UK public opinion is reported to be swinging the way of large scale cuts in the public service sector, according to recent reports. The sector, costing taxpayer’s record amounts of money each year. Is now employing more people than ever before. Unions who represent public sector employees are anticipating having a have a fight on their hands, if as expected, the Conservative party wins the next election and inherits an economy still struggling to pull itself out of recession.

According to statistics issued by the Office for National Statistics before the weekend, business investment in the UK fell 0.6% sequentially in the third quarter, significantly less than the 3% initially estimated. British private and public sector manufacturing investment has reportedly fallen 9.4% since the second quarter and by almost 30 % since the third quarter of 2008.

According to a recent report by the Bank of England the “probability of default by U.K. real estate companies has increased significantly” as households continue to face a weakening labor market paired with tightening credit conditions.

Amid concerns that the government’s 50% banking bonus tax could seriously damage future business levels, stock markets around the world have been focusing upon the city of London investment markets. The UK government went as far as issuing a report, released on Friday, clarifying who is liable to fall under the scope of the banking tax.

With reports in circulation that UK banks, and especially those whose activities are centered on in London continue to consider their position regarding the banking bonus tax, which has been mooted as a one-off charge, is making people in the banking world a little hot under the collar.

The Confederation of British Industry (CBI) has raised its 2010 economic growth forecast, whilst predicting that the Bank of England may place their bond-purchase plan on hold as soon as February as policy makers prepare to raise interest rates.

The CBI also predict that gross domestic product in the UK will increase 1.2 percent in 2010 after contracting 4.5 percent in 2009, up from their previously forecast expansion of 0.9 percent. The group also predicts the bank will raise the benchmark interest rate from 0.5 percent in the second quarter to reach 2 percent by the end of the year.

The recovery will be aided by companies rebuilding stocks to meet a rebound in world growth and as exporters benefit from a weaker pound, down almost a quarter since the start of 2007, making British goods cheaper to buy abroad.

Google, smart boys that they are, succeeded in not paying a penny in corporation tax on the £1.6 billion advertising revenues that it earned in Britain in 2008. The company, which enjoys an estimated 90% market share of UK internet searches, last year, used a cross-border network of subsidiary companies to keep the taxman at bay. Their smoothly interwoven international corporate structure enabled Google to avoid paying what could otherwise have been a corporation tax bill in the UK of as much as £450 million, according to recently filed accounts for subsidiary company Google UK Limited. The accounts show none of the search engine’s advertising revenues from British customers were accounted for in the business, despite operations in London and Manchester While much of the costs linked to the running of Google’s British operations are recognised for tax purposes in the UK. Revenues from customers in Britain, however, are diverted to another Google company in Ireland, where the corporation tax rate is between 10% and 25%, while UK corporation tax is levied at between 28 and 30%

The British Pound has begun to recover and bounced back to a high of 1.6251 on Friday following the rise in risk appetite. Analysts predict that Sterling may continue to recover as a recent Bank of England Financial Stability report said the U.K. financial system has become “significantly more stable”. This was credited to the unprecedented steps taken on by the government.

• Dollar 1.6152
• Euro 1.1262

Things were pretty brisk on the FTSE 100 approaching the weekend, with

nursing homes group Care UK drawing a lot of attention. The company has been reportedly been considering whether to accept a £275 million pound bid from Bridgepoint which will take them private. Care that runs 60 nursing homes, GP practices and NHS walk-in centres in the UK saw their shares rise 10.5 pence to 430.5 pence on Friday.

Overall U.K. stocks were on a minor downward spiral, with banks leading the way. Lloyds Banking Group Plc and Barclays Plc were are ever leading the way, as the European Central Bank (ECB) increased their estimate of the value of write downs by 13 percent. Lloyds, the 43 percent government-owned bank, lost 4.7 percent to 48.7 pence, to its lowest since July. Barclays, the U.K.’s second biggest bank, slid 3.5 percent to 264.25 pence.

