Economics
Global economy The world’s top central banks emphasised their vigilance
against inflation in the face of soaring food and energy costs, dampening
hopes of aggressive interest rate cuts in response to financial upheavals.
In a hawkish summary of talks in Basle among the Group of Ten central banks
from leading economies, Jean-Claude Trichet, President of the European
Central Bank and the G10 chairman, talked up world growth prospects and
sounded a warning against complacency over inflation. He also told big
financial institutions worldwide that they must shoulder responsibility for
tackling money market stresses and the credit squeeze.
Retail sales The Bank of England will come under intense pressure to
cut interest rates this week as figures out today show that the high street
suffered its worst Christmas for three years.The British Retail Consortium
will show that like-for-like sales across the sector rose by only 0.3 per
cent in December.
UK prospects Gordon Brown sounded a renewed warning in a BBC radio
interview over what he said was a “dangerous” year ahead for Britain’s
economy, foreseeing “what is clearly several months of global financial
turbulence”.
Eurozone unemployment was unchanged in November, at an historically low
rate of 7.2 per cent across the 13-nation bloc, official figures said.
Eurozone producer prices, for the cost of goods leaving factories, rose
by 0.8 per cent in November, lifting their annual pace of increase to 4.1
per cent, from an October pace of 3.3 per cent, and 2.7 per cent in
September.
Carbon tax A row has erupted in Brussels over proposals to introduce a
carbon tax on goods entering the European Union from countries that fail to
take measures to curb carbon dioxide emissions. It would hit powerful
emerging market exporters, which do not comply with the Kyoto treaty on
climate change.
Banking
& finance
Citigroup, the world’s biggest bank, is expected to cut up to 32,000
jobs to stem rising losses. The bank could lose 10 per cent of its workforce
when it unveils full-year results next Tuesday. It is also believed to be
considering the sale of non-core assets.
Northern Rock SRM Global, the largest shareholder in Northern Rock,
insisted that the bank was not a lame duck as it urged fellow investors to
join its fight to secure a say in the future of the lender. The hedge fund
followed RAB Capital by publishing an open letter to investors in Northern
Rock before a vote next week.
Close Brothers The head of European private equity is the latest senior
manager to leave Close Brothers, the investment bank under siege from a
string of potential suitors. Darren Redmayne has defected in favour of the
American buyout group Lincoln International, where he will head UK
operations.
Gulf investors spent a record $83 billion buying foreign companies last
year, according to the mergers and acquisitions tracker Zephyr. At least 173
corporate transactions took place.
Mortgages Lenders must tell indebted borrowers if they are in danger of
getting into financial difficulties, under changes to banking rules. New
guidelines designed to avert a rise in the number of home repossessions will
force banks to offer at-risk customers alternative debt repayment plans.
Mortgages One in five lenders has failed to pass on the cut in interest
rates to mortgage borrowers after the Bank of England’s base rate cut last
month.
Construction
& property
Marshalls, the paving stone maker, said that its 2008 prospects were
positive and it expected to report 2007 results in line with expectations.
It said that the outlook for 2008 in its public sector and commercial market
was positive.
Balfour Beatty has been selected by BAA to deliver its Midfield Pier
project at Heathrow airport, a scheme worth an initial £350 million. The
construction group said that the three-phase project would complement the
new Heathrow East terminal, with construction work commencing in spring
2008.
Consumer
Goods
Scottish & Newcastle has commissioned an independent report into
Baltic Beverages Holdings, its Russian and Eastern European joint venture
with Carlsberg, as it tries to ward off a takeover by Carlsberg and
Heineken.
Starbucks’ chairman effectively sacked his chief executive and assumed
the dual role in a bid to lead the coffee retailer towards recovery. Howard
Schultz said that Jim Donald would be leaving the company.
Krispy Kreme, the American doughnut group, is replacing its chief
executive of less than two years. Shares in the troubled company rose 10 per
cent when it said that it had appointed James Morgan, its chairman, as chief
executive. Daryl Brewster, who joined as chief executive in March 2006, will
step down at the end of January.
Engineering
Renold, the world’s second-biggest manufacturer of industrial chains,
has completed the sale of its Burton upon Trent factory site to Morris Homes
for £6.4 million. The company will use the money to pay down debt.
Demand for cars in Germany, Europe’s largest auto market, last year hit
the lowest level since the country reunified in 1990, official statistics
showed, confirming earlier industry estimates. New car registrations dropped
9.2 per cent to just over 3.148 million in 2007, after a plunge of 20.3 per
cent in December, according to data released by the German motor vehicles
agency KBA.
Health
Smith & Nephew, the medical devices company, has been asked by the
Serious Fraud Office (SFO) to submit documents as part of its inquiry into
allegations that British companies paid bribes to Saddam Hussein’s regime in
Iraq. The SFO launched its investigation into the United Nations
Oil-for-Food programme at the beginning of the year. GlaxoSmithKline and
AstraZeneca have also been asked to submit papers.
