Economics
Interest rates Hopes of further early cuts in interest rates, perhaps
as soon as next month, were dealt a blow when Tim Besley, an external member
of the Bank of England’s Monetary Policy Committee, suggested that its
ground-breaking scheme this week to tackle the credit crunch would reduce
the case for lowering rates again.
Money markets There was little immediate sign of money market stresses
being diminished by the Bank of England’s new special liquidity facility.
The key three-month sterling Libor interest rate for lending between high
street banks edged lower again, but by only 0.001 per cent, as markets
digested the details of the Bank’s £50 billion scheme.
The euro burst through the $1.60 barrier for the first time, setting a
new high of $1.6019 at one point, as hopes of cuts in eurozone interest
rates continued to fade. Markets’ expectation of rate cuts were undercut
after Yves Mersch, a member of the European Central Bank’s governing
council, said that he was surprised that observers still saw scope for the
ECB to reduce rates and emphasised its determination to bring eurozone
inflation under control.
US home sales The US National Association of Realtors said that sales
of existing American homes had fallen by 2 per cent during March to an
annual rate of 4.93 million, down from 5.03 million in February.
Oil prices surged to records near $120 a barrel because of the weaker
dollar, export disruptions from Nigerian rebel attacks and concerns that a
Scottish refinery strike could hit North Sea production. US crude settled up
$1.89 at $119.37 a barrel after hitting a record peak of $119.90 earlier.
Banking
& finance
Royal Bank of Scotland has insisted that there was no need for any
sacrificial lambs after its recent crisis as it began a block-buster £12
billion rights issue, the biggest equity capital raising attempted in
Britain.
Bradford & Bingley, Britain’s biggest buy-to-let lender, has
remained coy about the possibility of a rights issue but insisted that
deposits were pouring in to fund its mortgage sales. The bank was recently
forced to deny that it was on the verge of an emergency rights issue.
Credit Suisse, the Swiss bank, said that it will cut about 500 jobs
across its investment banking and shared services divisions. The cuts come
on top of the 500 job losses announced in January and the 170 announced
during October.
GLG Partners, the hedge fund manager, said that Greg Coffey, one of its
top managers who oversaw $7 billion (£3.51 billion) in assets, had resigned.
Mr Coffey, who is expected to set up his own fund, withdrew a previous
resignation last week. He will continue to manage GLG funds until October
and will help to find his successor.
Alliance & Leicester has published the prospectus for a $40 billion
medium-term note programme that will allow the bank to issue debt without as
much paperwork.
Construction
& property
Morgan Sindall, the construction group, said it has made a positive
start to the year, with trading in line with its expectations and growth in
construction, infrastructure services and affordable housing. But it added
that it had seen a slowdown in refit business from the financial services
sector.
Consumer
goods
Associated British Foods said that further price rises on products such
as bread were almost inevitable as it gave warning of a possible £800
million increase in operating costs this year.
Unilever, the Anglo-Dutch consumer goods group, has filed a US lawsuit
against several Canadian competitors claiming that they were infringing on
its Slim-Fast brand of weight-loss products.
Engineering
Manganese Bronze Holdings, which makes the London black taxi cab, has
signed an agreement with Tanfield Group, the producer of electric commercial
vehicles, to develop a battery-powered zero-emission urban taxi.
FKI, the engineering group, has defended its decision to accept a £478
million takeover offer from Melrose, despite receiving several approaches
that might have led to a higher offer.
BAE SystemsThe Serious Fraud Office is to appeal against a High Court
judgment that it had acted unlawfully in dropping an investigation into
allegations of bribery and corruption relating to a BAE Systems arms deal
with Saudi Arabia.
Health
SkyePharma, the drug delivery group, has signed an exclusive licence
agreement with Kyorin Pharmaceutical for the Japanese group’s lead product,
the asthma treatment Flutiform.
Industrials
Highveld Steel & Vanadium, the South African steelmaker in which
Evraz, the Russian steel group, has a controlling stake, said it would sell
its vanadium assets to Vanchem Vanadium Products for $160 million (£80.3
million).
Leisure
Bodog, the controversial internet gambling operator, announced that
Calvin Ayre, its founder and chief executive, would be retiring as the
public face of the company.
Bourne Leisure, the company behind the Butlins and Haven chains, said
it remained hopeful of reviving a deal with Candover after the collapse of
the sale of a stake of less than 50 per cent to the private equity group.
Probability, the AIM-listed mobile phone gambling operator, reported
strong fourth-quarter trading, despite a two-day winning streak by a waiter
in a Chinese restaurant in Worcester that netted £211,000 – the biggest
payout by a mobile gambling group.