Ryanair surged 5.8 percent to 3.282 Euros after the carrier said it will generate surplus cash for shareholders between 2012 and 2015 after they had suspended their talks with Boeing regarding future aircraft acquisitions.

Also on the up was Aggreko Plc, the world’s biggest provider of mobile power-supply gear. Their shares rallied 7.9 percent after announcing that trading in the fourth quarter was better than it estimated.

The benchmark FTSE 100 Index dropped 20.8, or 0.4 percent, to 5,196.81. The FTSE 100 fell 1.2 percent this week. The gauge has still rebounded 48 percent since March and is heading for its biggest annual gain since 1997 as central banks cut interest rates to record lows and governments worldwide committed about $12 trillion to revive the economy.

On close of trading, the Dow Jones Industrial Average was up to 10, 328.61 while the NASDAQ was stable on 2,211.69

GM says it has failed to sell its Swedish car brand Saab and will begin "an orderly wind-down of Saab operations".

GM had been in talks with the Dutch specialty car maker Spyker over a sale. Talks with Sweden’s Koenigsegg also fell through earlier this year.

GM has been trying to sell Saab as part of its turnaround plans since January. Dutch luxury car maker Spyker has submitted a new offer to General Motors (GM) for its Swedish car brand Saab.

Spyker has submitted a new 11-point proposal to GM, addressing the issues that ended talks.

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Tags: Aggreko Plc, Bank, Bank of England, Banking, Barclays Plc, Bridgepoint, British Economy, British Pound, Care UK, CBI, Confederation of British Industry, Credit Crunch, Currency, Dow Jones, Economics, Economy, European Central Bank, Financial News, FTSE, General Motors, Google, Koenigsegg, Lloyds Banking Group Plc, Money, Money Markets, NASDAQ, NHS, Office for National Statistics, Recession, Ryanair, Saab, Spyker, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession

The U.K.’s second- biggest bank Barclays Plc have announced that they are to acquire Standard Life Plc’s banking assets for a sum of £226 million pounds, In a move designed to expand their UK based savings and mortgage operations, Barclays will receive a major boost in turnover through Standard Life Bank Plc, who currently hold around £ 5.5 billion in deposits as we’ll as £8.8 billion in mortgages. A spokesman for Barclays announced the bank’s intention to continue to explore opportunities in the U.K. retail long term savings and investments industry, working in conjunction with Standard Life, who are the U.K.’s third-biggest insurer.

The bank is seeking to increase revenue at its consumer and corporate-banking division, whilst reducing their reliance on investment banking. The acquisition follows that of the Portuguese credit-card business of Citibank International Plc made last month. Barclays continue to seek more acquisitions in Europe.

Production of new cars in the UK fell by 16.1 percent for the year in September, making for the smallest decline for 12 months, according to figures issued by the Society of Motor Manufacturers and Traders. 119,616 cars were made in Britain last month, making for an annual total of 694,769, down by 41.2 percent on the same period in 2008. Sales have been boosted by the government’s car scrappage scheme, which allows motorists to trade in cars that are more than 10 years old in return for a 2,000 pound subsidy on a new vehicle.

Oil giant BP has reported third-quarter profits of £2 billion ($4.98 billion) well ahead of analyst’s expectations

BP’s results, boosted by higher than expected cost cuts, was still down by

50% from last year. This is largely due to the fact that oil is currently trading at about $80 a barrel, about half of where it was this time last year. The announcement sent BP’s share price up by almost 4%.

The British Standards Institute (BSI) the national standards body are reportedly deep in the process of developing a voluntary standard of ‘kitemarks’ that will be issued to retail and wholesale financial services firms.

The BSI have been consulting with members of the industry in order to set out a common methodology and good practice standard, which can be implemented alongside existing regulations, with the goal of reducing risks of compliance failures whilst offering greater reassurance to management that regulatory requirements are being met. The British Bankers’ Association (BBA) are apparently offering their whole hearted support for the scheme, with their chief executive quoted as saying that the initiative should improve efficiencies between and amongst compliance teams across the financial service industry .

