Economics
Mortgage approvals plunged in May, fuelling alarm over prospects for
house prices as the number of new home loans agreed fell to record lows.
Approvals for house purchases dropped to 42,000, down 28 per cent from April
and 64 per cent on a year earlier, the Bank of England said.
Consumer borrowing through unsecured personal loans and credit cards
rose by a still buoyant £1.4 billion in May, despite gloom over economic
prospects, the Bank also said. Credit card borrowing rose by £600 million,
in its strongest monthly increase for two years.
Global economy The downturn may be deeper and longer than markets and
economists have predicted, while rising inflation may be stronger and more
persistent, the Bank for International Settlements said in an assessment of
conditions in its annual report.
Oil prices jumped by more than $3 a barrel to set new record highs
above $143 before falling back to levels just above $140 in later dealing.
Eurozone inflation leapt to a record high of 4 per cent last month,
cementing expectations that the European Central Bank will raise interest
rates on Thursday by a quarter-point, despite political leaders’ pleas for
it to stay its hand.
Banking
& finance
Bank reforms Depositors are to be guaranteed the first £50,000 of their
savings if their bank fails, under a scheme to be announced by the Treasury
today. The figure is understood to be the “lead option” in a consultation
paper on reforms and will replace the existing guarantee of £35,000.
John Charcol cut its workforce by a quarter and shut three offices. The
mortgage broker also ousted its chief executive as it downsizes to prepare
for a severe contraction in the mortgage market.
FSA The most senior head to roll at the Financial Services Authority in
the wake of the Northern Rock collapse walked away with a £612,000 farewell
package and a £30,000 “performance-related bonus”, it has emerged. Clive
Briault, who was head of the retail division at the City regulator, left on
April 30.
Bradford & Bingley The bank’s hopes of securing a swift financial
rescue were dealt a blow after a campaigning investor group told B&B’s
army of small shareholders to consider blocking its £400 million bailout
plan.
Construction
& property
Taylor Wimpey, Britain’s largest housebuilder by production, said that
it would take a £550 million writedown on the value of its British land
holdings and confirmed that it would tap its largest investors for hundreds
of millions in cash to stay afloat. The housebuilder is grappling with £1.9
billion in debts.
Costain Group, the construction company, said that its forward order
book stood at more than £2 billion and it had performed in line with
management expectations since its interim management statement on May 8.
Carillion said that it had continued to perform strongly in the first
half of 2008, with overall trading in line with expectations. The
construction and support services company expected its half-year order book
to be worth about £20 billion.
Consumer
goods
British American Tobacco has denied claims made by a BBC investigation
that it is breaking its code regarding the sale of single cigarettes, seen
as more attractive to child smokers. Duncan Bannatyne, the businessman,
claims that he discovered special pots in Mauritius that BAT has distributed
to shops to make it easier for them to sell single cigarettes.
SABMiller, the brewer, lowered its beer volume growth target for the
Latin American market because of weaker consumer demand, especially in
Colombia and Peru. Price rises and cost-cutting mean that it should be able
to hold its profit-margin targets.
Adnams, the Suffolk brewer, gave warning that the toughest trading
conditions for many years meant that first-half profits would be
“substantially lower” than last year’s £1.2 million as ale volumes fell by
8.3 per cent. Adnams is dealing with faltering confidence and the impact of
the smoking ban.
Engineering
EADS Gustav Humbert, the former head of Airbus, the aircraft
manufacturer, was detained for questioning by France’s financial crime unit
in connection with alleged insider trading at EADS, Airbus’s parent, a
source said.
Enodis Manitowoc, the American industrials group, emerged the victor of
a long running takeover tussle for the food equipment maker, Enodis, beating
its US rival, Illinois Tool Works (ITW), in a rare single bid auction
process conducted by the Takeover Panel.
Health
Southern Cross Healthcare Shares in Britain’s biggest care homes
operator plunged by 58 per cent after it failed to make a debt repayment.
The industry has been hit by local authority budget constraints and higher
costs.
GlaxoSmithKline could face up to a one-year delay before the US Food
and Drug Administration (FDA) begins its review of the data for Cervarix,
its cervical cancer jab, a big new product for the company.
Ardana, the Edinburgh-based biotech company specialising in
reproductive health, went into voluntary administration after failing to
refinance the business or find a buyer.
Industrials
ArcelorMittal is buying a 60 per cent stake in DSTC FZCO for an
undisclosed sum. The Dubai-based distribution company sells mainly to the
construction market, distributing approximately 120,000 tonnes of products
per year. Last year, its revenues were around €70 million (£55.3 million).
Leisure
Tote The Government sought to boost its efforts to sell the Tote by
appointing Mike Smith, the former chief executive of Rank Group, as chairman
of the state-controlled betting operator.
Globe Pub Company, the tenanted company controlled by Robert Tchenguiz,
reported a 12 per cent fall in fourth-quarter beer volumes, taking the
decline for the full year to the end of May to 8 per cent.
