Economics

Factory gate prices fell for a second successive month in September. Producer prices fell 0.3 per cent, cutting the annual rise in prices from 9.1 per cent to 8.5 per cent, official data show. Core prices, excluding volatile petrol, food and tobacco prices, edged down 0.1 per cent in the month.

Like-for-like retail sales fell for a fourth consecutive month in September. Sales fell by 1.5 per cent against September last year as shoppers were put off by bad weather and tighter budgets, the British Retail Consortium said. Clothing and footwear sales fell despite mid-season promotions and sales of furniture and floorcoverings fell at the fastest rate in eight years. Only food retailers recorded a rise in like-for-like sales.

Estate agents struggled to sell one property a week in September, Royal Institution of Chartered Surveyors figures show. Home sales reported by agents averaged only 11.5 in the month, the lowest since the series began in 1978.

The UK economy is already in recession and could enter a long downturn, Andrew Sentance, a Bank of England Monetary Policy Committee member, said. He hinted that more rate cuts could be on the way as the MPC acted to bolster output.

Banking & finance

President Bush is today expected to unveil firm plans to use $250 billion of US taxpayer funds to seize stakes in nine of America’s biggest banks to try to stabilise the US banking system.

Britannia Building Society has confirmed that it is talks with Co-Operative Financial Services that could lead to a merger of the two mutuals in the face of the growing economic turmoil. A combination of the two would create an organisation with six million customers and about £70 billion of assets.

Lloyds TSB cut the terms of its takeover offer for HBOS after the two lenders asked the Government for a combined capital boost of £17 billion.

Mitsubishi UFJ, Japan’s biggest bank, agreed in last-minute talks to pour $9 billion (£5 billion) of capital into Morgan Stanley, unleashing a wave of relief on Wall Street.

Santander, the Spanish bank, confirmed that it was in talks to acquire control of Sovereign Bancorp, the largest remaining American savings and loan bank.

Lancashire Holdings, the insurer, said that it estimated that the hurricanes Gustav and Ike would have a total net negative effect of $150 million (£86 million) on its results. About $125 million relates to offshore losses, out of a total offshore industry loss of $3 billion. Lancashire estimated its annualised total investment return at a positive 1.2 per cent for the nine months to September.

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