Sterling continued to rise in value yesterday against the dollar, while falling against the Euro.

• Pound/US dollar 1.6351
• Pound/Euro 1.1043
• Pound/Japanese Yen 149.0922
• Pound/Swiss Franc 1.6709

Shares in the Anglo-Dutch publishing group Reed Elsevier, were very much in demand on Tuesday, rising 3.3 per cent to 473 pence after the market deduced that concerns over the trading performance of, it’s content archive service division, Lexis-Nexis, had been exaggerated.

Banks didn’t have such a good day on the FTSE, especially the partially nationalised ones. Royal Bank of Scotland were down 8.1 per cent to 40.8 pence while Lloyds Banking Group, also fell 6.1 per cent to 83.8 pence. The reason for their downfall was investor fears regarding the disposals that both banks will be obliged to make in order to satisfy European Commission rules on state aid.

The FTSE 100 made a minor recovery on trading Tuesday, up just 9.23 points to close on 5200.97. The FTSE 250 continued to lose value, yesterday down 44.82 points to close on 9141.28.

Fears about future job prospects was stated as the principal reason why US consumer confidence fell unexpectedly in October. The Important Consumer Confidence Index from the Conference Board business organisation slipped to 47.7 in October from a revised 53.4 in September. Analysts were caught unawares by the decrease, with expectations that the index would remain unchanged or might even rise slightly.

On Wall Street, the Dow Jones hiccupped a little into forward gear, up a mere 14.21 points to 9882.18. The NASDAQ Composite index was still dropping yesterday, a further 25.76 points to 2116.09.

According to the European Central Bank, lending to companies operating in the eurozone fell in September at an annual rate of 0.3%, compared with a modest annual growth of 0.1% in August. The fall is a source of concern for the Eurozone countries is it comes when European governments continue to bolster their economies by increased lending at very low, subsidised interest rates.

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Tags: Bank, Banking, Barclays, Barclays Plc, BBA, BP, British Economy, British Pound, British Standards Institute, BSI, car scrappage scheme, Citibank International Plc, Conference Board, corporate-banking, Currency, Dow Jones, Economy, European Central Bank, European government, Financial News, FTSE, Important Consumer Confidence Index, Lloyds Banking Group, Money, Money Markets, NASDAQ, Recession, Reed Elsevier, Royal Bank of Scotland, Society of Motor Manufacturers and Traders, Standard Life Bank Plc, Standard Life Plc, Stocks and shares, The British Bankers’ Association, UK Banks, UK Economy, UK government, UK Recession, Wall Street

It now appears likely that Bank of England Governor, Mervyn King will be awarded the post of deputy chairman of a Europe-wide board, that will be responsible for the tracking the stability of financial institutions as well as co-coordinating risk supervision by national bank regulators.

King would join the board as number two to the European Central Bank governor Jean-Claude Trichet, who has been invited to chair the new body.

Reports have it that although no formal offer to Mr. King has yet been delivered, if Mr. King was to accept the post as deputy, his presence might help to calm UK fears that the revamp of Europe’s supervisory system would undermine the City’s position as leader in financial services in Europe.

Meanwhile head City regulator, Lord Turner made a robust defence on Tuesday night of his allegations that the “swollen” financial services sector has produced “socially useless” products, He continued by adding that UK banks may become “boring” lower-risk, lower-return investments.

“Banks need to refocus their energies on their core functions of providing savings and credit and payment products to customers,” Turner added at a speech presented at the Mansion House City banquet hosted by the lord mayor of London.

"The huge profits that many banks were expecting to make this year should be attributed to implicit government guarantees and low interest rates, and therefore much of that money should be used to build bigger capital and liquidity buffers rather than paying big bonuses", summed up Lord Turner.

According to recently released information, the pace of business failures slowed in August to its lowest level in almost 12 months. Although statistics gathered continue to suggest the worst of the UK recession may be over, there are wide geographical disparities within the data, with the north-east of England showing a 92.7 percent increase in the number of insolvencies.

