At one time, before the credit crunch implosion was ever thought of, credit cards seemed liked a really good idea. And the truth is, it still is. If placed in the proper hands.

However, in the days of easy credit, things got very out of hand. Credit card companies, on the constant look out for more paper profit, began to offer unreasonable levels of credit to the UK public, too many of whom took up the temptation to live now and pay later, without taking into account the long term implications. And the implications for too many people, especially young families starting out in life, is that they will be facing a future filled with uncertainty and debt.

However this situation appears to be drawing to a close thanks to proposed UK government legislation that will see an end to credit card company’ practices of raising a customer’s spending limits on their credit card without them requesting it. Another recent marketing tool that the credit card companies have adopted recently is to send cheques by post to their customers, These cheques, always unsolicited, present tremendous temptation to people who are struggling to make ends meet to “borrow their way out of trouble” Instead, they are only placing themselves in deeper financial trouble in the long term.

APACS, the UK trade association that provides a forum for financial institutions to discuss issues relating to the payments industry hastened to announce that its members did not raise the credit limits of borrowers with known financial problems. Currently it is estimated that credit card debt in the UK stands at a staggering £53 billion.

Consumer Affairs Minister Gareth Thomas has expressed his concerns, both on the amount of credit card debt in the UK. With the average adult carrying a debt of close to £2,000 in addition to their other financial commitments.

” We are concerned that people may be tempted to borrow irresponsibly if credit card companies increase borrowing limits without this being requested by customers, or send out unsolicited credit card cheques,” said the Minister “It’s vital we protect consumers at this time and we are exploring these issues carefully,” he continued.

A new code of practice for the credit card industry, instituted back in the 2006, imposed on credit companies to carefully assess a customer’s suitability before sending out cheques or raising limits without solicitation on behalf of the customer. They were also requested to explain clearly the implications and costs of taking up these offers. However, in practice, most people see these offers as a lifeline and find it difficult, if not impossible, to refuse.

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Tags: Banking, British Economy, Credit, Credit Crunch, Debt, Financial News, UK Credit Cards

On the day that Lord Mandelson, the business secretary, exchanged words with that pillion of global finance, the American coffee bar chain, Starbucks over the comments made by the chain’s CEO Howard Schultz that the British economy had slid into an unstoppable spiral of decline, statistics were being released showing that to be a city wizard is becoming increasingly financial challenging. Jobs are scarce, pays rises are a thing of the past, getting to work is becoming increasingly more expensive as it is uncomfortable and the coffee tastes like Starbucks.

It will as no surprise to anyone that the number of job vacancies in the City of London has fallen by 64 per cent in the last twelve months, with competition for the few vacancies now available also down by almost half. In other words, the number of people who actually want to work in the city is diminishing at a considerable rate.

And who can blame them, with salaries also falling by six percent from last year, and hiring activity in the City slowing almost to a dead stop as the credit crunch continues to strangle the financial services sector of the UK economy, increasingly more city traders are seeking to earn their daily bread elsewhere. Expectations are that 62,000 city jobs will disappear in 2009, a fall of more than 17 per cent from year.

And that’s not all. The fat pay packets of even a year ago appear to be history, with the average salaries, while still pretty high, is under pressure. With average City salary of around £50,000 meaning a fall of six percent annually to its lowest levels since 2004, it would appear that while that bastion of all that was good in the UK economy has been put on ice for a very long time.

And not only that, those poor souls that still have to learn their living in the financial services industry in Central London, are finding it increasingly expensive as well as uncomfortable to get there! A report issued yesterday by the Confederation of British Industry (CBI) reported that the UK transport network is so unreliable and congested, that it is having a direct effect on business efficiency and competitiveness.

A report said roads were the worst part of the network, rated as poor and getting more unreliable and crowded. In comparison travelling by train travel was rated barely satisfactory, and only in terms of its reliability which was considered to be “improving”, and capacity levels rated as being on the rise.

The report did hasten to point out however that rail fares in Britain are fifty per cent higher than the rest of Europe, whilst the annual season ticket, a favourite of city commuters, almost double the price of the next most expensive country, which is France. In Italy the price of an annual season ticket for commuters travelling the same distances as their UK counterparts is 25% of the price.

Anthony Smith, chief executive of Passenger Focus, who carried out the study, was reported as saying that “British fares were astonishingly expensive, especially for tickets that you buy on the day and especially for commuters in London and the south-east”. “Passenger satisfaction with the rail network had risen but people felt they failed to receive value for money.” He did hasten to point out.

