Economics
Business investment Disappointing figures on business investment gave
an early warning that the underlying pace of the economy could be set to
slow. Data from the Office for National Statistics showed that business
investment rose by 0.8 per cent in the second quarter, much weaker than
analysts had expected. Over the year to the second quarter, investment grew
by 7.4 per cent.
Money markets The European Central Bank and the US Federal Reserve took
fresh action to ease tightening credit linked to the US home loans crisis.
The ECB added €40 billion (£27.2 billion) in three-month funds to the money
market to encourage lending by banks. The Federal Reserve injected $17.25
billion (£8.7 billion) into the financial system.
The US budget deficit for this fiscal year will shrink to $158 billion,
the Congressional Budget Office said, much lower than a March estimate of
$177 billion, mainly because of strong economic growth. In its August review
of the budget, the nonpartisan agency forecast the deficit for fiscal 2008,
which begins on October 1, to be $155 billion.
Japanese interest rates The Bank of Japan left its key interest rate
unchanged for the sixth month running at 0.5 per cent. Until the global
markets went into a tailspin, investors had expected the bank to tighten by
a quarter-point to 0.75 per cent.
Banking
& finance
Northern Rock, the bank that is heavily exposed to the wholesale credit
markets, has moved to shut down its UK sub-prime mortgage business, raising
interest rates on its fixed-rate loans by as much as 1.25 per cent and
scrapping its range of trackers for borrowers with an impaired credit
history.
Business leaders have attacked a decision to allow high street banks to
raise charges for small and medium-sized businesses. Banks will be allowed
to charge what they like after the Competition Commission said it would lift
restrictions on the sector’s biggest operators.
Independent Insurance Michael Bright, former chief executive of
Independent Insurance, broke down in the witness box during the trial of one
of the biggest fraud claims in British corporate history. Independent,
founded in 1986 by Mr Bright, collapsed in 2001 with the loss of more than
1,000 jobs. The Financial Services Authority paid out more than £350 million
in settlement of claims.
Borse Dubai, the stock exchange, has defended its move to acquire a
stake in OMX, the Nordic market operator, despite the Swedish Financial
Supervisory Authority finding it guilty of buying the shares illegally.
Barclays Capital Edward Cahill, head of one of Barclays Capital’s key
debt groups, has resigned in the same week that several investment vehicles
that he structured were hit by losses in the credit market turmoil. They are
thought to have run into trouble because they invested in risky home loans
to low-income US families.
Accredited Home Lenders Holding, the US sub-prime mortgage specialist,
said that John Buchanan, its chief financial officer, was resigning. Earlier
it said that it had stopped taking loan applications and would shut most of
its retail and wholesale operations.
Construction
& property
F&C Commercial Property Trust, one of Britain’s largest real estate
trusts, has called on shareholders to decide its future as its share price
has traded at such a large discount to its stated net asset value for the
past 90 days.
AFI Development, the Russian property developer that raised £700
million at its AIM flotation in May, reported a 9 per cent rise in net asset
value between its flotation and the end of its first half.
The Local Shopping REIT, which raised £160 million at its main market
flotation in May, has bought Gilfin Property, the privately owned group, for
£12.85 million in cash and shares, adding 28 more properties to its pool of
local high street shops.
Consumer
goods
International Greetings, which makes stationery, wrapping paper and
Christmas crackers, said its profit hopes had been dented by “tough” retail
conditions and it expects to report full-year earnings of about £17 million,
rather than the £20 million that had been forecast in the City, sending its
shares down by 23 per cent.
Engineering
Ford Motor, the US carmaker, said that it would not make an
announcement about the sale of its Jaguar and Land Rover units until later
this year or perhaps early in 2008, and added that it was also in the middle
of a strategic review of its Volvo unit.
Motor vehicle production in Britain picked up in the three months to
July, driven by growth in exports, although production for the domestic
market fell, according to the Office for National Statistics.
Health
Genetix Group, which makes scientific instruments, reported a 59 per
cent rise in its first-half adjusted operating profits, helped by 69 per
cent sales growth of its new cell biology products.
GlaxoSmithKline, the UK’s biggest drugs maker, has been forced to breed
a new strain of blackcurrant for its Ribena drink that can cope with
Britain’s increasingly mild winters. It will be used to make Ribena this
year.
Industrials
Misubishi Chemical, the Japanese group, said that its Indian unit aims
nearly to triple its capacity for purified terephthalic acid (PTA), a raw
material used for polyester, by July 2008. The company is spending 17
billion rupees (£209 million) to produce 800,000 tonnes per annum of PTA at
its plant in Haldia, West Bengal.
