Key figures in the UK banking world announced their dismay and subsequent anger after Alistair Darling confirmed plans for his 50 per cent "supertax" on banks’ bonus pools. The reaction from one leading UK going as far as went as far as describing the measure as an "assault on the prudent and the profitable". Bob Diamond, the president of Barclays continued to voice his displeasure by implying that that bankers and institutions were "mobile and they might desert London’s financial centre. The one-off tax will be imposed on banks rather than individuals, and will also apply to building societies

Similar moves to tax bonuses on bankers are also being considered by both Germany and France, with the German banks even considering the imposition of self-discipline on pay while France is in favor of matching the U.K.’s planned one-off tax on bank bonuses, and is likely to slap such a levy on bonuses to be paid out in 2010 for the past year.

According to a report released last week, London could be pushed into third place as a global financial centre by Shanghai within the next ten years.

Global business leaders apparently are becoming increasingly convinced that the West is facing accelerated competition from the East, with more than 90% of company owners and managers in Shanghai and Mumbai are confident in their economic outlook for 2010, compared to 22% of business leaders in London and 35% in New York.

Meanwhile to add to the U.K.’s banking system’s woes, comes the news that the Financial Services Authority intend strengthening their rules governing the amount as well as the quality of capital that banks in the U.K. need to hold against potential losses as part of an effort to implement changes to European Union rules. Their proposals are expected to result in a £33 billion, or 5%, increase in the total amount of capital held by banks, with the bulk of this required to be held by the start of 2011.

On the FTSE before the weekend, shares in Barclays Plc , climbed 4.6 percent, to 290.75 pence, possibly on news that the bank is about to eliminate around 150 jobs from its retail and commercial banking operations in India. With the news that British Airways Plc have decided to retain p full ownership of its OpenSkies subsidiary, their shares rose 1.1 percent, to close on 202.3 pence.

The U.K.’s largest CD retailer HMV Group Plc posted a loss after tax of £17.8 million in the six months period ending Oct. 24, an improvement on the loss of £19.8 million pounds in the year-earlier period. Despite the relatively positive news their stock dropped 0.2 percent to 106.6 pence.

Independent News & Media Plc, publisher of The Independent Newspaper is looking to reduce their holding in APN News & Media Ltd. One the news their shares advanced 0.2 cent to 10 cents.

As the Cadbury takeover sage continues, news that rift has opened up between Hershey’s management and the Hershey Trust over whether to trump Kraft’s hostile bid for the company. The Trust, a philanthropic body that controls Hershey, is pressing the management to go ahead with an offer while the board argues that a bid financed by extra debt could put the company’s investment grade rating at risk. Cadbury chief executive Todd Stitzer has let it be known that he considers Hershey a better cultural fit than Kraft. On Monday morning, Cadbury is expected to make a formal rejection of that Kraft offer but is unlikely to make any official statements regarding their talks with Hershey, as a formal bid has yet to table. However the company is expected to release an interim update of their trading figures.

Sterling lost ground against the dollar before the markets closed for the weekend whilst rising slightly against the Euro.

• Pound/US dollar 1.6221
• Pound/Euro 1.1081

The FTSE 100 Index rose 17.2 points to close on 5,261.57. The index has shown a 50 percent recovery since March and looks to be heading for its biggest annual gain since 1997.

The US House of Representatives has approved the most sweeping changes to the country’s financial sector since the Great Depression of the 1930s. The 223 to 202 vote is a victory for President Obama who has made financial reform one of his main goals. The bill aims to create a new agency to monitor consumer banking transactions and give the government powers to break up companies that threaten the economy. The US Senate will have to pass the bill before the president can sign it. The legislation would give regulators the power to dismantle the companies in a way which ensures shareholders and unsecured creditors, not taxpayers, bear the losses. It also hopes to strengthen the powers of the Securities and Exchange Commission to detect irregularities that could provide an early warning of fraudulent investment schemes. Plans to regulate the vast $600 trillion market in products called derivatives are also included.

On close of trading Friday, the Dow Jones Industrial Average had risen 186 points to 10,471.5 and the NASDAQ was also up around twenty points to 2,190.31

Kenneth Feinberg, the White House "pay czar" has extended limits on the pay of executives at four US firms who were given government bailout money.

Under the restrictions, employees will not be able to earn more than $500,000 (£307,770) per year.

The companies involved are Citigroup, AIG, General Motors and GMAC, with the rule applying to the 26th to 100th highest paid staff. The top 25 at each firm had their pay limited in October. Free of any such pay restrictions are the

Bank of America who succeeded in repaying their "bailout "money as recently as this week, while Chrysler and Chrysler Financial were exempted because total pay for their second-tier executives is already under the magic $500,000 barrier.

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Tags: AIG, Alastair Darling, Bank, Bank of America, Banking, Barclays Plc, Bob Diamond, British Airways Plc, British Economy, British Pound, Cadbury, Citigroup, Currency, Dow Jones, Economics, Economy, Financial News, Financial Services Authority, FTSE, General Motors, GMAC, Hershey Trust, HMV Group Plc, Independent News & Media Plc, Kraft Foods, Money, Money Markets, NASDAQ, OpenSkies, Recession, Stock Markets, Stocks and shares, supertax, UK Banking, UK Banks, UK Economy, UK Recession

The Treasury is looking at introducing tougher requirements on bankers’ pay disclosure than those proposed last week by Sir David Walker.