The Department for Transport said it would cost an extra £500m a year to bring UK commuter fares in line with those heavily subsidised European countries. “Since 1997 regulated fares have fallen sharply relative to earnings, raising less than a quarter as much as disposable income,” it said.

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Tags: Credit, Credit Crunch, Economics, Financial News, Global Credit Crisis, Recession, Starbucks

In a show of fortitude, recently appointed deputy chairman of the Financial Services Authority (FSA) resigned his post, largely due to accusations that during his term as HBOS chief executive he placed blocks on reports from his head of risk management at the Bank, Paul Moore. Moore’s warned in several reports to Sir James that the bank was on a path to ruin due to the inordinate risks that they were taking.

Crosby appeared to do what was the right thing, stepping down from his role in the FSA a mere 24 hours after Moore blew the whistle on the “gagging” claims. Especially embarrassed by the resignation was Prime Minister Gordon Brown who had earlier claimed that he had “full confidence” in Sir James’s ability and integrity.

Never slow to take political advantage, Opposition Leader David Cameron claimed that Brown’s appointment of Sir James in a key role at the FSA, as well as a key financial advisor in other roles, raised serious question marks regarding his judgment. Gordon Brown was seen to be obviously uncomfortable when pressed on the subject during Parliamentary question time, avoiding the issue by stating that “Sir James Crosby is no longer a Government employee.”

He did receive some perfunctory backing from the Prime Minister who insisted that Sir James was entitled to defend himself against the “gagging” claims made against him by Paul Moore, who held down the role as risk moderator at HBOS up until 2005.

When questioned in recent interview Moore claimed that the reason behind his sacking was that he had raised a series of challenges in reports made directly to Sir James with which the bank head was uncomfortable about accepting. He added “the somewhat lame reason that the bank gave for my dismissal was that I didn’t fit in.’

Gordon Brown appeared to have no option than to back Sir James’s resignation so that he could devote all of his energy to clear his good name in financial circles. The Prime Minister did hasten to add ‘It is important that the FSA show at this time that it is operating to the best standards possible. The review that has been set up will look at exactly these matters, of risk management, remuneration and the performance of bank boards. I believe the system of regulation in this country can and will be improved.’”

In a statement yesterday, Downing Street rejected claims that Sir James had been forced to resign stating that the resignation was Sir James decision only.

The issue came to light when Paul Moore made a written submission to the Treasury select committee yesterday who are investigating the financial crisis in the banking community. Moore confirmed that he had “blown the whistle” on Sir James in particular as well as others at the HBOS who during his tenure had ignored warnings that the bank was ‘going too fast’,

In his resignation letter Sir James stated his confidence in the fact that while there was no substance in Moore’s allegations, he was confident that the right course of action was to resign from the FSA board.

Crosby also hastened to add that an independent investigation ordered by the HBOS had backed his decision to dismiss Moore. Sir James added: ‘HBOS has reiterated its view that his allegations have no merit. Whilst I am totally confident that there is no substance to any of the allegations, I nonetheless feel that the right course of action for the FSA is for me to resign from the Board which I do with immediate effect.’

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Tags: Bank, Bank of England, Banking, Credit, Interest Rates, Money Management, Savings

A recent set of announcements from the Federation of Small Businesses (FSB) has indicated a low approval of the state interventions instigated to help them to survive through the current financial downturn.

A recent survey announced that most of the various Government endeavors have yet failed to take effect or been unsuccessful.

Many members of the small business federation have reported to the association that instead of offering support, many banks had deferred their applications for credit, which was supposed to be government-guaranteed.

The survey of four thousand small business enterprises reflects the current state of play among small businesses. The feeling is that the scale of the UK’s economic decline will make it difficult for many businesses to survive no matter their efforts and that the government support schemes, although provided with the best of intentions will not make too much of a difference.

More than half of the companies who participated in the survey, responded by saying that the recent government guarantee scheme was not a guarantee that bank lending would increase as a result, with many members already reporting that their banks had refused to extend them increased credit facilities.

Suppliers to Government bodies have also discovered that the promise made to settle accounts within ten days as well as to pressurise other public sectors also to meet the same commitment has been less than succesful, and the indications are that this may have been wishful thinking.