In the first deal of its kind since the credit crunch began in the summer of 2007, Lloyds Banking Group are set to sell more than £2.8 billion in new bonds. The bonds are backed by UK residential mortgages.

Understandably, the sale is being closely monitored, due to its potential to reopen the market for residential mortgage backed securities in Europe. The hint of a return to mortgage backed funding for banks, which helped to fuel the boom in mortgage lending before the crunch is reported to be making a few people in the city feel a little hot under the collar.

Meanwhile the Cadbury/ Kraft turnover saga continues. Cadbury has seemingly approached the UK Takeover Panel to ask Kraft to “put up or shut up” on their unsolicited £10. 2 billion takeover approach of three weeks ago.

Cadbury approached the panel to request that Kraft either make a formal takeover proposal or put their advances on hold for the next six months.

Financial experts are predicting that Kraft will be ordered to make a formal offer within the next two and eight weeks, and if no offer is forthcoming, Kraft will not be able to make another offer for Cadbury for at least six months. Meanwhile reports have it that head of Kraft Foods, Irene Rosenfeld, is due to fly in to London this week in an effort to persuade investors to back their £10.2 billion takeover offer.

The chairman and chief executive are scheduled to hold one on one meeting with global shareholders at an investor day organized by Bank of America Corp. A representative for Kraft wasn’t immediately available to comment, while a spokesman for Cadbury stated that it remained unclear whether chief executive Todd Stitzer would be among the company’s senior executives attending the conference, and that no meetings between Stitzer and Rosenfeld had been arranged. In the shadow of such uncertainty, Cadbury’s stock fell 0.5 percent to 788 pence on yesterday’s trading.

According to experts in the UK real estate market, home sellers have raised asking prices in September as confidence in the property market improved and the supply of homes dwindled.

The average cost of a home increased 0.6 percent so far this month to £223,996 after falling 2.2 percent in August. Price gains in London, the southeast and East Anglia outweighed declines in the rest of England and Wales.

The U.K. property market is showing signs of recovery as the country emerge from the recession. The recovery continues to be aided by the Bank of England maintaining the benchmark interest rate at 0.5 percent alongside other moves to stimulate the British economy.

On the FTSE, house builders Barratt Developments were reported to be looking to raise up to £700 million through a share placing and open offer, to reduce their debt level of £1.3 billion as well as to buy land for fresh housing developments. The news failed to either depress or excite the market, and their stock ended flat at 268 ½ pence.

High street retailer Blacks Leisure who operates the Millets and Freespirit chains saw their shares fall a considerable 17.5 per cent to 42 pence after admitting it was likely to breach its terms of borrowing.

A spokesman for the company warned that trading had missed targets and they are likely to be in breach of their lending agreements.

Shares in Carphone Warehouse, gained 4.9 per cent to 192 ½ pence due to positive comments on the company’s growth policies by their brokers.

On the day, the FTSE 100 ended up 8.24 points on yesterday’s trading at 5,142.60, while the FTSE 250, rose by 28.02 points to close on 9,248.67.

The pound made a minor recovery yesterday against the dollar and Euro while falling against the Yen.

• Pound/US dollar 1.6399
• Pound/Euro 1.1069
• Pound/Japanese Yen 149.188
• Pound/Swiss Franc 1.6767

The Dow Jones Industrial Average re-adjusted itself after losses on Monday, up 51.01 points to 9,829.87. The NASDAQ continued its steady rise, up 8.26 points to 2146.3.

