Economics
UK interest rates Mervyn King, Governor of the Bank of England,
reinforced expectations that interest rates will rise further, as he sounded
a warning that “more persistent inflationary pressures have picked up”, and
identified a series of factors that could mean that the Bank “may need to
take further action”.
UK input price inflation jumped by 1.2 per cent in May despite a fall
in fuel prices, the Office for Nation al Statistics reported. That put
annual input price inflation back into positive territory at 1.1 per cent,
compared with a 0.7 per cent fall in the year to April. Factory output price
inflation was unchanged at 2.5 per cent, and core output price inflation
fell to 2.3 per cent from 2.4 per cent in April.
UK house price inflation climbed in April to 11.3 per cent, the
Department for Communities and Local Government reported, up from 10.9 per
cent in March. The figures are a backward-looking measure, relating to the
price at completion.
UK Employment Employers plan to increase hiring for the third
consecutive quarter, Man-power, the recruitment consultan-cy, reported. It
said that the confidence of finance and business services for the third
quarter of 2007 was the highest since 1998.
UK tax Some 70 per cent of business leaders believe that Britain’s tax
system can deter potential entrepreneurs from starting a business, and a
similar number said that the tax burden put the UK at a competitive
disadvantage, according to a poll carried out by the Institute of Directors.
US Treasury markets succumbed to another bout of selling, sending
prices lower again after the rout suffered at the end of last week.
Benchmark 10-year Treasury notes fell by 5/32 in price, lifting their yield
to 5.13 per cent by early afternoon in New York, although yields held off
any return to the key levels close to 5.25 per cent reached on Friday.
Eurozone Doubts were sown over the eurozone economy after industrial
output in the 13-nation bloc’s top three economies fell unexpectedly.
Industrial output dropped in April by 0.8 per cent in both France and Italy,
official figures showed. The decline came after a report that German
industrial production fell in April by 2.3 per cent, its sharpest decline
for almost seven years.
Japan’s economy outperformed both the United States and the eurozone in
the first quarter, according to revised data that reinforced expectations
that the Bank of Japan will raise interest rates again in August. The
revised GDP data showed 0.8 per cent growth in the first quarter, up from an
initial 0.6 per cent estimate, lifting the annual pace of expansion in the
world’s No 2 economy to 3.3 per cent.
China racked up its third-highest monthly trade surplus on record last
month, with the politically sensitive total rising to $22.5 billion (£11.4
billion) – 73 per cent up on the same month last year. The news came ahead
of what were expected to be tense exchanges today in Brussels between Peter
Mandelson, the European Trade Commissioner, and Bo Xilai, the Chinese
Commerce Minister.
Banking
& finance
Up 0.24%
Icap, the interdealer broker, said daily electronic broking volumes
exceeded $1 trillion (£508 billion) last Thursday and Friday. These levels
were hit only once before this year.
Barclays A New York-based activist investor has called on Barclays to
drop its takeover of Dutch rival ABN Amro. Atticus Capital, which holds a 1
per cent stake in the UK bank, said it viewed the proposed £45 billion deal
as an offer to buy “an inferior business in an auction at inflated prices”,
adding that it would seek to lobby investors.
Construction
& property
Up 0.16%
Evans Randall, the Mayfair-based private investment bank, has sold the
ABN Amro headquarters to Prudential for about £230 million barely two years
after buying it for £184 million. The sale represents a 31 per cent gain on
the building, which is leased back to ABN.
Multiplex, the Australian construction giant which built the new
Wembley stadium a year late and at a loss, is to be sold for A$7.3 billion
(£3.1 billion) after its directors supported an all cash-offer from Canada’s
Brookfield Asset Management. The offer has backing from the founding Roberts
family, whose 26 per cent stake is now worth £800 million.
Workspace, London’s largest small business landlord, felt the squeeze
of higher interest rates as pretax trading profits fell 32 per cent to £10.2
million over the year to 31 March and it warned more expensive cost of
borrowing would impact on earnings this year.
SLR Consulting, the environmen-tal consultantcy, has bought Insite
Environments, the Newcastle-based architects, for £2 million in cash and
shares.
JSM Indochina aims to raise between $400 million and $600 million via a
new AIM listing to build shopping malls and serviced apartments in Vietnam
and Cambodia. Lehman Brothers and Evolutions Securities are organising the
share placement.
Consumer
goods
Down 0.24%
AG Barr, the Irn-Bru maker, said spring weather and a pickup in the
soft drinks market helped to boost sales. The Glasgow-based company said
like-for-like sales rose by 11 per cent in the first 13 weeks of the year to
28 April.
Engineering
Down 0.74%
Lord Woolf, the former Lord Chief Justice of England & Wales, and
BAE Systems are negotiating the terms of an independent inquiry into the
defence company’s operations and ethical practices.
Health
Down 0.59%
GlaxoSmithKline reported positive results from a pivotal phase III
trial of Promacta, which showed a statistically significant increase in
platelet count and reduced bleeding in adult patients with chronic
idiopathic thrombocytopenic purpura (ITP). Thrombocytopenia leaves sufferers
at risk of bruising and internal bleeding.