Alistair Darling, the chancellor, announced a formal consultation exercise on Monday on whether legislation should go further than the Walker review, which proposed that banks should disclose the numbers of employees earning above £1 million.

Treasury officials said there was a case for greater disclosure, for example starting at £750,000 and having narrower bands.

The news came as the chairman of the Financial Reporting Council; Sir David Hogg signalled that his review of broader corporate governance at UK listed companies, published on Tuesday, would be more far-reaching than Sir David’s recommendations on bank boards.

U.K. house prices rose for a fourth month in November as the shortage of homes for sale sustained the property market, according to industry sources.

The average cost of a home in England and Wales climbed 0.2 percent from October to 156,700 pounds, meaning that prices are down 11 percent from the 2007 peak. While U.K. mortgage data due today may show loan approvals at the highest level in 19 months in October, rising unemployment may curb house price increases next year. According to Bank of England Governor Mervyn King, the economy’s recovery from the longest recession on record isn’t “particularly strong.”

Dubai World, the investment company whose $59 billion of liabilities caused stock markets across the World some anxiety will ask all creditors for a “standstill” agreement as it negotiates to extend maturities according to Dubai’s Department of Finance. Reports are that the plan will not be acceptable to most investors and would be considered a default. Dubai, the second-biggest of seven states that make up the United Arab Emirates (UAE)., and its state-owned companies borrowed $80 billion to fund an economic boom and diversify its economy. The global credit crisis and a decline in property prices hurt companies like Dubai World as they struggled to raise loans and forced the emirate to turn for help to Abu Dhabi, UAE capital who hold 8 percent of the world’s oil reserves.

Barclays Bank will book a gain close to £1 billion more than expected on the sale of its asset management arm to BlackRock thanks to a 62 per cent rise in the US fund manager’s shares since the deal was struck. The UK bank on Tuesday completed the £9.1 billion sale of Barclays Global Investors (BGI) to BlackRock, which becomes the world’s biggest asset manager with more than $3,000 billion .Barclays has taken a 19.9 per cent stake in BlackRock as part of the cash-and-shares deal. The sale price was £6.2 billion higher than the value of BGI in the accounts of Barclays, and £900 million more than estimated when the deal was agreed in June.

Thomas Cook will refinance their £1.65 billion loan facilities by next summer but has no plans to use a rights issue, according to a leading company representative. The tour operator’s current facilities are due to expire in May 2011. The company has predicted that 2010 would be a tough trading year, and the refinancing plans were announced as Thomas Cook revealed that net debt had more than doubled from £292 million in 2008 to £675 million. Explanations were that the additional debt had come from completing its share buy-back programme, acquisitions and the need for increased working capital arising from late holiday bookings.

British Airways Plc has announced that they are to conduct a series of feasibility studies and tests to see if their planes can run on bio-fuels. The airline will run the trials in conjunction with Rolls-Royce. On that piece of good news for the environment, shares in BA shares gained 0.6 pence percent, to 193.8, while Rolls-Royce rose 0.9 pence to 476.4.

Cadbury Plc Chief Executive Officer’s Todd Stitzer has signaled his support for a possible bid by U.S. candy maker Hershey Co. in preference to the hostile bid from Kraft. Meanwhile JPMorgan Chase & Co. and Bank of America Corp. are being lined up to provide Hershey a further $7 billion in finance. Cadbury’s shares later advanced 3 pence to 806.

Drinks manufacturer C&C saw its share price jump almost 9 per cent yesterday on the back of an announcement that it is to acquire the British cider assets of Constellation Brands owners of the Gaymer Cider Company, the UK’s second largest cider manufacturer, for £45 million.

The transaction is expected to be completed by mid-January 2010, and will broaden C&C’s existing cider offering beyond Bulmers and Magners to include brands such as Blackthorn, Olde English as well as Gaymers.

Under the terms of the deal C&C will also acquire a cider production facility in Shepton Mallet, Somerset, and a distribution warehouse in Bristol. As well as strengthening its position in the UK cider market, the acquisition is expected to shift C&C’s focus away from on-trade sales towards the faster-growing off-trade distribution channel.

On the Foreign Currency exchanges, the Pound rose against the dollar, yen and Swiss Franc whilst falling slightly against the Euro,

• Pound/US dollar 1.6605
• Pound/Euro 1.1002
• Pound/Japanese Yen 144.5284
• Pound/Swiss Franc 1.6589

Fears of a further fall in share value on the FTSE 100 were dispelled as shares continued to recover, closing in Wednesday on 5312.77, up 67 points from the weekend.

US shares headed higher on Tuesday after a flurry of economic data pointed to a rebound in the economy Better reports on construction and housing suggested there was something to look forward to.

The housing figures, from the National Association of Realtors, provided the best hopes for growth, showing sales agreements 3.7% up on the month and 32% higher than this time last year.

The Dow Jones index closed up 126.66 points, or 1.2%, on Tuesday to reach 10,471.50 points, while the NASDAQ also rose, closing the day on 2175.8.

Australia’s central bank lifted interest rates for a third consecutive month on Tuesday amid signs that inflationary pressures were building in an economy expected to return to “trend” growth of 3.25 per cent next year. The 25 basis point rise to 3.75 per cent matches increases in the last two months and is part of the Reserve Bank of Australia’s strategy of weaning the economy off historically low interest rates. The benchmark rate fell to a 49-year low of 3 per cent earlier this year.

