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Darling announces that interest rates will remain low for the time being.

May 21st, 2009 by admin | Filed under Daily News, Recession, Retail, UK employment.

Chancellor of the Exchequer Alistair Darling is doing all that he can to create an atmosphere of ” business as usual “/ One of his measures announced yesterday is to allow interest rates to remain at the current and unprecedented low levels. Darling announced to leaders of UK commerce and industry at a conference on Wednesday that interest rates were “low and likely to remain low” for the meantime. The Bank of England, as cut borrowing costs 4.5 percentage points since October.

On the oil market, Royal Dutch Shell reported a sharp fall in first quarter profits followed rival energy group BP who announced a similar fate on Tuesday of this week. The only good news was that the loss was less than analysts had forecast, a net profit after tax of £3.3 billion, down by 50% from the same quarter in 2008.

After a long battle bravely fought and eventually lost, LDV the midlands based light van maker announced that they will have no option but to enter administration on May 6th. LDV regretted that administration would result in several thousand job losses, but they had given all hope of receiving a further bailout from the government, and understand that chances of selling the business as a going concern was now impossible.

The UK private equity company’s 3i’s have annoyed some of their major investors by announcing their intention of launching a rights issue, for up to £700million. The announcement comes after members of 3i’s board were briefed last week by their new chief executive Michael Queen who plans to use the funds to partially reduce the company’s £2billion debt burden. However investors have suggested that 3i could probably cut back on the debt through using existing cash flow as well as disposing of some of their investment portfolio.

U.K. stocks advanced yesterday on positive trading, encouraged by recoveries from both the banks and metal producers. The U.K.’s third-largest bank, Barclays, and Lloyds both rose by more than 8 percent, making up for what they had lost in the previous two days trading. Royal Bank of Scotland Group Plc also jumped by thirteen percent in the wake of positive profit forecasts. Kazakhstan’s largest copper producer, Kazakhmys increased their shale value by 5.9 percent (21 pence to 511). Vedanta, who holds the largest share of copper production in India, gained 5.7 percent (53 pence to 985.5) Global education service provider BPP Holdings Plc were the star of the day on the exchange as their shores rose 58 percent (213 pence to 578) on the announcement that the company had received a firm offer from Apollo Global for 620 pence a share.

Building giant Taylor Wimpey Plc rose by 8.5 percent, (3.5 pence, to 44.5.) on estimates that the company is not liable to announce any capital raising measure when it announces preliminary results tomorrow. Up and coming Scottish based manufacturer of semiconductors Wolfsan Microelectronics Plc (also jumped yesterday, up 12 percent (13.5 pence, to 125) the company announced that their cash position as well as their order book was strong.

On the day the FTSE 250 index rose by 1.49% or 93.35 points to 6351.92 while the FTSE 100 finished the session up 93.19 points, higher at 4,189.59 Sterling fell slightly against the dollar and the Euro and recovered against the Japanese Yen and the Swiss Franc:

Pound/US dollar 1.4807

Pound/Euro 1.1145

Pound/Japanese Yen 127.58

Pound/Swiss Franc 1.6425

Wall Street rose despite news that the US economy continues to contract led by the biggest export fall for 40 years in the first quarter of 2009, The US GDP contracted at a rate of 6.1% annually during the quarter, improving slightly on the 6.3% fall in the last quarter of 2008. The Dow Jones Average jumped up 168.8 to close at 8185.73. NASDAQ rose 38.13 points to close at over the 1700 mark, at 1711.95

Japan, reputedly the World’s second powerful economy who has been particularly hit hard by the global downturn, reported that their industrial output has risen in March for the first time in six months. Production rose by 1.6% in March following months of dramatic decline.
Shares in Asia were broadly higher on Wednesday thanks to some encouraging signs about company profits and the dissipation of worries about the effect of swine flu on the world economy.

Crude oil prices on Wednesday rose above the $50-a-barrel mark as traders shrugged off a bearish increase in US crude stockpiles and instead focused on a large drop in petrol inventories ahead of the driving season.

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