Pharmaceuticals The global pharmaceutical market will more than double
in size by 2020 to $1.3 trillion, according to a report on the industry due
to be published today by PricewaterhouseCoopers.
AOI Medical, a US company that specialises in orthopedic devices,
announced its intention to float on AIM with a valuation of approximately
£21 million.
Merck, of Germany, will invest $29.8 million (£15.1 million) in
Arch-emix, the US biotech company, as the companies expand an alliance to
develop cancer treatments.
Industrials
Up 2.26%
EADS Jean-Paul Gut is stepping down as the chief operating officer of
EADS, the European aeronautics and defence giant, because of a disagreement
over strategy. EADS will replace him with the head of MBDA, the missile
group, Mar-wan Lahoud. Gut will receive €2.8 million (£1.9 million) as an
indemnity, equal to 24 months of salary for 24 years of service.
Leisure
Down 0.60%
Whitbread, the leisure group, is expected to return up to £500 million
to shareholders after losing the auction of Jurys Inns, which has gone to a
bid of €1.165 billion (£790 million) from Quinlan Private, the Irish
investor.
The British Casino Association lost a High Court battle to scupper the
Government’s plans for 17 new casinos, including the first super-casino in
Manchester, after a judge dismissed its claim that the move could cost
existing casinos £120 million a year in profits.
Hilton Hotels Corporation, the US hotel operator, will today announce a
franchise deal in the UK that will see the development of 25 budget Hampton
Inns over five years costing about £300 million.
Media
Down 0.12%
Cricinfo, cricket’s most popular website, was sold by Wisden to ESPN,
the US sports broadcaster, for an undisclosed fee.
Natural
resources
Down 0.43%
Royal Dutch Shell said it had appealed a court ruling ordering it to
pay 6 billion naira (£75 million) in damages to three local communities in
Nigeria. The high court in Port Harcourt, Rivers State, last month ordered
the Anglo-Dutch oil company to pay the damages for breaching a lease
agreement on land on which it has staff residential quarters.
Retailing
Up 0.23%
Umbro Steve Makin, chief financial officer has been named the new head
of Umbro, the sports-wear retailer, following the departure of chief
executive Peter McGuigan, to take up the same role at Americana, the owner
of Bench and Hooch.
Mothercare’s £85 million acquisition of Chelsea Stores Holdings, the
owner of Early Learning Centre, has been cleared by The Office of Fair
Trading.
Sainsbury’s Justin King, chief executive of J Sainsbury, is in
line to earn up to £13.6 million in cash and shares in the year ahead after
a pay rise and bonus increase.
Exista, the Icelandic financial firm behind the buyout of Dave
Whe-lan’s 29 per cent stake in sports retailer JJB, is considering pushing
for a break-up of the business.
Support
services
Down 0.28%
Hyder Consulting, the engineering design and management con-sultancy,
said pretax profit for the year to March 31 rose 60 per cent to £13.3
million from £8.3 million a year earlier.
Latchways reported a 26 per cent rise in its full-year pretax profit as
revenues rose 14 per cent and said the new year has started well. The maker
of fall protection systems for working at height said pretax profit for the
year to March 31 was £7.8 million, compared with £6.2 million last year.
Analysts had expected £8 million.
Hogg Robinson, the business travel and corporate services company,
reassured investors that it was trading in line with expectations after it
announced that Colin Child, who was to have joined the board as finance
director, would no longer be doing so.
Rexam, the world’s biggest drinks can maker, acquired the plastics
division of Owen-Illinois, which specialises in healthcare packaging and
plastic tops, for $1.57 million (£800,000) including tax benefits.
Technology
Up 0.04%
HgCapital yesterday sold IRIS Software and Computer Software Group
(CSG), which provide software to accounting and legal firms respectively, to
Hellman & Fried-man, the US buyout firm, for £500 million including
debt. HgCapital acquired IRIS in 2004 and CSG this year. Under HgCapital’s
ownership, IRIS has more than doubled its employees, from 171 to 368 and
grown revenues to £45 million from £20 million, as profits jumped to £18.6
million from £7.6 million. HgCapital will retain shares in the combined
business.
Apple, the US computer and software group, is reported to be in
advanced talks with Hollywood’s largest film studios on launching an online
film rental service to challenge cable and satellite television operators.
IBM said it has agreed to purchase Telelogic, the Sweden-based business
software company, for $745 million (£380 million).
Telecoms
Up 0.82%
Nokia, the world’s biggest mobile phone maker, has filed a patent
counter-suit against Qualcomm in a Texas court, seeking damages and an
injunction against the US chip maker, claiming it infringed six
implementation patents in its MediaFLO mobile TV and Brew mobile data
technologies.
Transport
Down 0.95%
SNCF, the French rail group, confirmed it was holding discussions with
Deutsche Bahn, its German peer, over possible partnership on freight
business.
Utilities
Down 0.57%
British Energy, the nuclear power group, said its Hunterston B-7
nuclear power plant shut down late on Sunday after engineers found potential
problems with the reactor’s temperature controls.
sectors@thetimes.co.uk
Up/Down = sector index percentage change on day
