The G7 is no longer effective and should be replaced by
a steering group that includes new emerging economic powers such as China,
India and Brazil, Robert Zoellick, the head of the World Bank, said. He said
that the American financial crisis was a “wake-up call” and showed that
cooperation among a broader group of countries was needed.
Banking
& finance
Lehman Brothers Richard Fuld took a defiant stance at a congressional
hearing, admitting no responsibility for the meltdown of the bank he ran,
despite accusations from a senior politician that he had squandered billions
of dollars in the face of clear warning signs. Separately, it emerged that
some of Lehman Brothers’ top European and global bosses stand to make
millions of pounds for three months’ work helping the failed bank’s
liquidator to unwind its trades.
BNP Paribas acquired Fortis assets in a €14.5 billion (£11.2 billion)
deal organised by the Belgian Government. Authorities nationalised Fortis’s
Belgian and Luxembourg banking division before ceding a 75 per cent stake to
BNP Paribas through the issue of 132.6 million new shares worth €9 billion.
European banks Bankers scrambled to complete mergers and win government
backing for emergency rescue packages. Dexia, the Franco-Belgian bank, and
UniCredit, of Italy, looked to be among the potential prey. BNP Paribas, of
France, Banco Santander, of Spain, and HSBC, of Britain, appeared
well-placed to swallow up weaker rivals.
Wachovia and its suitors Wells Fargo and Citigroup agreed to a two-day
halt of litigation in the takeover battle for the North Carolina lender.
Citigroup had said that the Wells Fargo deal violated its rights to buy part
of Wachovia. The banks pledged to “cooperate in good faith to agree among
themselves to secure orders where necessary in all applicable cases in all
jurisdictions,” according to a joint statement issued last night.
Bank of America said it would cut its dividend in half and raise $10
billion (£5.7 billion) through the issue of new shares as it reported a 68
per cent dive in third-quarter profits to $1.18 billion.
Iceland agreed emergency legislation aimed at avoiding more financial
chaos as its banking system faltered and its currency plummeted 30 per cent.
It also suspended trading in the shares of six leading financial
institutions.
Allianz, Europe’s biggest insurer, will invest $2.5 billion in Hartford
Financial Services Group. Hartford lost half of its market value last week
amid worries that it would have to raise capital. Allianz will purchase $750
million of preferred shares convertible to common stock at $31 per share.
Construction
& property
Balfour Beatty, the construction group, has been forced to surrender
£2.25 million in unlawful proceeds after a Serious Fraud Office (SFO)
investigation found inaccurate accounting practices at an Egyptian joint
venture.
Consumer
goods
Chinese dairy China has vowed to clean up its dairy industry, admitting
a grave lack of supervision as authorities said that more children had
become ill from tainted milk products. Wen Jiabao, the Prime Minister,
presided over a meeting of the Cabinet, which called for immediate efforts
to clean up the industry as more than 5,000 food safety inspectors were
deployed.
Engineering
Meggitt, the Bournemouth-based aerospace and defence company, said that
it had been chosen to supply features — including main wheels, nose wheels
and carbon brakes — for the new Gulfstream G250 aircraft.
Rolls-Royce has won a £96 million power and propulsion equipment
contract from the Royal Navy. The contract includes four MT30 gas turbines
for two of the world’s largest warships — the new 65,000-tonne aircraft
carriers, HMS Queen Elizabeth and HMS Prince of Wales.
Health
Tristel, which makes and sells products that control and eliminate the
risks of cross-infection and contamination in hospitals, announced a higher
full-year pre-tax profit of £1.2 million and said that it was confident
about the future because its market presented opportunities for growth.
ReGen Therapeutics said that the recent trial of its Zolpidem drug
showed that it could help a considerable number of patients with a wide
range of brain damage, from birth injury to trauma, stroke and others.
CustomVis, the maker of surgical laser vision equipment for custom eye
surgery, said that it had made its first sale in Peru of the Pulzar Z1 solid
state laser, its flagship product. South America is a key market for the
company and it is reporting a sustained, high level of interest in the
Pulzar Z1.
Industrials
Cookson Group, the materials science company, said that third-quarter
trading showed a “strong improvement in performance” from last year.
Proventec, which provides specialist cleaning technologies, said that
it had acquired a 60 per cent stake in CryoJet Industrial Services, the
Netherlands-based cryogenic cleaning equipment services provider. The
acquisition has been paid for from existing cash reserves and by issuing
224,506 shares in Proventec.
Corus, Europe’s second-largest steelmaker, said that there had been a
slowdown in steel demand and the company was taking steps to adjust its
production to the new situation.
Leisure
Grosvenor House Hotel Royal Bank of Scotland is understood to
have appointed ABN Amro to find potential buyers for the hotel in Central
London, which has been relaunched under the luxury JW Marriott brand after a
£100 million revamp. Middle Eastern investors are tipped as likely buyers at
the mooted asking price of £600 million to £700 million.
Little Chef, the roadside restaurant chain rescued from administration
by R Capital in January last year, has reopened two sites. The sites in
Shiptonthorpe and Warwick North could be the first of many sites to reopen
after an increase in revenues of between 5 per cent and 12 per cent across
the chain over the summer.
