Economics
Eurozone industrial production rose by much more than expected in
August, Eurostat said, raising hopes of continued strong growth despite a
rising euro and the global credit crunch. Output rose by 1.2 per cent on the
month and by 4.3 per cent year on year.
US producer prices rose by 1.1 per cent in September, more than
expected, on rebounding energy prices, data from the Labor Department
showed. However, core producer prices rose by 0.1 per cent, less than
forecast, following a 0.2 per cent rise the previous month. Core prices were
up by 2 per cent year on year.
US retail sales rose by a bigger than expected 0.6 per cent as sales at
petrol stations grew at their fastest pace since May, the Commerce
Department said, while car sales also were brisk. Excluding cars and petrol,
retail sales were up by 0.2 per cent.
US consumer sentiment in the Reuters/University of Michigan Surveys of
Consumers dipped to 82.0 in early October, the lowest reading since August
2006 and slightly below analysts’ expectations.
China’s trade surplus has scorched past the record figure for the
whole of 2006, official data showed. The customs bureau said that the
accumulated surplus from January to September was $185.7 billion, exceeding
the $177.5 billion for all of last year. The swelling surplus helped China’s
foreign exchange reserves to surge by 45.1 per cent in the first nine months
of the year to $1,430 billion, the central bank said.
Consumer price index The Bank of England has launched a national
inquiry into mysterious swings in the price of sofas, armchairs and kitchen
tables, which have played havoc with its economic forecasts. Changes in
furniture prices have been large enough to increase the volatility of the
consumer price index, the Bank’s target measure of inflation.
Banking
& finance
Northern Rock Sir Richard Branson yesterday unveiled a line-up of
partners, including the world’s largest insurer and an activist hedge fund,
for his attempt to take control of Northern Rock.
SAC Capital Advisers, a Connecticut-based hedge fund, is being sued by
one of its traders who is alleging that he was forced to take female hormone
tablets to make him less aggressive.
Barclays signalled that full-year profits would easily top £7 billion
this year despite the sting of the credit crunch and the fallout from the
near-collapse of Northern Rock.
Sovereign wealth funds Assets held by sovereign wealth funds will
explode over the next four years, fuelling major investment in riskier
assets and giving more balance to the global economy, a report by Merrill
Lynch predicts.
Kazakhstan The Government of Kazakhstan may buy back shares in some of
its largest national companies listed on the London Stock Exchange,
including Kazcommertsbank and Alliance Bank, as the country grapples with a
financial crisis.
Fauchier Partners, one of London’s most successful hedge fund groups,
alerted clients to the dangers of “black box” hedge funds, arguing that
their computer-driven strategies contained the seeds of their own
destruction.
Spain Lending in Spain’s financial and corporate sectors is grinding to
a virtual standstill amid a climate of suspicion about which bank could be
the “Spanish Northern Rock”.
Citigroup The credit crunch claimed another high-profile casualty as
Thomas Maheras left Citigroup in the wake of a $1.9 billion (£934 million)
loss at the fixed-income division he ran for the world’s largest bank.
Och-Ziff is preparing to raise up to $1.2 billion (£590 million) from
its forthcoming initial public offering after the US hedge fund manager
filed with the Securities and Exchange Commission to sell as many as 36
million shares at between $30 and $33 each.
Construction
& property
Bovis Homes boosted its presence in the North of England after agreeing
to buy regional builder Elite Homes for £25.7 million. Bovis, which is based
in Longfield, Kent, said the acquisition of Elite improved its consented
land holdings by more than 800 plots. Elite is based in Newton-le-Willows,
Merseyside, but sells homes across the North West and Yorkshire. As well as
paying £25.7 million to existing directors and related trusts, Bovis will
assume £46.2 million of debt through the deal.
Consumer
goods
McDonald’s said its third-quarter profits will top Wall Street’s
estimates following another month of strong sales. Global sales from its
restaurants open more than a year rose 5.9 per cent in September, led by an
impressive 12 per cent gain in its Asia-Pacific, Middle East and Africa
division. Stronger foreign currencies helped to boost results. Same-store
sales in its US outlets rose 3.5 per cent, increasing for a 54th consecutive
month. The company cited its value menu, breakfast offerings and drinks as
helping to boost sales.
Engineering
General Electric’s profits rose 14 per cent in the third quarter on
strong global sales of aircraft engines, locomotives and other equipment
that have led to a record order backlog. The Fairfield-based industrial,
finance and media conglomerate, whose properties range from aircraft engine
manufacturing to the NBC television network, reaffirmed its profit outlook
for the year. The company earned $5.54 billion (£2.72 billion), or 54 cents
per share, in the three months to the end of September 30, up from $4.87
billion, or 47 cents a share, a year ago.
Scania said it has received its largest bus and coach order to date in
Asia, for 500 city buses from SBS Transit, the leading public transport
company in Singapore. Financial details were not disclosed. Deliveries will
take place in 2007-08.
Health
Zimmer Holdings, the orthopaedic implant maker, said that the US
Securities and Exchange Commission is conducting an informal investigation
into the sale of medical devices in foreign countries. The company said the
investigation relates to possible violations of the Foreign Corrupt
Practices Act. Other medical-device companies received similar inquiries,
the company said. Zimmer said it plans to fully co-operate with the
investigation.