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Tags: Bank, Bank of America Corp, Bank of England, Banking, Barratt Developments, Blacks Leisure, British Economy, British Pound, Cadbury, Carphone Warehouse, Credit Crunch, Currency, Dow Jones, Economy, European Central Bank, Financial News, Freespirit, FTSE, Interest Rates, Irene Rosenfeld, Jean-Claude Trichet, Kraft, Lloyds Banking Group, Lord Turner, Mansion House City banquet, Mervyn King, Millets, Money, Money Markets, Mortgage, Mortgages, NASDAQ, Recession, Retail, Stock Markets, Stocks and shares, Todd Stitzer, UK Banks, UK Economy, UK government, UK mortgages, UK Recession, UK Takeover Panel

The Financial Services Authority has banned Royal Bank of Scotland from making repayments on bonds worth £920 million pounds next month. They are doing so as a result of concerns that the partly nationalised bank is too reliant on billions of pounds of taxpayer’s money to remain afloat. RBS is in advanced talks with the European Commission (EC) to decide the nature of fiscal restraints to be imposed on the bank in return for its government funding. Among other measures, the EC is likely to force the bank to cut its share in the small-business banking market.

The British Chambers of Commerce (BCC) has predicted that the UK economy should bounce back next year. They did hasten to add that the risk of the economy relapsing still remains high. The BCC announced in a recent statement that they expect the economy to grow 1.1% in 2010, almost double their previous forecast of 0.6% made as recently as June. According the report, unemployment will peak at around 3 million, fewer than the 3.2 million forecast previously.

At a weekend meeting of the G20 in London, finance ministers representing the world’s most powerful economies have reached agreement on a series of measures designed to regulate the global banking system.

The ministers are interested in implementing a system that will reward long-term performance rather than short-term risk-taking among the global banking community, without reaching agreement on specific limits on the amounts individual bankers get paid.

Britain, the US and Canada were reported to be against the proposal, which is due for further discussion at the summit of G20 leaders in Pittsburgh, Pennsylvania later this month.

The UK economy should bounce back next year but the risk of a relapse remains high, a business group has warned.

The British Chambers of Commerce expects the economy to grow 1.1% in 2010, almost double its previous forecast of 0.6% made in June.

It says unemployment will peak at just above 3 million, fewer than the 3.2 million forecast previously.

However, it said that sustaining the recovery would prove challenging given the UK’s debt burden.

Vodafone and O2 have both tabled bids of about £3.5 billion to buy T-Mobile UK from owner Deutsche Telecom, with a successful bid from either firm liable to make them the largest mobile phone operator in the UK.

High street retail chain, Wilkinsons have succeeded in filling a large part of the vacuum left when Woolworths closed their doors towards the end of 2008. The company reported annual sales up by 6.2 percent to 1.4 billion pounds in the year to the end of January, a record for the family-owned group. Wilkinsons have announced their plans for expansion, in which they will open 15 new outlets by 2009, as they drive to reach a target of at least 500 outlets by 2012.

The U.K.’s largest recruitment company Hays Plc retreated 3.7 percent to 96.1 pence on the announcement that their full-year profit had declined by 44 percent due to reduced hiring in the recession.

The U.K. developer of software for William Hill Plc’s Web-gambling site Playtech Ltd announced a 38% increase on pre-tax profits. Their shares rose in value by 13.25 pence to 346 on the news.

Shares in Premier Farnell Plc the U.K. electronic and industrial products distributor dropped 7.2 percent to 151.3 pence after they reported earnings and turnover and profit that fell behind analysts’ estimates.

The FTSE 100 index ended a further 54.95 points higher at 4,851.70. The index has now risen by 38 percent from its six-year low in early March, on hopes that the worst of the global recession is behind us in the UK.

Meanwhile the FTSE 250 rose again on Friday, up 141.05 points to close on 8,745.85.

The pound rose against the dollar, yen and Swiss franc, yet continued to falter against the Euro.

• Pound/US dollar 1.6398
• Pound/Euro 1.1449
• Pound/Japanese Yen 152.6881
• Pound/Swiss Franc 1.7361

The number of US workers claiming unemployment benefits has fallen last week but continued to be a cause for concern, with fears that unemployment figures will remain high even after the US moves out of recession.

New jobless claims fell by 4,000 to 570,000; however the number of workers continuing to claim unemployment benefits rose by 92,000 to 6.23 million.