The continuing weakness of the US dollar has pushed up demand for gold to another record level. Gold struck £722.69 an ounce on the London Bullion Market, after striking historic peaks over recent weeks. The dollar index fell 0.8% against a number of currencies as early fears regarding the Dubai debt crisis continued to wane across international markets. Demand for gold has been fueled by moves by central banks to diversify assets.

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Tags: Alastair Darling, Bank of America Corp, Bank of England, Banking, Barclays Bank, Barclays Global Investors, BlackRock, Blackthorn, British Airways Plc, British Economy, British Pound, Bullion Market, Bulmers, C&C, Cadbury Plc, Dow Jones, Dubai World, Economy, Financial News, Gaymer Cider, JPMorgan Chase & Co., Magners, Mervyn King, Money, NASDAQ, National Association of Realtors, Olde English, Recession, Reserve Bank of Australia, Rolls-Royce, Shepton Mallet, Sir David Hogg, Sir David Walker, Stock Markets, Stocks and shares, Thomas Cook, Todd Stitzer, UAE, UK Banks, UK Economy, UK government, UK Recession, United Arab Emirates

According to a survey for the Confederation of British Industry (CBI), UK companies will be relying much less on banks for credit in the future, instead pinning their hopes funding from bonds and equities.

The survey showed that half of the companies will be looking to decrease financing from bank debt after the recession winds down. More than forty percent of the companies who took part in the survey said that they could see no change in bank funding.

The new Supreme Court is expected to rule on Wednesday on whether overdraft charges can be assessed for fairness under the Unfair Terms in Consumer Contract regulations. If the Supreme Court rules in favour of consumers, banks could be forced to pay out hundreds of millions of pounds if the overdraft charges levied were ruled to be unfair, and the public could seek to recoup losses through charges on current accounts and ATM withdrawals.

The British Bankers’ Association announced that the number of home purchase loans approved by banks in October was almost double that of a year ago, with 42,238 mortgage applications being approved. The figure was slightly higher than the 42,073 loans approved in September, while they almost double what they were from the same period on 2008. Net mortgage lending rose by £3.1 billion pounds in October, the same figure as in September.

Up to their knees in this week were the Association of British Insurers (ABI), who have received between 500 and 1,000 claims relating to recent flooding in Cumbria and southern Scotland where claims totaling up to £100 million have been recorded. At least 1,500 homes were affected by the floods, six bridges are reported to have collapsed and 5,000 households were left without power. The ABI announced that it was difficult to ascertain how many more claims could be expected. Insurers have said they might have to reconsider current arrangements, whereby all homes in the UK are offered flood insurance

Britain’s biggest mortgage lender, Lloyds Banking Group Plc is scheduled to publish results of a debt exchange. Meanwhile it was reported that the banking group is in talks with Execution Ltd. and a deal may result in the creation of a joint venture. Shares in Lloyds dropped 2 percent to 88.15 pence

Following its successful merger with Spain’s Iberia Lineas Aereas de Espana SA, British Airways Plc could revive plans for a tie-up with Australia’s Qantas Airways Ltd. Chief Executive Officer Willie Walsh has suggested that the Iberia model would allow Qantas to retain a separate brand and home base.

British Airways has agreed to combine with Iberia to boost its network amid a slump in international travel that contributed to a record first-half loss. The carrier abandoned merger talks with Qantas last year after the airlines failed to agree on who would control the new company. Shares in BA gained 1.6 pence, or 0.8 percent, to 202.6 pence.

Rumours abound that Nestle SA has thrown their cap into the ring in the who will buy Cadburys circus. The company is said to be weighing options would challenge Kraft Foods Inc.’s offer as well as a potential move by Hershey Co.

Cadburys are seemingly expecting a friendly bid from Hershey Co. if it can arrange the financing, with the company’s controlling trust supposed to be in favour of a $17 billion bid for Cadbury. The only thing that is certain is that Cadbury’s stock keeps on rising, up 1.2 percent to 800.5 pence.

Marks & Spencer Group Plc’s incoming chief executive officer Marc Bolland, has announced that he will focus on growth on foreign markets especially China, when he takes the reins next year. The markets remained indifferent, as shares dropped or 0.1 percent, to 380 pence.

The pound rose against the dollar, while falling against the Euro and the yen on continued concerns regarding the U.K. budget deficit.

• Pound/US dollar 1.6581
• Pound/Euro 1.1077
• Pound/Japanese Yen 146.6185
• Pound/Swiss Franc 1.6718

The FTSE 100 Index jumped by 82.55 points to 5,323.98, while the FTSE 250 rose by 14 points to close on 9,181.

In the US, the National Association of Realtors announced that sales of previously-owned US homes jumped by 10.1% in October as buyers rushed to take advantage of tax credits, which have now been extended.

Sales hit a seasonally adjusted annual rate of 6.1 million, up from a revised 5.54 million in September. First-time buyer tax credits had been due to expire at the end of November, but have been extended until 30 April.

The jump in October home sales was the biggest in almost three years.

The Dow Jones average took a turn for the better after the weekend, up 93 points to 10411.5 The NASDAQ rose seventeen points to finish up on 2163.73

Computer hardware giant Hewlett-Packard (HP) has announced a rise of 18% in profits for the third quarter, despite that the fact that their sales had fallen for the period. A spokesman for HP revealed that the company’s major cost-cutting initiatives had been the driving force in the £1.4 billion profit earned during the period. The firm has cut 6,700 jobs this year to trim costs.