Industrials
Formosa Plastics, Taiwan’s leading petrochemical conglomerate, proposed
706.8 billion Taiwan dollars (£10.6 billion) worth of investments over the
next five years. The projects include an expansion of its petrochemical
complex in central Taiwan, a steel mill and two wafer plants.
Leisure
Wagamama’s proposed £200 million flotation, is on a knife edge
this weekend amid indications of a mixed response to the noodle bar chain’s
plans from institutional investors.
The Food & Drink Group, operator of the Henry J Bean’s and Jamies
chains, reported a slowing of like-for-like sales growth but said it still
expected to meet full-year profit forecasts.
Rank Group, the bingo and casino company, issued a profit warning
because of the impact of the smoking ban and the scrapping of big jackpot
fruit machines under the Gambling Act.
Media
ITV is expected to generate an extra £2 million in advertising from the
Rugby World Cup this weekend, the extra cash coming on the back of England’s
unexpected presence in the tournament’s semi-finals.
Universal Music, the world’s biggest music company, will later this
month begin releasing singles on USB memory sticks, in an attempt to arrest
the decline in music sales by offering new products for fans.
Digital download sales in the UK will hit a record £163 million this
year, a report predicted. The 45.5 per cent year-on-year growth will help to
breathe life into the flagging music and video retail sector, according to
market analysts Verdict. Downloading will continue to soar in popularity,
with spending expected to hit £600 million by 2012. Music and video
downloads will make up a predicted 13.5 per cent of the total music and
video market by that date, compared with 4.1 per cent today, according to
Verdict’s report.
Natural
resources
Centrica The energy giant is set to withdraw from a £200 million gas
project following planning delays. The British Gas parent was part of a
consortium looking to build the new liquefied natural gas import terminal at
Canvey Island in Essex, but the scheme has been dogged by planning issues. Centrica,
which had a 25 per cent stake in the project, is leaving partners Calor, LNG
Japan and Osaka Gas to press on with the project, which has met with strong
local opposition.
Retailing
Bhs Sir Philip Green’s plans to bring about a revival at Bhs took a
blow yesterday when Tony Brown, retail director of the high street chain,
resigned to head up department store Beales.
Woolworths The high street retailer has cautioned that it may face a
shortage of popular children’s toys in the days leading up to Christmas. The
news follows delays to toy shipments headed for the UK from China as
stringent checks were imposed after recalls from Mattel in the summer. More
than 21 million toys, including Barbie playsets and Dora the Explorer toys,
were recalled during the summer, after they were found either to contain
excessive amounts of lead paint or had small magnets that could easily be
swallowed by children.
Support
services
Inspicio Shares in the UK’s largest tester of food rose by record levels
after the company said it had received a takeover approach.
Accounting standards The European Union is set to slow down a global
push to converge accounting standards as it bows to pressure for more
consultation, a document showed.
Technology
BEA Systems Carl Icahn, the American billionaire shareholder activist,
was last night holding out for a higher rival offer for one of his biggest
investments after Oracle swooped with a $6.7 billion (£3.3 billion) cash
offer for BEA Systems.
Eastman Kodak The photography and imaging company said it will end its
sponsorship of the Olympic Games after the Summer Olympics in Beijing in
2008 as it moves in a new direction. “Our new strategy requires us to
reassess our marketing tactics as well, and adapt them to changing market
conditions and evolving customer behaviour,” Elizabeth Noonan, Kodak’s
director of brand management, said.
International Business Machines said it has won a $73 million (£36
million) order to supply IT infrastructure services to energy company Hess.
IBM said that the agreement will run for 5½
Telecoms
Internet calls The attack on the mobile phone market from some of the
internet’s biggest names is escalating with Skype planning to offer free
mobile calls to Britons. The world’s biggest internet calls service is
expected to announce shortly a deal with 3, the 3G mobile phone operator, to
enable users of a new Skype/3 branded phone unlimited free calls to each
other.
Cable & Wireless again played down speculation that it was
considering selling its business, saying it made more sense to acquire
assets and build up its own operations. Persistent bid speculation has
underpinned shares in Britain’s number two corporate telecoms provider as a
recovery in its laggard UK business gathers pace.
Transport
Ryanair has announced three new routes from Bristol to Bergerac,
Beziers and Pau in France. The airline said the services will each run three
times a week, starting in May. The airline has said that it will appeal the
decision of the regional court in Rome not to stop the Italian Government
restricting the availability of low fares at Rome’s Ciampino airport.
Ryanair said the decision provides illegal protection of Italian flag
carrier Alitalia and restricts consumer choice.
Utilities
E.ON said it signed a letter of intent for a multibillion-euro asset
swap with Statkraft, the Norwegian state-owned company, that will give it
full control of jointly held power plants in Scandinavia and make Statkraft
a shareholder of the German utility. E.ON will take over Statkraft’s 44.6
per cent stake in E.ON Sverige worth €4.4 billion (£3.0+ billion), making it
the sole shareholder of the unit.
