Economics
Factory output in France fell by 0.4 per cent in August, after a 1.4
per cent rise in July, which was revised up from 1.2 per cent. August’s fall
was less sharp than analysts’ forecasts of a 0.7 per cent drop.
Norway’s core inflation rate rose to 3.1 per cent in September,
from 2.8 per cent in August. Headline inflation rose to 5.3 per cent, from
4.5 per cent in August, reaching its highest level since December 1988.
The US trade deficit narrowed in August as US imports fell for the
first time since March and exports declined at the fastest pace in four
years. The Commerce Department reported a $59.1 billion deficit, down 3.5
per cent from the downwardly revised $61.3 billion July trade gap.
US import prices dropped at the fastest pace in five years in
September, falling by 3 per cent. However, prices were still 14.5 per cent
up on September last year. US export prices dropped by 1 per cent, the
second month in succession that exports have fallen after a 21-month run of
rises.
The Dow Jones industrial average was wrongly stated in yesterday’s
business section main-page graphic to have fallen 39 per cent in the
previous seven trading days to 9 October. It should have said that the Dow
had fallen 39 per cent since its record high in October last year.
Banking
& finance
Lehman Brothers, the bust investment bank yesterday triggered the
biggest corporate debt default in history as it emerged that the US Federal
Reserve is concerned as to whether Washington’s $700 billion bailout fund will
avert a financial meltdown.
Morgan Stanley’s and Goldman Sachs’s shares dived as Moody’s ratings
agency said it may have to cut credit ratings on the US brokerages, which
recently turned themselves into bank holding companies. Morgan Stanley slid
41.45 per cent, before closing 22 per cent off, and Goldman closed down 12
per cent after Moody’s said that the worsening financial crisis threatened
to cut their profits.
Russia has raised guarantees on personal bank deposits to 100 per cent
of the first 700,000 roubles (£15,700), the equivalent of nearly 40 average
monthly wages in Russia. There was more bad news for Russian banks with one
bank’s licence revoked, another asking clients to repay mortgages and S&P,
the ratings agency, putting 13 institutions on negative outlook.
Three-month dollar Libor — the cost of borrowing in dollars for three
months between banks — rose to 4.8 per cent, from 2.8 per cent a month ago.
Three-month sterling Libor rose to 6.285 per cent. Three-month euro Libor is
5.366 per cent. This indicates that the rate at which banks lend to each
other has risen despite steps by governments worldwide to tackle the credit
freeze.
Royal Bank of Scotland’s beleaguered chief executive, Sir Fred Goodwin,
has let it be known that he will stand down if necessary to secure a rescue
capital injection for it.
UK fund management suffered a sell-off in shares amid concern that
fearful retail investors will rush to withdraw funds.
Yamato Life Insurance, the Japanese insurer, has gone bankrupt. The
company said it had fallen £65 million into the red because of the slide in
stock prices arising from the US sub-prime mortgage crisis. It has about
1,000 staff.
Admiral Group, the car insurer, said it would match or beat market
forecasts for full-year profits. The group, which also owns the Bell and
Diamond insurance brands, said it had seen a year-on-year 17 per cent
increase in customers to 1.71 million in the quarter to the end of
September, lifting turnover 13 per cent to £718 million. Vehicles insured
increased by 13 per cent to 1.55 million. However, margins at Confused.com,
its automated car insurance price comparison website, remained under
pressure.
Construction
& property
Rightmove, the property website, could lose more than 75 per cent of UK
estate agents. A survey by estateagenttoday.co.uk found that more than three
quarters of estate agents will not be renewing their annual subscription to
the site, because fees of up to £500 a month per estate agent are considered
too expensive.
DTZ, the commercial property consultancy, has appointed a new chief
executive. Paul Idzik, 47, was Barclays’s chief operating officer until May,
and will take over from the present chief executive, Mark Struckett, on
November 3.
Consumer
goods
Swatch Group’s chairman, Nicolas Hayek, said that he has personally
lost SwFr3 billion (£1.5 billion) to SwFr4 billion on paper on its shares as
a result of the financial crisis and is “furious” but not worried. The paper
loss happened as shares in the watchmaker plunged in the past month.