The price of gold has hit a new all-time high, boosted by continued concerns about the weakening dollar.

Gold hit a record of $1,173.50 an ounce, up almost 2% from Friday close.

The expectation that US interest rates will remain low has put pressure on the dollar, making both gold and oil more attractive as an investment.

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Tags: ABI, Association of British Insurers, ATM withdrawals, Bank, Banking, British Airways Plc, British Bankers Association, British Economy, British Pound, Cadburys, CBI, Confederation of British Industry, Credit, Currency, Dow Jones, Economy, Execution Ltd, Financial News, FTSE, Gold, Hershey Co, Hewlett-Packard, HP, Iberia Lineas Aereas de Espana, Interest Rates, Kraft Foods, Lloyds Banking Group Plc, Marc Bolland, Marks & Spencer Group Plc, Money, Money Markets, NASDAQ, National Association of Realtors, Nestle SA, Oil, Qantas Airways Ltd, Stock Markets, Stocks and shares, Supreme Court, UK Banks, UK companies, UK Economy, UK government, UK Recession

Sweeping spending cuts and tax increases will be required across the industrialized world over the next decade to bring public finances under control following the economic crisis, the International Monetary Fund warned on Tuesday. The IMF projected that on current trends, even assuming some discretionary fiscal tightening next year, government debt in the advanced G20 economies would reach 118 per cent of gross domestic product in 2014.

The Fund warned against assuming that current low borrowing rates for these nations in the bond market would prevail forever, releasing research suggesting that the projected increase in government debt would result in a roughly 2 percentage point increase in government bond yields.

HSBC is to shed another 4 per cent of its UK workforce as pressure mounts across the banking industry to cut costs. The global bank said it would cut about 1,700 jobs in back-office functions, affecting mainly collections and credit card operations, in the next 12 to 18 months. The jobs would mostly be lost from regional centres in southern England. It also aims to add 400 to 500 jobs in Birmingham in that time. HSBC had previously announced the loss of 1,200 jobs in March and 500 in December last year. Of these, the bank said it had redeployed some 500 staff and would hope to redeploy a similar proportion from the latest round of job cuts.

Legal & General (LGIM) sought to defend itself against the idea of a break-up of its businesses as it reported its lowest level of quarterly sales figures for at least seven quarters on Tuesday.

The life and pensions said that keeping its annuity, protection and asset management businesses under one roof brought valuable “synergies” across all three.

Tim Breedon, chief executive, said that about 30 per cent of its new business either came from cross-selling or was business the company would not have won if it did not have all three elements.

Mr Breedon highlighted stronger-than-expected cash flow at the group and the performance of LGIM, the group’s asset management arm, which attracted net inflows of £12.2 bn ($20bn) over the first nine months, outstripping the £11.1 bn seen at M&G, Prudential’s asset management arm.

Marks and Spencer has confirmed it will start selling branded goods at its stores across the UK.

It will mean 400 household brands, such as Kellogg’s and Coca-Cola, will be sold alongside M&S’ own products in areas such laundry, beer and pet food.

The decision comes after successful trials in stores in the north-east and south-east of England.

The announcement came as M&S reported profits of £306.7 million for the six months to September.

The figure was little-changed on the profit of £307.8 million made in the same period last year.

Associated British Foods (ABF LN): The maker of Silver Spoon sugar reported a 12 percent rise in full-year group revenue. The company also said it’s cautious about the outlook for the U.K. consumer. The shares gained 5.5 pence, or 0.7 percent, to 833.

Aviva Plc (AV/ LN): The U.K. insurer raised 1.02 billion euros ($1.5 billion) selling stock in its Dutch insurance unit Delta Lloyd NV, pricing the shares near the low end of its forecast range after insurance companies slumped.

The U.K.’s biggest insurer by market value sold 63.5 million Delta Lloyd shares at 16 euros each. Aviva had sought 15.50 euros to 19 euros a share. Delta Lloyd will begin trading today in Amsterdam.

The shares rose 5.5 pence, or 1.4 percent, to 389.1.

British Airways Plc (BAY LN): Europe’s third-biggest carrier may face its first cabin-crew strike since 1997 before the end of the year as the union representing flight attendants at Europe’s third-largest airline prepares to vote on a walkout.

Members of the Unite union will meet on Dec. 14, by which time union leaders aim to have the results of a strike vote. The stock dropped 1.9 pence, or 1 percent to 179.9.

GlaxoSmithKline Plc (GSK LN): The U.K.’s largest drugmaker received a letter from Connecticut Attorney General Richard Blumenthal saying he was investigating allegations of price gouging, according to a faxed statement. The shares fell 3 pence, or 0.2 percent, to 1,247.

Cadbury Plc (CBRY LN): The U.K. confectioner is targeting an “unrealistic” price as a starting point for talks about a merger with Kraft Foods Inc., the Sunday Telegraph said, citing people it didn’t name. Kraft will probably make a hostile takeover bid if Cadbury’s management doesn’t support a tie-up. Reports have it that Kraft is preparing another bid for Cadbury which will be put to investors within the next 10 days. The newspaper did not say where it obtained the information. The stock fell 2.5 pence, or 0.3 percent, to 770.5.