Wall Street on Friday saw the markets continuing to rise, with the Dow Jones Industrial Average up 99.66 points to close on 9441.27 while the NASDAQ Composite index hurdled the 2,000 mark yet again, closing for the weekend on 2018.78.

The European Central Bank (ECB) remain cautious on the state of economy in the 16 nation Eurozone, forecasting that growth would be very gradual and is capable of being thrown into reverse again.

Evidence of the ECB’s continued wariness, was the news that they had left their main interest rate unchanged for the fourth consecutive month at 1 per cent, which is a record low.

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Tags: Bank, Banking, British Chambers of Commerce, British Economy, British Pound, Credit Crunch, Currency, Dow Jones, Economy, Employment, European Central Bank, European Commission, Financial News, Financial Services Authority, FSA, FTSE, Global Credit Crisis, Money Markets, NASDAQ, O2, Playtech Ltd, Premier Farnell Plc, RBS, Recession, Royal Bank of Scotland, Stock Markets, Stocks and shares, T-Mobile, UK Banks, UK Economy, UK government, UK Recession, Unemployment, Vodafone, Wall Street, Wilkinsons, William Hill, Woolworths

Officers in charge of the Chelsea Building Society held their head in their hands on Friday as they sheepishly admitted that the society had fallen victims to £41 million fraud by some of their buy-to-let borrowers.

The Chelsea, UKs fifth-largest building society, hastened to explain that if the fraud hadn’t taken place their half year loss of £26 million would have been a £15 profit, which still looks bad when compared to their £23 million of last year, but will still be acceptable given the current economic circumstances.

In an act of accountability which is rare in the UK these days, the society announced that both Finance Director Andrew Parsons and Chief Executive Richard Hornbrook will be resigning their posts as details of the fraud began to unravel. Initial findings are Chelsea reveal that artificially inflated property values by professionals such as mortgage brokers and surveyors were the main factors, whilst acknowledging that the society’s risk controls may not have been as tight as they could have been at a time of booming demand for mortgage finance and runaway house prices.

Chelsea has since conducted a review of its risk management, setting up a number of risk committees.

The much heralded government scheme purporting to offer up to £5 billion to help protect suppliers from the collapse of their customers has so far attracted only minor interest with only £7 million of assistance being provided to a mere 52 UK companies to date. .

The thinking behind the scheme was to prop up private sector insurers who were growing increasingly nervous about their levels of exposure during the credit crisis.

The reasons for the scheme’s low take-up has been blamed on the scheme’s tight restrictions and comparatively high charges, amounting to 2 per cent of turnover, which is more than four times the cost of typical private sector insurance.

On Thursday, the UK business department announced that they would be cutting charges to 1 per cent in the hope that more entrepreneurs would take up the initiative.

Barclays has recently published research suggesting that business sentiment amongst the UKs businesses is on the rise.

Almost three quarters of UK businesses surveyed in the poll described their attitude towards the economy as more positive, with the research also revealing a confident stance towards recovery, with 15 per cent of respondents believing their company will move back into a sustained growth phase within the next six months.

An interesting point raised in the poll was that a significant number of business leaders believe that the current recession was positively affecting motivation levels of staff and management within their company.

Officials of the UKs largest state controlled bank, the Royal Bank of Scotland Group Plc have been asked to appear at a hearing due to take place in October where the subject of whether the Treasury violated its own environmental standards by bailing out the bank will be discussed

It was also revealed on Friday that clients of Lehman Brothers’ European operations are liable face further delay before they can recover part If not all of their $9 billion of assets. The news came after an English judge decided he could not approve a scheme mooted by PwC, administrator of the defunct bank’s main European operations that would have helped expedite the winding up of the collapsed bank’s complicated operations.

PwC had proposed a scheme that would have divided the bank’s more than 1,000 clients into three classes. A move that would have allowed the administrators to deal with claims by class rather than each one separately. .

Thelondonpaper, the free sheet published by News International, owners of the Sun and the Times, will be wound up after the company announced advertising income had “fallen short of expectations”.

