Welcome to today's round-up of business news from The Times: what we're
saying, what they're saying, what you should be thinking
Top stories
The Times: Santander, the Spanish bank that bought Abbey four years
ago, will buy Alliance &
Leicester for £1.3 billion ($2.6 billion) to create Britain's second-biggest
mortgage lender.
New York Times: Federal regulators moved
to reassure both bank customers and investors as confidence and prices
in the sector continued to spiral down.
Telegraph: Mervyn King, the Governor of the Bank of England, turned
down a pay rise of £110,000 ($220,000) because he did not feel it was
appropriate in the current economic climate.
Comment
Gerard Baker in The Times: The US Federal Reserve pulled
off a clever bit of talk-based manipulation to rescue America's
beleaguered mortgage lenders, but a real bailout still seems inevitable.
Damian Reece in the Telegraph: Santander's offer for Alliance &
Leicester puts a floor beneath the value of British banks and kick-starts
consolidation in the sector.
George Soros interview with Reuters: The crisis over Fannie Mae and Freddie
Mac will not be the last as we
experience "the most serious financial crisis of our lifetime".
Upside
Reuters: Shares in General Motors jumped 5 per cent after the market
closed on news chief executive Rick Wagoner would announce
plans to cut more jobs and conserve cash.
Financial Times: A US judge ruled Ebay was not
liable for the sale of fake Tiffany jewellery on its website, removing
a real threat from the online auction system.
Telegraph: Shares in Imperial Energy jumped after it revealed it had received
a bid from an unnamed suitor, believed to be Oil and Natural Gas, the
Indian state-owned oil group.
Downside
The Times: Home sales in Britain fell
to their lowest level in 30 years last month, falling almost 40 per
cent in the past year.
Financial Times: The Children’s Investment Fund, the London hedge fund,
lost more than $1 billion (£500 million) in its
worst month ever in June.
The Times: Companies will have to promote
union membership if they want to win government contracts.
Mergers and shakers
The Times: Royal Dutch Shell’s £2.9 billion ($5.8 billion) cash offer
for Duvernay Oil, the Canadian oil and gas producer, was unanimously
accepted by the target’s board.
Reuters: Waste Management made a $6.19 billion (£3.1 billion) bid to buy
competitor Republic Services, threatening Republic’s own deal to buy a
third waste-management company, Allied Waste.
Financial Times: Kazakhmys, the UK-listed Kazakh copper producer, and
Metalloinvest, the Russian iron and steel group, began
talks on forming a £20 billion ($40 billion) mining giant.
Around Asia
Bloomberg: The China Securities Regulatory Commission rejected
Great Wall Motor Co’s application to list in Shanghai, driving its Hong
Kong-listed shares down 7 per cent.
Bloomberg: South Korea's government is working
on a series of price controls designed to cool the fastest inflation in
a decade.
Nikkei: Japan's three megabanks have about 4.7 trillion yen (£22.2
billion, $44.4 billion) in debt securities issued by US mortgage companies
Fannie Mae and Freddie Mac.
Look ahead
New York Times: Big banks expect
to suffer blows this week as they reveal losses, with Merrill Lynch to
report on Wednesday, JPMorgan Chase on Thursday and Citigroup on Friday.
Reuters: Merrill Lynch is considering
selling other investments aside from its stakes in BlackRock and
Bloomberg to drum up capital.
New York Times: Exelon, the Chicago-based electric company, will promise
massive cuts in greenhouse gas emissions on Tuesday in a bid to shape
the debate on carbon rules.