DUTCH parcel firm TNT, which is trying to cash in on the disruption caused by the UK’s postal strikes, yesterday posted better-than-expected quarterly results due to cost-cutting and highlighted signs of revival in its business parcels arm. TNT, which has lobbied the government to allow it to launch a door-to-door postal service to challenge the strike-hit Royal Mail, said third quarter profits dipped 14.4 per cent to €179m (£162m), although margins recovered to nearly match last year’s levels. The group uses the Royal Mail for the so-called “final mile” of its British postal network, but has been trialling its own door-to-door letter deliveries in several areas including Merseyside, using orange-clad postmen. TNT said UK business-to-business parcel volumes had increased about 10 per cent in the few couple weeks since the strikes by the Communication Workers Union kicked in, but a spokesman said the rise had come too late to affect the third quarter numbers.

General Motors (GM) has cancelled plans to sell a majority stake in its European car business Opel, including its UK brand Vauxhall.

The US giant said in a statement that its board had made the decision because of "an improving business environment for GM over the past few months".

GM had agreed to sell Opel and Vauxhall to Canadian car parts firm Magna.

It added that it would now be seeking aid for Opel from the German government and other European states. GM added that it had also come to its decision because of the importance of Opel and Vauxhall to its global strategy. General Motors (GM) has confirmed that it plans to cut 10,000 jobs across its European car unit Opel, which includes the Vauxhall brand in the UK. The announcement comes a day after GM said it was cancelling its deal to sell Opel to Canadian car parts firm Magna. Unions in Germany said workers would begin walk-outs from Thursday in protest at GM’s decision.

The German government, which had backed the sale of Opel, demanded GM repayment of a 1.5bn euro ($2.2bn; £1.3bn) loan.

The pound fell for a second day against the dollar and snapped a five-day gain versus the euro on speculation that forced asset sales by banks may weaken the country’s financial institutions.

Billionaire Warren Buffett’s investment firm is to take control of the second-biggest US railroad, in what is said to be his biggest deal yet.

Berkshire Hathaway agreed to buy the 77.4% of Burlington Northern Santa Fe (BNSF) it does not already own for about $26bn (£16bn) in cash and stock.

BNSF is the biggest US hauler of products such as corn and coal.

Mr Buffett said that the deal was "an all-in wager on the economic future of the United States". Including past investment and the assumption of $10bn of BNSF debt, the deal is valued at $44bn. Warren Buffett on Tuesday struck the biggest deal of his life with the $26.6bn purchase of Burlington Northern Santa Fe, one of the largest US railroad operators, in what the billionaire investor called an “all-in wager” on America’s economic future. The cash-and-shares deal by Mr Buffett’s Berkshire Hathaway, which already has a 22.6 per cent stake in BNSF, caps a long search by the legendary investor for an “elephant” deal to deploy his vast cash pile. The takeover deepens Mr Buffett’s exposure to the US-focused old-economy sectors that have long been the backbone of his empire alongside financial services, and underlines his confidence in a rebound in domestic growth

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Tags: Associated British Foods, Attorney General, Aviva PLC, Bank, Bank of England, Berkshire Hathaway, BNSF, British Airways Plc, British Economy, Burlington Northern Santa Fe, Cadbury Plc, Coca-Cola, Credit Crunch, Delta Lloyd, Economics, Economy, Employment, Financial News, General Motors, GlaxoSmithKline Plc, GM, HSBC, International Monetary Fund, Kellogg's, Kraft Foods Inc, Legal & General, LGIM, M&G, M&S, Marks and Spencer, Money, Opel, Prudential, Recession, Retail, Richard Blumenthal, Royal Mail, Silver Spoon, Sunday Telegraph, Tim Breedon, TNT, UK Banks, UK Economy, UK government, UK Recession, Unite, Vauxhall, Warren Buffett

The Bank of England has announced that they are to inject a further £25 billion into the UK economy. The move is seen as an almost desperate bid to drag the economy reluctantly out its longest recession on record, after the announcement last week that the UK economy had shrank 0.4% in the third quarter. The BOE’s gesture extends the quantitative easing programme to a total of £200 billion, meaning 14% of UK’s gross domestic product (GDP). The £25 billion will be released over the next three months.

According to that perennial bearer of bad news, the International Monetary Fund (IMF), sweeping spending cuts and tax increases will be required across the industrialised world over the next decade in order to bring public finances under control following the economic crisis, The IMF projected that on current trends, even assuming some discretionary fiscal tightening next year, government debt in the advanced G20 economies would reach 118 per cent of gross domestic product in 2014.

As pressure mounts across the banking industry to cut costs, HSBC have announced that is to pay off another four per cent of their UK workforce The job cuts would affect around 1,700 HSBC staff involved in back-office functions, and would come into effect over the next 12 to 18 months, and would mostly be lost from regional centres in southern England

Marks and Spencer have stepped into new territory with the announcement that they will begin to market branded goods at their stores across the UK.

This will mean the unfamiliar site of such household brands as Kellogg’s and Coca-Cola, appearing on the M&S’ shelves alongside their own label products. M&S have reported profits of £306.7 million for the six months to September, down just a smidgeon (£1.1 million) from the same period in 2008.

Makers of Silver Spoon sugar, Associated British Foods have reported a 12 percent rise in full-year group revenue. Their shares gained 5.5 pence to close on 833.

Meanwhile, Europe’s third-biggest airline, British Airways Plc is staring in the face of a cabin-crew strike, which could happen before the end of the year. The Unite union representing flight attendants are preparing to vote on a walkout on December 14th. On that less than encouraging news, stock in BA dropped 1 percent to 179.9 pence.