Pfizer, the world’s largest pharmaceutical group, has signed a deal
with Taisho to research, develop and market the Japanese company’s
schizophrenia drug candidate TS-032. The agreement will give Pfizer
exclusive development and marketing rights outside Japan.
Industrials
Smiths Group said that its Smiths Detection division had won three
contracts worth a total of $58.3 million (£29.6 million) from a US
government agency. The company said that the contracts were for high- energy
cargo X-ray screening systems.
Leisure
McDonald’s is going head-to-head with Starbucks and installing
coffee bars complete with “baristas” into nearly 14,000 of its restaurants
in America. It hopes that the move will boost sales by $1 billion (£507
million) a year. A spokesman said there were no plans to copy the move in
Britain.
Playtech, the world’s biggest supplier of software to online gaming
companies, was confident of meeting market expectations for its 2007
results. The Cyprus-based company said that trading in the fourth quarter
had exceeded expectations and it was confident of its trading performance
for 2008.
Media
GCap Media Global Radio has begun talks with GCap Media shareholders in
an attempt to win their support for a takeover of Britain’s largest
commercial radio group after Global’s initial approach was rejected
privately by the board.
News Corporation, parent company of The Times, has bought 14.6 per cent
of the German television channel Premiere for €287 million (£214 million).
Aegis Group has made two acquisitions. The media company said that its
Isobar unit had bought the Finnish digital marketing and design agency White
Sheep. Aegis has also bought the American market researcher Oncology Inc.
Natural
resources
Petrol prices in Britain hit record highs, compounding the misery for
hard-pressed consumers. Average petrol prices hit 103.62p a litre and diesel
108.58p, according to the AA. This time a year ago, petrol was 88.25p a
litre and diesel 93.62p.
Nighthawk Energy said that an additional three wells had been added to
the winter drilling programme at the Cisco Springs project in Utah.
Nighthawk holds a 50 per cent working interest in the project and the
operator, the Denver-based Running Foxes Petroleum, holds 50 per cent.
Retailing
House of Fraser put pressure on Debenhams, its department store rival,
by reporting like-for-like sales growth of 2.4 per cent for the run-up to
Christmas. The group, which was taken private by a management buyout last
year, said that margins were also higher than a year ago.
Tesco has pledged to match the prices offered by Aldi and Lidl, the
discount chains, on more than 2,000 products. The move comes amid increasing
speculation that the pair are poaching some of Tesco’s value-driven
customers. Tesco is also offering more than 400 items at half-price in
January.
Support
services
Intertek Group, the quality and safety services provider, said that it
had bought Electrical Mechanical Instrument Services (EMIS) for £900,000
cash. EMIS operates oil and gas industry calibration businesses in Britain,
Qatar and the United Arab Emirates.
Ricardo said that it was pleased with its trading performance for the
five months to November 2007, driven by solid growth in its UK technical
consulting business.
Technology
Autonomy said that it had entered into an original equipment
manufacturer licence agreement with Adobe for the licensing of Autonomy
software. It said that it had also entered into a significant software
licence agreement with Lloyds TSB.
Telecoms
Nokia Siemens Networks said that it had won a contract to build a 2G
and 3G mobile network for Zain in Saudi Arabia. The order, which includes
the provision of managed services over five years, is worth $935 million
(£474 million), the Nokia and Siemens joint venture said in a statement.
2ergo Group has won a five-year contract to provide mobile marketing
services for Telefónica’s European mobile service O2. It said that the fees
secured through the contract underpinned the company’s expectations for the
year.
Matsushita, the Japanese electronics giant, has teamed up with Google
and YouTube to commercialise internet-enabled plasma televisions that allow
users to access videos online, according to reports last night.
Transport
Arriva, the bus and train operator, has bought a further 10 per cent
stake in Barraqueiro SGPS, the Portuguese transport company, for €50 million
(£37 million) in cash. The move builds on Arriva’s acquisition of 21.5 per
cent of Barraqueiro for €60 million in 2006.
Qantas Airways, Australia’s largest airline, will raise its fuel
surcharges on international routes, the second increase in less than a year.
It said that the increases of as much as 16.7 per cent, to take effect from
January 17, were in response to record fuel prices.
Cathay Pacific Airways, Hong Kong’s leading airline, said that it was
prepared to team up with Air China and Air China’s parent China National
Aviation Corp to make a bid for China Eastern Airlines if the Singapore
Airlines-Temasek deal is rejected.
Utilities
Scottish & Southern Energy has completed the tunnelling phase of
the Glendoe hydro- electric project in Scotland, which began in September
2006. The tunnels will allow water from a new reservoir to reach the
underground power station, from where it will be discharged back to nearby
Loch Ness.