Ladbrokes, the bookmaker, is considering lodging an appeal after losing
its case against the Norwegian Government’s monopoly betting and gaming
regulations.
Media
TNS, the market research company, has recommended that shareholders
back a £1.1 billion takeover offer from WPP, the advertising giant. It
reversed its opposition to the deal after WPP said that it had 61 per cent
of acceptances to its proposed offer.
Aegis Group, the marketing communications group, said that it had
bought Clownfish, a brand sustainability company, for £500,000.
Natural
resources
Total Hundreds of claimants whose properties and businesses were ruined
in Britain’s biggest peacetime explosion are set for a £700 million payout
after Total, one of Europe’s largest oil companies, abandoned a key part of
its defence against a lawsuit.
Dubai World, the Dubai Government’s sovereign wealth fund, has set up a
unit to invest in energy, mining and agriculture. Dubai Natural Resources
World will look for investment opportunities in oil and gas production and
refining, and in mining facilities.
Ferrexpo Fevamotinico, the biggest shareholder in the Ukrainian iron
ore miner, said that it had sold a 20.8 per cent stake at 80p per share to
New World Resources, the Czech coal producer. Fevamotinico, controlled by
Kostyantin Zhevago, a Ukrainian billionaire, retains a 51 per cent stake in
Ferrexpo.
Lonmin, the platinum miner, agreed a 12.5 per cent wage increase for
members of the South African Solidarity trade union. The agreement will be
implemented retrospectively from October 1. The wage negotiations started
last month.
Retailing
JJB Sports The sportswear chain faced a further threat to its survival
after credit insurers withdrew cover to its suppliers, sending shares to a
record low.
Kesa Electricals, the owner of Comet, has named a new chief executive
less than a month after telling investors that it expected Britain’s
second-biggest electrical goods retailer to fall into the red. The company,
which demerged from Kingfisher five years ago, said that Thierry
Falque-Pierrotin would succeed Jean-Noël Labroue in January.
EBay, the online auction website, said that it was cutting 10 per cent
of its global workforce in response to slowing growth in its internet sales
and that it was buying an online payment service.
GNE Group, the petrol station operator, said that it was not in talks
with any party regarding an offer or potential offer for the company. This
comes after Petrogas said that it was no longer considering an offer for
GNE.
Support
services
WS Atkins, a design and engineering consultancy, has spent £2.5 million
on MG Bennett, the mechanical and structural specialist. Bennett, based in
Rotherham, South Yorkshire, has 30 staff and a strong track record in the
nuclear industry.
Waterman, the engineering and environmental consultancy, said that
results for the year to June 30 had come in ahead of market expectations,
with profits up 42 per cent to £7.4 million. It reported a record order book
of £225 million and said that it had maintained growth in expanding markets.
Xchanging, the business process outsourcing group, has agreed to buy
Cambridge Solutions, its Indian peer, for £83 million. It said that its
pipeline of work was very full and the acquisition would boost its US and
Asian businesses.
Interserve, a services, maintenance and building group, has been
awarded the £32 million contract to design and build prisoner accommodation
comprising 232 cells and additional facilities at HMP Forest Bank for
Agecroft Prison Management.
Technology
Intercede Group, the developer of smartcard and identity software, said
that it had made a pre-tax profit in the first half and that sales were 25
per cent higher compared with last year. Separately, it noted news reports
that ActivIdentity, formerly an Intercede business partner, has filed an
infringement suit against Intercede.
Telecoms
Nokia Siemens Networks, the telecom network equipment company, said
that it had won an order to expand the GSM mobile telephone network of
Teletalk Bangladesh, a state-owned operator. Financial details of the deal
were not disclosed.
Transport
British Airways The merger with Iberia, the Spanish flag carrier, will
be delayed as the airline’s managers struggle to cope with a decline in
passenger numbers. Willie Walsh, the chief executive of BA, said that the
deal would take longer than expected as it tried to cope with a
transatlantic economic slowdown.
EasyJet, the low-cost airline, said that it filled more of its seats in
September, during which it flew 4.2 million passengers. Its load factor of
86.9 per cent was almost two percentage points higher than the same month a
year earlier and better than the 84.1 per cent for the last year. Passenger
numbers rose 22.1 per cent on a year ago.
Utilities
Ofgem More than 15 million households are overpaying for their gas and
electricity in an “unfair” market that requires reform, according to the
energy market regulator. In an investigation into competition, Ofgem said
that it had uncovered no evidence of collusion over prices or that suppliers
were quick to raise prices and slow to cut them, but it did highlight areas
where it felt that many of Britain’s 26.7 million households were being
treated unreasonably.
Vattenfall, the Swedish power group, said it had bought AMEC Wind
Energy, a British developer of commerical wind farms, for £126.6 million in
cash. In Britain, Vattenfall owns and operates the Kentish Flats offshore
wind farm.
Marseille to London. BA-250 euros, Easyjet-78 euros. Explains the comments above quite nicely I think
Robert, Caromb, France