U.K. confectionary giant Cadbury Plc is said to be setting an unrealistically high price as their starting point for merger talks with Kraft Foods Inc. Reports have it that Kraft is preparing another bid for Cadbury which will be put to investors within the next 10 days, and Kraft will probably make a hostile takeover bid if Cadbury’s management doesn’t support a tie-up The uncertainty in the air caused Cadbury’s stock to fall 0.3 percent to 770.5 pence.

Dutch parcel firm TNT, busily trying to cash in on the disruption caused by the UK’s postal strikes have lobbied the government to allow it to launch a door-to-door postal service to challenge the strike-hit Royal Mail. The group has been testing out its own door-to-door letter deliveries in several UK areas. A spokesman for the company said that UK business-to-business parcel volumes had increased about 10 per cent in the last couple weeks since the strikes began, but added that the rise had come too late to affect the third quarter numbers, which, in any event were higher than expected.

General Motors (GM) have sensationally cancelled their plans to sell a majority stake in its European car business Opel, including its UK brand Vauxhall to Canadian car parts firm Magna.

The US giant announced that their board had made the decision because of "an improving business environment for GM over the past few months", as well as marking the importance of Opel and Vauxhall to their overall global strategy. Unions in Germany said workers would begin walk-outs from Thursday in protest at GM’s decision and the German government, who had backed the sale of Opel, demanded that GM repayment of a 1.5 billion Euro, (£1.3 billion) loan. British unions were reported to be delighted with the news of GM’s rapid reversal, in the hope that the move will result in increased protection of Vauxhall jobs in the UK

The pound recovered from early losses against the dollar on Thursday after the Bank of England extended its asset purchase plan, but by less than forecast.

• Pound/US dollar 1.6606
• Pound/Euro 1.1162
• Pound/Japanese Yen 150.6643
• Pound/Swiss Franc 1.6881

The London equity market took a decided upturn as news of an extension to the Bank of England’s economic stimulus measures broke. At close of trading, the FTSE 100 was up to 5,125.64.

The FTSE 250 limped back above the 9,000 point mark to close on 9,020.40

US shares have risen strongly over the last 24 hours on the news that US business productivity has risen at its highest rate for six years. Official figures showed that productivity, as measured by output per hour of work, rose at an annual rate of 9.5% between July and September.

The data suggests that the increase in productivity may lead to an increase in demand for staff.

The US Dow Jones index continued to make serious bounds forward closing on Thursday on me recoveries from the last two days trading; up 61 points to 10005.96. The NASDAQ also climbed, reaching 2105.32.

Billionaire Warren Buffett’s investment firm, in what is said to be their largest deal in their history, are to take control of the US’s second-biggest US railroad.

Berkshire Hathaway have agreed to buy the remaining 77.4% of Burlington Northern Santa Fe (BNSF) that it does not already own for about $26 billion (£16 billion), with the deal to be financed with cash and stock. .

Mr. Buffett proudly stated that the deal was "an all-in wager on the economic future of the United States and underlines his confidence in a coming rebound in domestic growth.

Gold held its price at almost $1,100 an ounce after hitting a record high in the previous session while oil prices dipped and base metals edged lower

financial

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Tags: Associated British Foods, Bank, Bank of England, Banking, Berkshire Hathaway, BOE, British Airways Plc, British Economy, British Pound, Burlington Northern Santa Fe, Cadbury Plc, Coca-Cola, Currency, Dow Jones, Economy, Financial News, FTSE, General Motors, GM, HSBC, IMF, International Monetary Fund, Kellogg's, Kraft, Magna, Marks and Spencer, Money, Money Markets, NASDAQ, Opel, Recession, Retail, Royal Mail, Silver Spoon, Stock Markets, Stocks and shares, TNT, UK Banks, UK Economy, UK government, UK Recession, Vauxhall, Warren Buffett

The last two years have been tough for UK retailers, especially those whose economic survival is based around them being on the High Street. An excess of selling space as well as having to cope with spiraling costs have had a serious negative impact on the retail industry and forecasts are that a number of well known retail chains could go out of business.

Recent statistics show that retail sales per square foot have fallen to around £355 pounds in 2009, down ten percent from their 2007 peak.
Encouraged by the seemingly never ending spending boom, the retail industry added more than 50 million square feet of selling space over the past decade.

The UK’s largest private company Ineos is set to announce on Thursday that it has secured vital agreement from creditors to reset the terms of its $10.3 billion debt burden.
Ineos, one of the world’s biggest chemicals companies, have been in long-running talks with hundreds of creditors about securing additional breathing space under the terms of its debt, after an unprecedented fall in demand and limited market visibility that began last year.

The success or failure of Ineos’s negotiations will be closely observed by a number of other companies in a similar situation who need time as they struggle against the downturn and require to renegotiate large and complex debt structures, involving a variety of different investors,.

The sale of Gatwick, the second-largest UK airport, by Spain’s Ferrovial has been hit by the apparent withdrawal of the last bidder from the contest.

The bidder, a consortium led by Manchester Airport Group and Borealis, the Canadian infrastructure fund, have apparently refused to raise its final bid to meet Ferrovial’s asking price of about £1.4 billion, leaving a gap of at least £100 million to the price being sought by BAA, the UK airports group that is the UK subsidiary of Ferrovial.