In a separate yet vaguely connected announcement, the FSB stated the despite pressures , Gordon Brown’s Government must hesitate in passing new laws on the next business law start date. Their fear is that these laws could cost almost a billion pounds annually to small business operators from Spring 2009 onwards. The dates for amended business regulations to come into force (April 6 and October 1) have signaled the onset of some fairly punitive changes in the past, that small businesses have been less than prepared for. In the light of past experiences, the FSB is calling on the Government to consider each new law and if it is possible to delay its passing, in order to defer costs to small businesses in 2009, which looks like being a very difficult year for trading.

Results of the recent FSB poll also stated that one in four of the association’s members believe that small to medium businesses will be those that will provide the push to pull the UK out of its current recession, but only if they are not overburdened by new legislation. They claim that during a recession there is no reason to change existing legislation, especially those that are liable to have negative financial implications on small businesses.

This assertion was given added weight by the announcement that

company incorporations in 2008 fell 17.2 per cent to 372,400 when compared with 2007.

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Tags: Bank, Credit, Economics, Financial News, Recession, Retail

Chancellor Alistair Darling announced over the weekend that banks that failed as badly as RBOS failure should be disallowed from awarding large bonuses, although he did concede that there should be some modest pay-outs for certain staff.

In an interview with the BBC Darling revealed that “no overall bonus figure has been agreed on” but was adamant that none of the bank employees directly associated with the losses should be rewarded.

Reports are that the potential total bonus figure for RBOS could reach as high as one billion pounds to be distributed amongst the bank’s almost two hundred thousand staff. Expectations are that an investigation into the Bank’s management of the crisis and what led up to it is due to be held in the very near future and one of the main issues that will be dealt with is past and future bonus payouts. Although the one billion that is due to be paid out is fairly modest in relation to years in the past, the chancellor pointed out in his interview that ” success should be rewarded and not failure’

Last month, RBOS announced that 2008 was a record loss year, with a deficit before write-downs of between seven and eight billion pounds expected to be announced.

He insisted that “absolutely no figure has been agreed” with RBS, adding that the bank wanted “to make sure they cut down these payments to the absolute minimum they have to.”

“They have to understand that these banks would not be here but for the British taxpayers, therefore they have to show the degree of restraint that people would expect.”

In general, representatives from across the political spectrum have pressed the Labour Government to impose embargoes on the bonuses paid out at financial institutions, especially among those who take unnecessary risks.

George Osborne, spokesman for the opposition Conservative party on Treasury matters, announced in a recent interview. “It is totally unacceptable for these large banks which have large tax shareholdings to pay large cash bonuses to their senior management.”

Despite his claims to the contrary, Alistair Darling has refused to accept a cap on bonus payments, saying the government had to take into account incentives for employees.

U.K. bankers have reaped more than 31 billion pounds in bonuses over the past four years, according to the Centre for Economics and Business Research.

On the industrial front, it was reported that manufacturing output in December declined at its fastest rate for almost the last thirty years, ample evidence that the fragile state of the UK economy was showing no signs of improvement .

According to the Office for National Statistics (ONS) manufacturing output fell by 10.2% from December 2007 figures , and for the last quarter of 2008, there was a fall of five percent from the comparative period in 2007, which was the steepest fall since the ” winter of discontent in” 1974.

These frightening statistics, according to ONS meant the current UK recession could be even worse than first thought.

This theory was strengthened by information that the number of companies that went bankrupt in the fourth quarter of 2008 soared as the economy contracted by its largest amount since 1980, according to government figures issued on Friday. The Insolvency Service said the number of companies from across the business spectrum going into liquidation in the fourth quarter was 4,607, up 11.9 percent from the previous quarter and 51.6 percent higher than the same period the previous period.

The number of company administrations across England and Wales in the fourth quarter soared to 2,018 from 575 in the same period the year before. Through all of 2008, the number of companies who called in the administrators rose by 92 percent to reach 4,820.

At close of trade on Friday, the FTSE 250 index rose by +2.67%
or 170.52 at 6,561.67 while the FTSE 100 finished the session up +1.49% or 62.94 at 4,291.87.

Sterling rose slightly again against the dollar and the Euro and rose strongly against the Japanese Yen and the Swiss Franc:

Pound/US dollar 1.4788

Pound/Euro 1.1442

Pound/Japanese Yen 135.80

Pound/Swiss Franc 1.7173

On Wall Street, things were buoyant on Friday where the Dow Jones index rose by 217,52 points to 8280.59 and the Nasdaq also soared 45.47 points closing at 1591.71.