Rupert Murdoch has vowed to charge for all the online content of his newspapers and television news channels. Price rises are now one of the few growth strategies available to newspaper publishers.

The UK Office of Fair Trading (OFT) could force some of Britain’s largest bus companies to sell off their buses or even entire depots after they ruled that a lack of competition in the local bus market may be a cause for inflated fare tariffs and sub standard services.

OFT’s proposal is one of a series suggested in a recent study that reach the overall conclusion that operators in the £3.6 billion market could be overcharging customers.

After a rapid wave of consolidation in 1986, currently almost y two-thirds of UK bus services are controlled by five operators – Go-Ahead, National Express, Arriva, FirstGroup and Stagecoach, with OFT revealing that passengers were paying 9 per cent more for fares in areas where there was only one national operator.

On the FTSE Friday, Cable and Wireless was among the risers, gaining 1.6 per cent to 143 pence amid hopes that the market rebound would allow it to revive plans to split out its worldwide division.

The insurance sector was also on the rise, boosted by Aviva rising 5.5 per cent to 411 pence and Friends Provident up 4.3 per cent to 82 pence

Legal & General also gained 5.6 per cent to 78 pence after major market analysts named the stock among their top picks in the sector.

The FTSE’s advance also favoured stocks with recovery potential, with British Airways being among the hottest rising 7.2 per cent to close at 188 pence.

A 2 per cent rise gave the FTSE 100 its fourth straight session of gains, up 94.31 points on Friday to its biggest gain in more than a month at 4,850.89. For the week, the benchmark was up 2.9 per cent, lifting the index to a 10-month high.

On its way back in some style is the FTSE 250 jumping a further 1.73 % or 147.47 points to close for the weekend on 8,678.83

Currency markets remained fairly stable on Friday.

• Pound/US dollar 1.6501
• Pound/Euro 1.1522
• Pound/Japanese Yen 155.7159
• Pound/Swiss Franc 1.746

World stock markets have risen after US central bank chief Ben Bernanke said the world’s biggest economy was nearing the start of a recovery.

The Fed boss said unemployment, which is expected to top 10% in the US, would fall "only gradually".

However, European Central Bank president Jean-Claude Trichet expressed concern at what he saw as premature talk of a full recovery.

On Wall Street, the Dow Jones index rose more than 1%, while European markets were also sent higher.

US stocks rallied to new highs for the year on Friday after early optimism from Europe was boosted by signs of a US recovery.

An unexpected jump in the sales of existing homes fuelled the US stock market’s best day since late July.

This gave investors further confidence that the recession is ending, after figures earlier in the week showed factory activity in the mid-Atlantic region and manufacturing in the New York area both rose impressively last month.

The Dow Jones Industrial Average continued its steady recovery, up a further 155.91 Points to close on 9505.96. The NASDAQ also crossed the 2,000 point barrier again up 31. 68 points to close on 2020.90

Monday evening in the US will see an end to the cash-for-clunkers scheme which has been described as "a victim of its own success" just a month after the scheme was introduced.

The decision to wind down the scheme was taken to ensure that payments do not exceed the $3 billion allocated by Congress.

By Thursday, the transportation department had recorded 457,000 transactions, worth almost $2 billion in rebates.

The board of General Motors was set to choose their preferred bidder for a controlling stake in Opel/Vauxhall on Friday. Amid intense pressure from the German government to favour Magna International, the Canadian parts maker, the decision is to be made amid growing disquiet over the sale process among other EU member states where the Detroit carmaker has operations. The UK government is concerned that the Germans will seek to call the shots in deciding which GM plants are closed or scaled back as the new owners work to put the unit on a more even financial keel. Magna is competing against RHJ International, the Brussels-based private equity group.

The price of oil has hit its highest level of the year, boosted by sharp rises in Chinese stocks and rising shares on Wall Street.

The price of US crude rose to $74.15 a barrel before settling at $73.89, a gain of 98 cents. London Brent was up 86 cents at $74.19.

Worldwide oil prices have been extremely volatile this year.