Global Infrastructure Partners, pulled out of the bidding in May, when its bid of about £1.36 billion was rejected by Ferrovial. Both groups apparently are interested in acquiring Gatwick, regarded as being one of the most attractive airport assets on the world market. However both now are increasingly reluctant to meet the target price set by BAA, possibly due to recent deterioration in the airport’s traffic performance.

London equity markets fought their way higher, building on the gains of the previous three sessions, although yesterday’s rise was less dramatic, up just 15.38 points to 4361.84. On the other hand, the FTSE 250 stuttered on Thursday after a few days of steady increases. On the day it fell 18, 22 points to close on 7,554.11

Sterling lost ground on Thursday against all the major European currencies.

Pound/US dollar 1.6392
Pound/Euro 1.16
Pound/Japanese Yen 153.6779
Pound/Swiss Franc 1.7618

Stateside, JPMorgan Chase became the second major US bank to report a major profit upsurge for the second quarter. Net profit totalled $2.72 billion (£1.6 billion), making for an increase of 36% on the same period last year. Revenues at the company rose 41% to a record $27.7 billion, impressive but still less than the $3.44 billion that rival Goldman Sachs reported.

The prospect of a bankruptcy and not profits is hanging over the US mid-market lender CIT as hopes of rescue plan led by the government were becoming increasingly remote. A spokesman for CIT announced “There is no appreciable likelihood of additional government support being provided over the near term,” CIT has battled a liquidity crisis and will be required to pay $1 billion of debt that matures next month

On Wall Street, the Dow Jones continued to rise, on the day by 95.61 points to 8711. 82 while the NASDAQ maintained a similar pace, closing up 22.13 points to 1885.03.

Internet search engine Google has seen better-than-expected quarterly results even as revenue growth slowed following the economic downturn.

Google reported net income reach $1.48 billion (£900 million) in the second quarter, compared to $1.25 billion for the previous year. Revenue rose by three percent for the period at $5.52 billion with more than half of that figure emanating from outside the US shores. Analysts reacted broadly positively to the company’s results, particularly their marked decrease in running costs.

China’s economy grew at an annual rate of 7.9% in the second quarter, an increase from 6.1% in the first quarter, thanks to the Chinese government’s substantial stimulus package.

The country’s rapid economic expansion is certainly bucking the global economic trend while most nations in the West continue to experience recession. Expectations in Beijing are that China will achieve 8% growth for 2009, compared to a predicted contraction of between 1% and 1.5% in the US. However, the Chinese government hastened to warn that significant economic challenges have to be overcome for them to achieve their goal.

Russia’s economy shrank 10.1 per cent in the first half of this year, a spokesman for the finance ministry announced this week, its worst decline since the early 1990s.
The credit crunch, falling commodity prices and a gradual devaluation of the state currency, the ruble, have combined to decimate a decade years of rapid economic growth. There are some positive signs however that the pace of economic decline is slowing as industrial production contracted at its slowest pace in six months.

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Tags: British Airways Plc, Economics, Economy, Financial News, Google, Ineos, Money Markets, Retail, Stock Markets, UK Credit Cards

Stephen Hester, chief executive of Royal Bank of Scotland will be expected to jump up through a few flaming hoops next year following the public outcry over his pay award that could reach as high as £9.6 million for this year.

Hester will be given considerably tougher performance targets to meet next year to collect his maximum bonus, and will need to hit exacting goals on profitability and other measures, and not just the internally set RBS share price target set for his 2009 long-term incentive plan.

The news of Mr. Hester’s new deal came as UK Financial Investments, the government body that manages the state’s 70 per cent stake in RBS as well as 43 per cent of the Lloyds Banking Group holding, published its first annual report on Monday. The report made for grim reading, showing that the UKF’s stakes were trading at a paper loss of £10.9 billion as at the end of June.

On the FTSE, it was hats off to British Airways Plc and their Chief Executive Officer Willie Walsh. Shares in the airline advanced 5.5 percent to 126.6 pence after news that the company has secured backing from some investors for a share sale to boost the company’s finances.

Separately, the airline is prepared to improve the terms of a proposed merger with Iberia Lineas Aereas de Espana SA, and is willing to consider a 50-50 share swap ratio.
Shares in the military research company Qinetiq Group Plc rose by 1.5 pence, to 138. The company who split off from the U.K. defense ministry in 2006 reached an agreement on talks with trade union Prospect to avert a pay dispute.

The U.K.’s biggest reader of water meters Spice Plc suffered a fall 1.50 pence to 67.25 pence after reporting an increased full-year net income and stating that they remained confident of future prospects in a wider economic environment that remains “challenging.”

Having recovered from their debt struggles, specialist fabrics maker Low & Bonar have forecast their intention to issue a dividend by the end of the year.
The possibility arises as the company announced the disposal of its flooring division as well as raising £30 million from shareholders over the past year in an attempt to reduce debts that have quadrupled to reach £208 million in the year to May 2008.

In interim results, the group announced that their net debt was standing at £99 million at the end of May, just under three time’s analysts’ consensus for full-year earnings.
The company manufactures specialist materials for carpet tiles, road surfaces and architectural awnings.

The FTSE 100 continues its steady recovery, closing the day up 35.55 points to 4237.18. The FTSE 250 also continues to rise, on Tuesday by 132.29 points to end the day on 7,411.09.

The pound gained ground on Tuesday as rising equity markets boosted investor confidence and statements from Adam Posen ahead of his appointment to the Bank of England’s monetary policy committee, announced that sterling should continue to appreciate in the medium term.