Gold futures rose steadily before the weekend, as the Bank of England cut its key interest rate to the lowest level of 1%.

Gold’s attractiveness as a safe haven and an inflation hedge has pushed its prices more than 3% higher this year, compared to a 6% decline in the S&P 500 equity index and a 5% loss in the Reuters/Jefferies CRB commodities index. Holdings in the largest exchange-traded fund backed by gold hit a new record Wednesday.

In Thursday trading, gold for February delivery rose $12, or 1.3%, to end at $913.60 an ounce on the Comex division of the New York Mercantile Exchange. The February contract expires Feb. 20, with open interest, or the total amount of outstanding contracts, remaining at 351,400 ounces as of Thursday.

Wall Street has had another big rally as investors bet the government will take some big steps to help the economy. All the major indexes rose more than 2 percent Friday, including the Dow Jones industrial average, which rose more than 200 points as investors looked past another bleak jobs report and awaited word from Washington about an economic stimulus plan and changes to the government’s financial rescue program. Financial stocks led the market as investors also awaited the government’s latest revisions to its lifeline for banks. Treasury Secretary Timothy Geithner is expected to announce the changes in a speech on Monday.

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Tags: Alastair Darling, Bank, Banking, British Economy, British Pound, Credit, Financial News, FTSE, Money Markets, Recession, UK Banks, UK Recession

Consumer confidence sank to the lowest level since at least 2004 last month as shoppers found it harder to access credit and became more concerned about job losses were seen to be putting a damper on consumer based share prices yesterday on the FTSE.

With the News Corp expected to announce cutting jobs in the coming weeks, due to a dramatic decline in revenue from print advertising, requiring cost reductions for News International, whose papers include The Times, Sunday Times and the Sun. The group is reported to be in the final stages of an efficiency review some 2.5 per cent of its staff, although some new posts may be created.

In mining, U.K. stocks continued to advance. The rally was caused by the devaluation of Kazakhstan’s local currency , the tenge causing the Kazakhmys, Kazakhstan’s biggest copper miner, and ENRC, the Kazakh ferroalloy producer part-owned by Kazakhmys to jump at least 9 percent after the central bank devalued the tenge by 18 percent. ENRC also reiterated its 2009 outlook. Kazakhmys climbed 34 pence to 278, with ENRC rising 30.75 pence to 361.

Meanwhile the world’s largest mining company, BHP gained 63 pence to 1,223 on reports of a 17 percent increase in first-half sales to $29.8 billion. BHP announced that they will pay a first-half dividend of 41 cents, up 41 percent from a year earlier, while cash flow from operations rose 74 percent to $13 billion.

There was a mixed bag of stocks that showed rises on the FTSE yesterday among them:

Aviva Plc the U.K.’s largest insurer increased by ten percent, (34.5 pence to 367.25). The company announced that despite the downturn, their life and pension sales rose by nine percent in 2008, The Company also said it plans to scale back a promised one billion pound payout to policyholders.

Rallying by two percent (9.75 pence to 497) were the British Sky Broadcasting Group Plc on the news that the group had succeeded in retaining U.K. rights to broadcast live English Premier League soccer for season 2009/2010.

To display that the UK consumer still loves to take part in sports and not just watch them was the news that JD Sports Fashion Plc, the U.K.’s third-largest sporting-goods retailer earnings will be higher than estimated. Their shares increased in value by 5.2 percent (11 pence, to 224.)

Sports property development also appeared to be strong with Quintain Estates & Development Plc shares also jumping a whopping 19 percent, (5 pence to 31). The company, heavily involved in developing the area around London’s Wembley Stadium, announced that it had succeeded in reducing its considerably as well as portioning a part of it three percent annual interest.

On the Iberian Peninsula, another worrying sign that protectionism may become part of commerce for the foreseeable future.

Spanish politicians announced a call for locals to adopt patriotic shopping habits, with the aim to protect jobs and beat the recession, amid stronger than ever signs of Spain’s accelerating economic slowdown. Yesterday the government announced that unemployment had risen to almost 14 per cent.

Consumer consumption in Spain was expected to fall by €7bn (£6.6bn) in 2009, with the loss of 120,000 jobs.