Leisure
The British Institute of Innkeeping said that its free legal helpline
had received more than 4,000 calls from publicans in the past three months
because of the dismal weather, flooding and the foot-and-mouth outbreak.
Bwin, the Austrian internet gambling operator that in July withdrew
from talks to buy Sportingbet, said it was not discussing a deal with any
other parties but believed the sector could be hit by a wave of
consolidation once the regulatory environment stabilised.
Media
Virgin Media Steve Burch, the Virgin Media chief executive, who left
the company this week, did not play a role in the company’s sale process
after June 7, according to a regulatory filing.
GCap Media, the radio group, saw its shares fall after Credit Suisse
cut its target price to 210p from 264p, and reiterated its “underperform”
rating.
Natural
resources
Gazprom, the Russian gas giant, could become a supplier to the United
States under a potential ground-breaking deal. BP is understood to have
offered Gazprom a stake in a liquefied natural gas operation in Trindad and
Tobago as part of a strategic alliance agreed this summer.
Santos, the Australian oil and gas producer, reported a 25 per cent
drop in first-half underlying profits as record production was more than
offset by a strong Australian dollar and higher depreciation.
Retailing
Mitsukoshi, the Japanese department store group, plans to merge with
Isetan, its rival, as Japan’s purveyors of fine goods struggle in difficult
market conditions. Despite the country’s economic recovery, Japanese
consumers remain reluctant to loosen their purse strings after years of
deflation.
Barnes & Noble, the US book retailer, reported a 9 per cent rise in
quarterly profits to $18.1 million (£9.1 million), helped by sales of Harry
Potter and the Deathly Hallows.
Support
services
Stockcube, the group which analyses the price trends of stocks and
bonds, reported a 13 per cent increase in its first-half pre-tax profits to
£339,000, compared with £302,000 last time, and said all its businesses are
now beginning to pay for themselves.
Neteller, which processes payments for online gambling companies,
including PartyGaming and 888 Holdings, made a first-half loss of $24.7
million (£12.4 million), from a $58 million profit last time, because of
restructuring and legal costs resulting from the US online gambling ban.
Photo-Me International, the photo booth operator, saw its chairman and
chief executive fighting for their jobs after Principle Capital, the
activist investor, called an emergency meeting to oust them. Principle
claimed the support of almost half the company’s shareholders for its
attempted putsch.
Rentokil said that it is using new technology, including infra-red
detection systems, in its battle against rats and mice after revealing that
climate change and Britain’s rubbish-strewn streets have fuelled the busiest
July for its pest control business in a decade.
Technology
ISoft, the National Health Service software group, is set to initiate
an auction process in an effort to settle a takeover saga. The company will
do this if Germany’s CompuGroup raises its offer in response to a new
proposal worth £166.3 million from IBA Health, its Australian rival.
Nokia, the mobile phone handset maker, said it will install a number of
Microsoft internet applications on its phones from early next year to
increase revenue from web services.
Facebook is preparing a new system that would allow advertisers to
target its users based on information that they reveal about themselves on
the US social networking website.
Telecoms
Hutchison Whampoa, the Hong Kong-based telecoms and ports conglomerate,
reported a 53 per cent increase in first-half profits to HK$28.8 billion
(£1.86 billion), from HK$18.8 billion last time, boosted by its 3G mobile
phone unit.
Transport
Metronet Unions at Metronet, the failed London Underground maintenance
group, said members will strike for up to 72 hours from 6pm on September 3
over concerns about jobs, employment conditions and pensions.
Ryanair, the Irish budget airline, said it expected to resolve its row
with Belgium’s Charleroi airport, one of its European hubs, and was no
longer considering suspending its operations there.
British Airways saw three of its former executives named in a lawsuit
that is seeking damages from the airline after it admitted fixing the price
of passenger tickets. Two Virgin Atlantic executives are also named in a
class-action suit filed by Cohen, Milstein, Hausfeld & Toll, the
Washington-based law firm.
Utilities
European energy sector The European Commission has drafted regulations
that aim to increase competition in the energy sector, meaning utilities
will be asked to give up their control over power network distribution
assets. There are also plans to set up a regulatory body that will oversee
the pricing of gas and electricity in the wholesale sector.
National Grid, the UK power network operator, said that the New York
State Public Service Commission had voted to approve its acquisition of
KeySpan, the US natural gas distributor.