Pound/US dollar 1.6328
Pound/Euro 1.1682
Pound/Japanese Yen 152.8168
Pound/Swiss Franc 1.7766

Wiping the slate with all of the analysts’ forecasts, US bank Goldman Sachs reported a net profit of $3.44 billion (£2.1 billion) for April to June, The rise in profit was put down to decreased volatility in stock markets, rises in global share prices as well as the bank’s increasing involvement in many firms’ rights issues and takeovers.

A spokesman for the bank announced that $6.65 billion had been earmarked for pay and bonuses in the quarter, making for an average of $226,000 per employee.
They can do so with impunity as Goldman recently paid off the $10 billion in government loans it had taken as part of a government bail-out programme.

There was optimism afoot on Wall Street as the Dow Jones index rose for the second day, this time by 27.81 points to 8359.49 while the NASDAQ continued its steady comeback, climbing by just 6.52 points to approach the 1800 mark 1799.73
.
According to a report from the Commerce Department, US retail sales rose by 0.6% in June. The increase followed May’s 0.5% gain, and was an improvement on analyst expectations of 0.4%. The increase in sales was largely led by the automobile and transport sector. Without their input, sales dropped 0.2%, their fourth straight decline.

Official figures have shown Eurozone industrial output also rose in May compared with April, the first month-on-month increase since August last year.
The information comes two weeks after official figures showed eurozone retail sales fell in May, while unemployment rose.

And just to remind us of the French Revolution, on Bastille Day workers at a failed French car parts supplier threatened to blow up their factory unless the company’s two biggest clients Renault and PSA Peugeot Citroen pay them extra compensation. Employees of the engine parts maker New Fabris have rigged up a series of gas canisters inside a factory workshop which they say will be detonated on July 31 if the two carmakers fail to pay €30,000 to each of the 366 workers facing unemployment. Financial analysts are still trying to figure out the logic behind the threat.

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Tags: Bank, British Airways Plc, Financial News, Iberia Lineas Aereas de Espana SA, Money, Royal Bank of Scotland, Stephen Hester, UK Financial Investments

US based fund manager BlackRock finally reached agreement late on Thursday to purchase the Global Investors wing of Barclays, pay $13.5 billion for the company. The deal, paid for in cash and shares, will make BlackRock the largest money manager in the world, handling in excess of £2,000 billion in assets.

Barclays as well as receiving around £5 billion in cash will also receive shares in BlackRock equivalent to close to 20 per cent of BlackRock’s current value.

While that particular deal did capture the imagination of the city, it was small potatoes when compared to the excitement created by the deal taking place in the hallowed corridors of Old Trafford in Manchester and the Bernabeu Stadium in Madrid. After almost two seasons of uncertainty, Manchester United eventually accepted a £80 million bid from Real Madrid for their gifted but petulant superstar player, Cristiano Ronaldo. If everything goes according to plan, the deal will be completed by the end of June and will not only break but shatter the World’s largest transfer record, set only a week previously, also by Real Madrid when they purchased the services of Kaka from AC Milan for £56 million. Obviously the global recession is yet to reach Madrid.

In the stock exchange, shares in Thomas Cook Group Plc jumped 10 percent to 235.75 on reports that Germany’s Rewe Group is interested in taking over the travel company.

Shares in the Indian Film Co Ltd jumped by a massive 48.5 percent after company whose core activity is investment in the Indian film industry posted a more than two-fold jump in full-year pretax profit, while announcing their confidence that next year will be just as strong.

Europe’s third-biggest airline British Airways Plc announced that their chief executive, Willie Walsh is to forgo his July salary owing to the “exceptionally challenging circumstances” facing the airline.” Despite Mr. Walsh’s noble gesture shares in BA remained unchanged at 145.6 pence.

Home Retail Group Plc, owners of the Argos and Homebase retail chains saw their shares rise 7.75 pence to 266 pence prior to the release of an interim management statement.

Overall, FTSE 100 rose again yesterday, this time by 25.12 points to finish on 4,461. 87 while the FTSE 250 rose 24.46 points to close on 7,754.44

Sterling has reached its highest level against the euro since the start of the year after data suggested the UK recession may be over.

The pound was worth 1.1758 Euros in early afternoon trading, up from the previous day’s high of 1.1672 Euros.
Pound/US dollar 1.6578
Pound/Euro 1.1758
Pound/Japanese Yen 161.9284
Pound/Swiss Franc 1.7735

US stocks made a recovery on Thursday on the back of some positive economic news from the Federal Reserve.

The Dow Jones rose 31.9 points to 8770.92, while the NASDAQ recovered by 9.29 points to close on 1862.3.
As part of a raft of executive compensation reforms, The salaries of the top 100 employees at seven US companies who have been recipients of government bail-out funds are due to be vetted by a “special master” named by US government officials. The administration is also expected to institute legislation that would force public companies to hold non-binding shareholder votes on executive pay every year. That news should set some corporate knees knocking.

According to reports from the International Energy Agency (IEA), demand for oil in 2009 looks like being higher than previously expected, although it would still be in decline from the previous year. Estimates are that daily global oil consumption will be 83.3 million barrels a day.

The increased demand added to signs that the worst of the global recession is over.

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Tags: BlackRock, British Airways Plc, British Economy, Cristiano Ronaldo, Financial News, Home Retail Group Plc, Stock Exchange, Thomas Cook Group Plc