A leading Madrid based economics experts pointed out that Spain’s economic success from the nineteen sixties onwards had coincided with the abandonment its protectionism. Its open market had raised from 10 per cent in 1959 to 65 per cent today.

On the stock markets the FTSE 250 index fell by 1.1% or 69.49 points to 6252.32 while the FTSE 100 finished the session down by 1.33 per cent, or 56. Points, to 4,172.52.

Sterling continued to rise against the main currencies, closing at:

Pound/US dollar 1.4405

Pound/Euro 1.1127

Pound/Japanese Yen 129.12

Pound/Swiss Franc 1.6726

Wall Street shares had a bad day on Wednesday’ trading U.S. stocks declined for a third day yesterday after consumer spending slumped for a sixth straight month and companies from Mattel Inc. to Rockwell Automation Inc. posted lower-than-estimated profit.

The Dow Jones Industrial Average dropped 121.7 points to close at 7956.60 NASDAQ rose a mere 1.71 50.5 points to 1515.94

On the market, Merck climbed 6.4 percent after savings from job cuts boosted profit, while Schering-Plough added 8.2 percent on earnings helped by cost reductions and added sales from an acquisition.

Harley-Davidson Inc., the biggest motorcycle maker, added 16 percent to $13.73 for the third-biggest gain in the S&P 500. Billionaire investor Warren Buffett’s Berkshire Hathaway Inc. agreed to buy $300 million of Harley-Davidson debt, adding to holdings of corporate bonds as yields rise.

Tyco International Ltd. climbed 19 percent to $24.27. The world’s largest maker of security systems through its ADT unit posted first-quarter profit that exceeded analysts’ estimates.

Stocks in Asia climbed today after governments from Japan to Australia widened efforts to revive economic growth. The MSCI Asia Pacific Index rose 0.8 percent.

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Tags: Bank, Bank of England, British Economy, Credit, Credit Crunch, Currency, Financial News, FTSE, Gordon Brown, Money Management, Recession, UK Banks

The European Union warned the US yesterday against plunging the world into depression by adopting a planned “Buy American” policy, intensifying fears of a trade war.

The EU threatened to retaliate if the US Congress went ahead with sweeping measures in its $800 billion (£554 billion) stimulus plan to restrict spending to American goods and services.

The EU Ambassador to Washington was reported as saying, that “history has shown us” where the closing of markets leads. This was regarded as a clear reference to the Great Depression, largely regarded as having been triggered by US protectionist laws.

Meanwhile a spokesman for the Prime Minister refused to condemn the “Buy American” clause. He would not say, however, whether Britain was lobbying the new Administration to drop the clause. In the meantime, on the only comment available, suspicions are that Mr. Brown does not want to join criticism of President Obama’s stimulus proposals, which he sees as vindicating his own, remaining, at least in public, in favour of President Obama’s decision to inject cash into the economy

The EU warnings came in letters to US political leaders in Congress, urging them to respect the decision taken by the G20, the world’s leading economic nations, in Washington last November to resist protectionism as a defence against the crisis. They are expected to meet again in London in April.

On the banking front, reports of increasing nervousness around depositing with Irish banks are gaining momentum. The Irish banks are currently offering some of the highest interest rates currently available online. However there are strong fears regarding the stability of country’s banking system, heightened by the news that deposits are no longer protected by the Financial Services Compensation Scheme (FSCS). Instead, all deposits are guaranteed by the Irish government.

Up until September 2008 , deposits held in Irish banks operating in the UK such as Allied Irish and Bank of Ireland, were protected under the umbrella of the FSCS, meaning that any compensation provided by the bank’s local protection scheme up to £50,000 was covered, with the UK government providing “top up ” security for any balances over that sum.

However when the Irish government decided to provide total protection for all of the moneys held in savings accounts by Irish banks, this top up” passport ” was no longer binding, leaving UK deposit account holders vulnerable, FSCS protection.

As a result, and despite the 3.4 percent interest rates available from the Irish banks under their fixed-rate bond paying 3.4 per cent, investor confidence in Irish banks is now falling. Financial analysts are unable to guarantee that the Irish government has the capacity to provide compensation in the event of an Irish bank failing.

All of the UK high street banks are covered by the FSCS, as well as foreign-based banks operating outside the European Economic Area (EEA) that do business in the UK, such as Indian-owned ICICI and Turkish Bank.