Ritz-Carlton, the luxury hotel division of Marriott International,
predicted weakening hotel demand in Asia’s key financial centres and added
that the impact of the credit crunch could curtail hotel openings.
McDonald’s, the US burger chain, reported a 0.8 per cent decline
in same-store sales in its US restaurants during March, the first monthly
decline in five years, overshadowing higher than expected first-quarter
profits and strong overseas sales.
Chinese gambling Macau, which has overtaken the Las Vegas Strip as the
gambling capital of the world, announced a freeze on all new licences and
land allocations for construction, partly at the behest Beijing.
Media
Reed Elsevier, the Anglo-Dutch publishing group, will face questions
from the Campaign Against Arms Trade at its annual meeting asking why it has
not sold its defence exhibitions business.
Havas, the French advertising group, reported a 7.4 per cent rise in
comparable first-quarter sales of €345 million (£276.4 million), up from
€337 million last year, and said it was not affected by the global financial
crisis.
Clear Channel CommunicationsThomas H Lee Partners and Bain Capital
Partners, the private equity groups, said they had rejected an offer for
binding arbitration from the banks which had arranged to fund the $20
billion (£10.02 billion) buyout of Clear Channel Communications, the US
radio station group.
The Wall Street Journal Marcus Brauchli is stepping down as
managing editor ofThe Wall Street Journal four months after News
Corporation bought the paper. He will stay on with News Corp as a
consultant. News Corp is parent company of The Times.
Natural
resources
Regal Petroleumconfirmed that it had received preliminary approaches
for its Ukrainian assets. But the independent oil and gas company, which has
interests in Ukraine, Romania and Egypt, emphasised that the talks are at an
“early stage” and may or may not lead to a transaction.
Retailing
Primark, the budget fashion chain which is owned by Associated British
Foods, reported full-year operating profits up by 22 per cent to £111
million. Sales increased by 25 per cent to £899 million, with like-for-like
sales up by 4 per cent – in contrast to like-for-like sales declines across
most of the retail sector.
Support
services
Erinaceous, the debt-laden property services group, said more than
2,500 jobs have been saved after administrators struck a series of deals to
sell parts of the group.
Tata Consultancy Services, India’s largest IT outsourcing company, saw
its shares fall by more than 10 per cent in Bombay – a record one-day fall
for the stock - after it reported its first quarteron-quarter decline in
earnings in three years as a result of the slowdown in the United States.
Technology
Samsung Lee Kun Hee, chairman of Samsung, the South Korean electronics
group, has resigned after an unprecedented investigation of his business
affairs. Samsung is responsible for a fifth of all South Korean exports.
soft needs to raise its takeover bid. Yahoo!’s first-quarter net income rose
to $542.2 million, from the year-ago quarter’s $142.4 million.
LogicaCMG, the Anglo-Dutch IT services group, is to cut 1,300 jobs,
including 500 in Britain, and will double its offshore operations as part of
a £110 million plan to revive the business.
Yahoo! reported a better than expected quarterly profit but failed to
do well enough to convince many on Wall Street that Microsoft needs to raise
its takeover bid. Yahoo!’s first-quarter net income rose to $542.2 million,
from the year-ago quarter’s $142.4 million.
Moneysupermarket.com, the price comparison website, said that revenues
were holding up well despite the turbulence in the loan and mortgage markets.
Telecoms
AT&T, the American telecoms group, reported first-quarter profits
up by 21.5 per cent to $3.46 billion (£1.74 billion), from $2.85 billion
last time, as wireless growth offset a fall in traditional telephone
subscriptions.
Transport
Alitalia The Italian Government has agreed to extend an emergency loan
of €300 million (£241.3 million) to Alitalia, the struggling flag carrier,
after Air France-KLM withdrew its takeover offer. The loan could be
considered as fresh state aid, which would bring the airline into
confrontation with the European Commission. I
BAAThe Government will review the economic regulation of the UK
airports system after the Competition Commission published a damning report
into BAA, the owner of Heathrow’s disastrous Terminal 5, criticising its
poor customer service.
UAL, the parent company of United Airlines, the US carrier, reported a
first-quarter loss of $537 million (£269.4 million) because of soaring fuel
costs. It added that it will be cutting flights and 1,100 jobs in an
“extraordinarily difficult” environment.
Utilities
Npower Ofgem, the energy regulator, has begun a formal investigation
into the alleged mis-selling of energy contracts by npower, one of Britain’s
top six power suppliers. The inquiry comes after claims that sales
representatives of npower – owned by RWE, the German utility group – had
lied to customers and used illegal practices to sell contracts.