MARKETS
FTSE 100 5,300.40 up 0.7% (Monday close)
Dow 11,055.19 down 0.4% (close)
S&P 500 1,228.30 down 0.9% (close)
Nasdaq 2,212.87 down 1.2% (close)
Nikkei 12,816.96 down 1.5% (latest)
Hang Seng 21,330.36 down 3.1% (latest)
Currencies
Sterling $1.998/1.254 euros (latest)
Euro $1.5932 (latest)
Commodities
West Texas crude $145.00 down 18 cents (latest)
Gold $972.30 down $1.40 (latest)
New York
Reuters: US stocks fell as
worry about the health of the nation’s banking sector outweighed earlier
optimism. National City Corp denied rumours of usual depositor
activity, but the bank’s shares still plunged 14.7 per cent. Other regional
banks also fell, with Washington Mutual down 34.8 per cent and M&T
Bank down 15.6 per cent. After the closing bell, General Motors rose
5 per cent on news of another restructure plan. Staple products bucked the
trend, led by McDonald's, up 1.3 per cent, and Coca-Cola, up
1.4 per cent.
Asia
Bloomberg: Asian stocks fell
for a second day, led by financial companies, on mounting concern
credit-market losses will widen. Japan’s three megabanks were all hurt, with Mitsubishi
UFJ Financial Group falling 4.1 per cent, Sumitomo Mitsui Financial
Group 3.4 per cent and Mizuho Financial also 3.4 per cent. Cathay
Financial, Taiwan's biggest listed financial services company, dropped
6.5 per cent and in Australia, the Commonwealth Bank fell 3.5 per
cent. The MSCI Asia-Pacific Index lost 0.8 per cent in early trade.
Michael Beh
michael.beh@thetimes.co.uk
London
Thomson Reuters, the provider of trading screens to market dealers
worldwide was the biggest faller in the FTSE 100, closing down 40p at £12.45
amid fears that its business would be hit by a swathe of investment banking
job cuts.
Polo Tang, a UBS analyst, cut his advice from “neutral” to “sell”, saying that
while job cuts in banks were only beginning, cancellations of subscriptions
would come later, towards the end of this year and thereafter. Earnings per
share at Thomson Reuters could fall by more than half, he said.
Actually, banks had a reasonable day yesterday, helping the FTSE 100 to
recover somewhat after Friday’s big sell-off. A&L's agreed
takeover by Santader helped restore confidence to bank stocks. A&L rose
115p to 335p.
Mining stocks also rebounded as metals prices were supported by power
shortages in China cutting metal production.
Kazakhmys was buoyed as much as 191p initially by talk of a takeover
bid by Metallovinest, of Russia, but it closed up a relatively demure 88p at
£15.15 as analysts pointed out that Kazakhstan’s Government, which holds a
stake in Kazakhmys, would be unlikely to support a takeover by Russia.
ENRC, in which Kazakhmys has a 22 per cent stake, finished 91p higher at
£12.28.
ITV was the top gainer, up 4.6p to 42.9p as it emerged that it had been
approached by predators such as Endemol, interested in buying BSkyB’s 17.9
per cent stake. But dire advertising numbers mean that there was little
belief that any would-be buyer would complete a deal.
Fears it would be hit by an Aldi v Tesco price war sent J Sainsbury down
3.5p to 267.5p. Weekend reports that Tesco was gearing up to launch a new
low-price food range mean bad news for Wm Morrison and Sainsbury’s, Philip
Dorgan, of Panmure Gordon, said as he cut his Sainsbury’s target price to
240p. Jonathan Pritchard, of Oriel Securities, said: “This is hardly good
news for Tesco [down 0.7p at 354.6p], it is even worse for the
others, who seem to resolutely believe that this price war is nothing more
than a little local difficulty and are in for a rude awakening.”
Robert Lindsay
robert.lindsay@thetimes.co.uk
AGENDA
INTERIMS
None scheduled
FINALS
Trikona Trinity Capital
AGMs
BlueStar SecuTech
British Airways
J Sainsbury
Speedy Hire
EGMs
None scheduled
TRADING STATEMENTS
Burberry (H1)
Goldenport Holdings
Premier Foods
ECONOMICS
UK BRC June retail sales monitor (0001 BST)
UK RICS June housing market survey (0001 BST)
BoE’s Andrew Sentance speech (0900 BST)
UK June CPI (0930 BST)
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