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Tags: Bank, Credit, Credit Crunch, Debt, Economics, Economy, Financial News, FTSE, Recession, Retail, UK Banks, UK Recession

The snow storms which paralysed Britain may have cost businesses already battling the credit crunch up to a billion pounds with more blizzards and attendant financial damage to be expected for the next few days.

Monday’s storms, the worst to hit the UK and especially the south of England are the heaviest in almost two decades. London, Europe’s financial capital, was less than four inches of snow. Enough to cause totally strangulation of the city’s transport system, shutting down road, rail and even air links.

Reports had it that one in five people were unable to show up for work on Monday, a cost to employers of over one billion pounds, and with the side effects caused by heavily diluted trading impossible to estimate.

Forecasts say that if the bad weather continues this week, that figure could rise to £3.5 billion in salary costs alone. Suggestions are that as a result of the blizzard, several thousand firms, already sadly weakened by the ongoing financial crisis, could go bankrupt as a result of the downturn in trade caused by the weather. A sign of how brittle the UK financial situation is.

With Britain in recession and facing what the International Monetary Fund (IMF) says will be the worst slump in the developed world, the rare cold snap risks putting many struggling businesses into the deep freeze for good.

To show that nature is still more powerful than the computer and is equally even handed the bad weather also hit other major European financial centres including France, Italy, Switzerland, Belgium and Spain.

However there are those that say, albeit tongue in cheek, that the current snap in cold weather could provide an upside for some economy sectors, particularly fuel suppliers, warm winter clothing manufacturers and retailers and UK panel beating companies.

The more somber UK economic analysts hasten to point out that disruptions to the business framework are the very last thing that the economy needs in its current extremely weak state.

Leaders in the UK business community, especially those in the South of England who are not used to such severe weather conditions and the disruption that it brings, were not slow to criticise the authorities for their lack of readiness to handle such an event. They claimed that television coverage of London at a standstill added very little to UK’s already tarnished image.

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Tags: Bank, Credit, Credit Crunch, Economics, Financial News, Recession, Retail

Boots Opticians is to merge with Dollond & Aitchison, the high street retail chain said today.

The combined business, trading as Boots Opticians, will have around 690 practices and employ more than 5,000 staff with Dollond & Aitchison gradually disappearing from the high street as its stores adopt the Boots Optician brand.

A spokesman announced that said the new company will become second largest chain of opticians in the UK, knocking taking over the slot currently held by Vision Express. Specsavers are expected to remain Great Britain’s largest chain of opticians.

Boots Opticians will be run as a separate and autonomous entity from the rest of the Alliance Boots group, with head offices to be situated in Nottingham.

Boots Opticians currently has a staff of 2,800 people, while Dollond & Aitchison employs 2,200.

A spokeswoman for Alliance Boots said neither company had full coverage in the UK, so it was anticipated that there would not be much overlap.

On the floor, mining giant, Rio Tinto, announced that they could be looking for a rights issue whilst rival Xstrata unveiled their plans to raise £4.1bn through a heavily discounted two-for- one share offer causing their shares to fall eleven per cent almost immediately As rapidly as they had fallen, Xstrata’s shares rose, and by the end of the day had not only recovered, but risen a further 3.61 percent.

Another company whose shares had an erratic day was the Cookson Group, manufacturers of industrial materials. The group announced that they would also be looking for a rights issue, and a fairly spectacular twelve -for-one deal at that. Obviously such a strong dilution did not please the market and their shares fell in value over some frenzied sell off activity. However recovery was not far away and their shares closed up 12.25 per cent at 95.5p

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 3.9 per cent, or 156.5 points, higher at 4,209.

Sterling fell slightly against the dollar and the Euro and rose slightly against the Japanese Yen and the Swiss Franc:

·       Pound/US dollar 1.424 

·       Pound/Euro 1.018

·       Pound/Japanese Yen 127.58

·       Pound/Swiss Franc   1.6425Wall Street shares had a bad day on Thursday’  trading

The Dow Jones Industrial Average dropped 226.44  38.47, to close at 8149.03. Nasdaq fell 50.5 points to 1507.84

Oil giant Royal Dutch Shell has posted a sharp fall in quarterly profits after the price of oil slumped dramatically towards the end of last year.

Profit for the final three months of 2008 fell to $4.8bn (£3.4bn), down 28% from the same period a year ago and 56% lower than the previous quarter.