Clapham House, the Gourmet Burger Kitchen and Real Greek restaurant
operator, reported a 30 per cent jump in underlying full-year profits and
announced a franchise deal with SSP, the caterer, to open Dexters eateries.
Media
Trinity Mirror Shares in the newspaper publisher suffered a record
one-day fall after it admitted that advertising at The Daily Mirror and its
portfolio of titles had collapsed by between 12 and 14 per cent in May and
June. It expects full-year operating profit to be about 10 per cent below
expectations.
ITV Michael Grade, the broadcaster’s chairman, accused competition
regulators of allowing Google and Apple to build dominant internet media
businesses as his company’s efforts to build a competitor were held up by
the Office of Fair Trading.
Natural
resources
TNK-BP Doubts over BP's future in Russia escalated last night after
authorities in Moscow refused half of the work permits requested by TNK-BP.
It means that over 70 foreign employees may soon have to leave Russia unless
they can secure new visas quickly.
Petroceltic, the Irish oil and gas explorer, said that Iberdrola, the
Spanish energy company, had agreed to buy a 22.64 per cent stake in the
company for $55 million (£27.6 million).
Lonmin, the world’s third-largest producer of platinum, with operations
in London and South Africa, has closed down its biggest furnace for repairs
for roughly one week. Lonmin has already cut its sales targets twice for the
financial year to end-September because of a power crisis in South Africa.
Retailing
Tesco has launched a legal challenge against the Competition
Commission’s call for the introduction of a new competition test into the UK
planning system. It would prevent supermarkets from opening in towns where
they already have a strong presence.
Pendragon Britain’s biggest car dealer has urged the Government to cut
taxes on petrol after revealing that consumers are steering clear of garage
showrooms. Trevor Finn, chief executive of Pendragon, said that the
Chancellor had to kickstart demand as motorists were buckling under record
pump prices and ever-higher “green” taxes on older vehicles.
EBay, the online auctioneer, is likely to face a barrage of lawsuits
after it was ordered to pay €40 million (£31.5 million) in damages to LVMH,
the French luxury goods group, for the sale of fake hand-bags, perfumes and
haute couture on its website. The Paris Commercial Court said that eBay had
committed “serious faults” through its failure to keep counterfeit goods off
its site.
Matalan, the clothing and homewares retailer taken private by its
founder John Hargreaves in 2006, has reported an 89 per cent rise in pre-tax
profit to £53.2 million for the year to March 1. The group said that the
higher profits reflected tighter stock control and £11 million of cost
savings.
ASOS, the online clothing retailer, is drawing up plans for an
international expansion after defying the consumer slowdown to announce a
doubling in full-year pre-tax profits to £7.3 million. Sales in the year to
March rose 90 per cent.
Instore, a variety store retailer, said that it was still in talks with
a third party regarding a possible offer for the company and that there was
no certainty that an offer would be made at or above its present share
price. The majority of Instore’s equity is owned by two shareholders —
Tradegro and the non-executive director Abdul Aziz Tayub.
Support
services
Serco Group said that it remained on track to deliver on expectations
for 2008, adding that its performance remained strong and its markets
continued to offer substantial opportunities, underpinning revenue and
margin guidance.
Technology
Samsung said it would spend $529 million (£265.7 million) to boost
production of next-generation organic displays to six times the present
level by the middle of next year. The increase in spending comes as panel
makers compete for a share of the growing market for these displays, which
make better-quality screens.
RM, the education technology company, said that the Cabinet Procurement
Committee had approved the appointment of the company as selected bidder for
a £25 million contract to provide managed ICT services for schools in
Haringey, London.
Telecoms
TeliaSonera The future of the Nordic telecommunications provider was
unclear yesterday after France Télécom withdrew a merger proposal.
Vodafone shares closed up 5.2 per cent at 149.15p after it announced a
deal with MySpace, News Corporation’s social networking site, under which
footage from Vodafone-sponsored music events will be available to the site’s
users. The service will be offered in Germany, Italy, Spain and Britain.
Cable & Wireless, the telecoms company, tabled a 180p-a-share offer
for Thus, its rival company, which values the company at £329 million and
was an increase on an earlier bid of 165p a share. Thus said that it was not
prepared to recommend the bid to shareholders.
Carphone Warehouse said that shareholders had approved the sale of 50
per cent of its European and American retail interests to Best Buy for about
£1.1 billion.
Transport
Chinese airlines, such as Air China and China Southern Airlines, have
been given the go ahead to increase their surcharge for domestic fuel by up
to 50 per cent to offset the impact of rising oil prices.
Utilities
Renewables Ports and property group Forth Ports unveiled a renewable
energy joint venture with Scottish and Southern Energy that looks set to
create up to 200 jobs. The initiative, Forth Energy, will involve renewable
energy projects developed at Forth Port’s sites across England and Wales.
Drax, the power generator, expects to report earnings above £400
million analyst consensus forecast because of its power sales contracts and
favourable conditions in the commodity markets.