Parmigiano Reggiano, the Italian Parmesan cheese, is the subject of a
plea by its producers to the Italian Government to declare a state of crisis
because of falling prices and soaring costs. The price of Parmesan has
decreased for the past four years while the cost of raw materials, such as
milk and energy, has shot up, leaving 30 per cent of producers on the verge
of bankruptcy, according to CIA, the farm industry group.
Engineering
Renishaw, the engineer, reported a 75 per cent rise in first-quarter
profits and said that its order book was encouraging, despite worldwide
economic turbulence. Renishaw, which makes measurement systems for
industries including carmaking and dentistry, said that it made an unaudited
pre-tax profit of £9.8 million in the three months to the end of September.
Its performance was helped by the weakness of sterling.
General Electric, whose products include engines and water-treatment
systems, said that third-quarter profits fell by 22 per cent after lower
earnings from its finance business. GE said it remained on track to meet its
2008 earnings forecast, which it lowered by about 10 per cent last month to
between $19.5 billion (£11.4 billion) and $21 billion. Total net income for
the quarter was $4.3 billion, against $5.56 billion a year earlier.
General Motors’ shares hit their lowest price in 58 years at the
opening of trading in New York yesterday over worries about financial
turmoil and a weakening global car market. The management said it was not
considering bankruptcy protection.
Renault, the French carmaker, announced that it had created a post of
chief operating officer for Patrick Pelata, who will become the official No
2 to Carlos Ghosn, the president and chief executive, and take charge of
day-to-day operations. Mr Pelata was previously Renault’s executive
vice-president for Europe.
Health
AstraZeneca’s drug Seroquel XR has been approved by the US Food and
Drug Administration as a treatment for bipolar disorder, extending the
medicine’s use beyond schizophrenia. This makes it the first medicine
approved for once-a-day acute treatment of both depressive and manic
episodes associated with bipolar disorder. Seroquel is already AZ’s
second-biggest selling drug, generating $4 billion of sales in 2007.
Merck’s controversial cervical cancer vaccine Gardasil was administered
to a quarter of girls aged 13 to 17 in the United States last year,
according to the Centres for Disease Control and Prevention. The vaccine,
which competes against a rival product from GlaxoSmithKline, is predicted to
be a big earner. It won approval in June 2006 and protects against the human
papillomavirus, which causes cervical cancer and genital warts, the US
Government said.
Takeda, Japan’s biggest drugmaker, said that the US Food and Drug
Administration has not been able to complete a review of a key diabetes drug
candidate on schedule because of lack of resources. The drug, called
alogliptin or SYR-322, is crucial to Takeda’s diabetes business because it
is expected to replace sales of its Actos when Actos goes off-patent in the
US in 2011. The FDA’s report on SYR-322 had been due at the end of this
month. Actos generates almost 30 per cent of Takeda’s sales.
Nobel Biocare, the world’s No 1 dental implant maker, saw its shares
lose over a third of their value and slump to a five-year low yesterday,
renewing takeover speculation, after it issued another profit warning. Nobel
Biocare said its third-quarter sales fell 2.8 per cent as demand slowed in
North America and Europe, and said it would not meet its 2008 targets.
Leisure
Fast-food outlets are serving 10 per cent more breakfasts than they
were five years ago — up from 105 million to 115 million — and casual dining
restaurants are expected to follow suit as they seek to mitigate the impact
of the consumer spending squeeze, according to Horizons, the foodservice
consultancy.
London Town, the tenanted pub operator, is bucking the trend of pub
closures by reopening 30 closed pubs so far this year, with a further eight
scheduled to reopen before the year’s end.
Media
Channel 4 said it has abandoned plans to launch three digital radio
stations because it can no longer afford the service’s £10 million launch
cost The broadcaster’s advertising revenues are down by 5 per cent and it is
now trying to make £100 million of savings in response.