But annual profits at the Anglo-Dutch company rose 14%, to $31.4bn, helped by record oil prices over the summer.

Oil prices rose slightly to $41.00 a barrel with calls from producers to gradually reduce  production and increase prices.

Hong Kong’s key stock index climbed in its first trading session of the Lunar New Year, after the U.S. House of Representatives approved an $819 billion stimulus plan that investors hope will revive the world’s largest economy.

Catching up after a three-day break to celebrate the Year of the Ox, the blue chip Hang Seng index Thursday surged more than 7 percent at the open, then pared some gains.

The benchmark index finished 575.83 points, or 4.6 percent, higher at 13,154.43.

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Tags: Boots, Boots the Opticians, Credit, Credit Crunch, Dollond & Aitchison, Finance, Financial News, Opticians, Recession, Retail

The minor upturn that U.K. stocks had been experiencing over the last three days suffered a minor reverse yesterday. The fall was hastened by the announcement that the U.K.’s second later water utility company Severn Trent Plc announced that their income forecast for 2009 will be much lower than previously forecast.

Shares in Severn Trent dropped by 3.5 percent on this news, with rival utility suppliers falling under a similar spotlight. Those whose shares took a downturn included United Utilities Group Plc and Pennon Group Plc, both whose shares declined by more than 2.5 percent.

Reasons given for the downturn included falling commercial and domestic consumption.

Other stock values that fell on the U.K. stock market yesterday included:

AstraZeneca Plc who dropped by 3.9 percent (115 pence to 2,832) after the US drug maker was asked to strengthen warnings about potential side effects on its antipsychotic medicine Seroquel.

Property group Workspace who as their name suggests specialize in renting space to small businesses, announced the launch of an almost £90 million share issue on Tuesday. It was expected that the share issue would spark off a wave of cash calls as cash strapped property companies attempt to bolster their balance sheets.

Workspace announced that the five-for-one issue was fully underwritten and would allow the extension of a key August 2010 credit facility to November 2012.

Under terms of the deal, new shares will be offered to shareholders at 10 pence per share on the basis of five new ordinary shares for each existing share.

Workspace shares, which have fallen by 88 percent in the past 12 months, were trading 7.7 percent lower at 30 pence.

The star of the show yesterday on the FTSE was Barclays Bank whose shares rocketed by a massive 73 per cent yesterday. This dramatic surge in value came after the bank took the unprecedented steps in an open letter of reassuring investors and shareholders that the bunk would remain both well funded and profitable for the foreseeable future.

Chief executive John Varley and chairman Marcus Agius jointly announced that Barclays was on track to exceed 2008 market forecasts of GBP 5.3 billion and added that the bank had no need for government assistance.

Barclay’s shares immediately raised 37.5p to 88.7p by the close.

Other banks also rallied with Lloyds Banking Group up 32 per cent, (15.9p, to 65.2p), Royal Bank of Scotland rose 20 per cent, (2.4p to 14.5p) and HSBC also rose by around 20 per cent (25.5p to 541p.)

On the industrial front Charter International Plc rose by 5 percent (16.5 pence to 348.25.) Charter, Europe’s largest manufacturer of welding equipment announced that its annual profit was higher than previous estimates, largely due to cutting overheads, particularly work force at ESAB, their welding and cutting unit

The FTSE 250 index rose by 1.49% or 93.35 points to 6351.92 The FTSE 100 finished the session 3.9 per cent, or 156.5 points, higher at 4,209.

Sterling continued to hold firm against the leading currencies:

Pound/US dollar 1.4267

Pound/Euro 1.0776

Pound/Japanese Yen 127.38
Wall Street shares advanced on Mondays trading largely on the announcement that pharmaceutical giant Pfizer planned acquisition of Wyeth, for a tidy $68 billion. The fact that a deal of this size can still go through even in the worst of recessions appeared to reassure investors and set trades rolling. Overall there was a mixed bag of news from companies. Downbeat comments from Caterpillar about the health of its business and warnings of substantial job cuts from Home Depot threw a wet blanket on earlier optimism.

The Dow Jones Industrial Average rose 38.47, or 0.48 per cent, to close at 8,116.03.

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Tags: AstraZeneca Plc, Barclays Bank, British Pound, Credit, Credit Crunch, Economics, Economy, Financial News, FTSE, Recession, Severn Trent Plc, UK Recession