Natural
resources
Soco International’s shares defied the wider market slump, surging 40
per cent at one point yesterday after the oil explorer group confirmed that
it had received a bid approach. The FTSE 250 group, which has interests in
Vietnam, Thailand and Africa, said that it had received “a very preliminary”
approach about the sale of the bulk of its portfolio of assets.
ENRC, the Kazakh mining group, said that it sees some downside risk for
prices of its biggest profit- driver, ferrochrome, but that it is seeking
takeover targets during the global financial crisis. Jim Cochrane, head of
marketing, said that output cuts by stainless steel producers, which use
ferrochrome as a key ingredient, made for an uncertain outlook. Ferroalloys
account for 65 per cent of group earnings. Contract ferrochrome prices in
Europe more than doubled this year to hit $2.05 a pound in the third quarter
amid tight supplies, but slipped 10 per cent in the fourth quarter.
Gold prices jumped by more than 4 per cent to $925 an ounce yesterday
as investors scrambled for safe havens during the financial crisis. Panicked
investors were said to have switched funds from shares and even bank
accounts to try to protect themselves.
Retailing
J Sainsbury’s share price fell after Sir Philip Green, the
billionaire owner of Bhs and Topshop, denied reports that he had bought 3
per cent of the supermarket company from Robert Tchenguiz, the property
tycoon, who is selling his 10 per cent stake.
Woolworths has a new high- profile investor — Sir Alan Sugar, the host
of the BBC show The Apprentice. The founder of Amstrad has bought a stake of
almost 4 per cent in Woolworths through his Amsprop London vehicle.
Tesco said that it is cutting the cost of petrol by 3p a litre as oil
prices fell to their lowest level for a year. The retailer is cutting prices
for unleaded petrol and diesel by 3p across its 430 UK forecourts with
immediate effect, taking many forecourts to 106p a litre.
Hardy Amies, the former dressmaker to the Queen, appointed
administrators yesterday “with immediate effect”. The firm, founded in 1946
by the late Sir Hardy Amies, has appointed Kroll as administrator after its
funding remained “unclear” despite last-ditch rescue talks. Shares in the
Savile Row tailor, which has about 50 staff, were suspended two weeks ago
after Arev Brands, its big shareholder, was unable to meet a request for
further funds.
Rosebys, the furnishing store that went into administration last month,
shut 31 stores, with the loss of 186 jobs. Another 87 jobs went with the
closure of a distribution centre at Selby, North Yorkshire. Howard Smith,
joint administrator of Rosebys, said the redundancies were made with regret.
He added that talks continued over the rest of the business.
Technology
Compuware, the US business software maker, said that the weakening
economy is hurting sales and that it will miss Wall Street forecasts for
quarterly results. Its shares fell 16 per cent yesterday. Compuware, which
makes software that helps companies to manage big computer systems, forecast
profits of 8 cents a share for its second quarter, to September 30, while
analysts on average forecast 13 cents. The group estimated revenue of $268
million (£157 million) for the quarter, below analysts’ expectations of $305
million.
Telecoms
Telefónica, Spain’s dominant telecoms operator, will no longer be
obliged to offer rivals wholesale internet at regulated prices in all areas
of the country. Spain’s telecoms regulator said that it had deregulated ADSL
in areas where there is competition. Until now, Telefónica has had to
provide a wholesale ADSL internet service to competitors in Spain at a
regulated price, under rules designed to promote fair competition.
Telus Corp, the Canadian phone company, said that it will spend C$1.9
billion (£941 million) in building a new wireless network, to be launched by
2010, with equipment from Nokia Siemens Networks and Huawei.
Transport
Lufthansa, the German airline, said that its September passenger
traffic rose by 5.8 per cent, but that its passenger load factor narrowed by
1.9 per cent, to 80.1 per cent, and that freight fell by 4.7 per cent.
Utilities
European energy ministers yesterday cleared up final disagreements
about liberalising energy markets by agreeing measures to prevent giant
utilities such as EDF from unfairly dominating the market. The Netherlands,
Spain and Portugal partly succeeded in introducing measures to protect their
gas and electricity distribution networks from being bought up by the sort
of energy giants found in Germany and France.