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Tags: Andrew Parsons, Arriva, Bank, Banking, Barclays, Ben Bernanke, British airways, buy-to-let, Chelsea Building Society, Currency, Dow Jones, Economy, European Central Bank, Financial News, FirstGroup, Fraud, FTSE, General Motors, Go-Ahead, Legal & General, Lehman Brothers, Mortgage, NASDAQ, National Express, News International, Office of Fair Trading, Opel, Richard Hornbrook, Royal Bank of Scotland, Stagecoach, Stock Markets, Stocks and shares, Thelondonpaper, UK Banks, UK business, Vauxhall, Wall Street

Mervyn King blew into the open the lack of trust and rancour between the bank of England and the Treasury on Wednesday as he complained he had not been adequately consulted on Alistair Darling’s plans for reform of banking regulations.

The Bank governor also heightened tensions over fiscal policy by insisting that the government’s “extraordinary” and “enormous” levels of borrowing had to be reduced faster than the Treasury planned, even if the economic recovery was only as strong as Mr. Darling pencilled in at the Budget.

The Organisation for Economic Cooperation and Development says the world economy is near the bottom of the worst recession in post-war history. The body that represents the 30 most industrialised nations said that those economies would shrink 4.1% this year. But it adds that recovery is likely to be “weak and fragile” for some time.

The UK is in “a sharp recession”, it says, with output set to decline by 4.3% in 2009. worse than its previous forecast of a 3.7% fall.
The OECD predicts zero growth in the UK economy in 2010, and says the UK budget deficit will reach 14% next year – both worse than UK government estimates.

Reality television mogul Simon Cowell and retail billionaire Sir Philip Green are finalising details of a new company they plan to run together.
Mr. Cowell has a production company called Syco, which makes shows such as Britain’s Got Talent and X Factor. Sir Philip would add his business acumen as the owner of BHS and Topshop.

On the FTSE, Stagecoach, the operator of the U.K.’s largest rail franchise surged 8.5 percent to 127.75 pence, the biggest jump since April 1.
British Land Co., the U.K.’s second-largest biggest real estate investment trust, increased 1.3 percent to 385.25 pence after Credit Suisse Group AG recommended buying commercial property shares.

McBride Plc, Europe’s largest supplier of store-brand household goods to supermarkets, soared 11 percent to 136 pence after saying revenue in its fourth quarter was “stronger.”

The benchmark FTSE 100 added 49.96, to reach 4,279.98, rising for the first time in three days. The FTSE 250 climbed by 127.89 points to 7,320.85

Sterling rose slightly against dollar as well as the Swiss Franc whilst retreating against the other two major currencies on a mixed day for trading.
Pound/US dollar 1.6451
Pound/Euro 1.1778
Pound/Japanese Yen 157.1041
Pound/Swiss Franc 1.8054

The recession in the US is “slowing” according to a spokesman from the Federal Reserve whilst cautioning that the economy is likely to remain weak.
Interest rates are to remain unchanged at their current low range of between zero and 0.25% where they will remain for an “extended period”.
In addition. the” Fed ” announced that they will continue their present level of purchasing long-term government debt to expand money supply.

On Wall Street, share values made a minor recovery with the Dow Jones up 61.44 points to 8384.35, while the NASDAQ jumped 35.65 points to close on 1800.57

As the day for his sentencing approaches for US financier Bernard Madoff, his lawyer has announced that Madoff should be handed down a sentence of no more than 12 years in prison for his crimes. Madoff pleaded guilty to 11 charges of investment fraud amounting to £35 billion. Madoff, now 71, is liable to be sentenced for to 150 years in jail (or life)

In their first-ever offer of unlimited one-year funds, the European Central Bank has pumped a record €442.2 billion into the eurozone banking system in their continuing struggle to combat Europe’s severe recession. The next largest amount injected in a single ECB operation was the €348.6 billion injected into the European Community in December 2007.

The Swiss franc fell sharply on Wednesday after the country’s central bank intervened in the foreign exchange market to halt the currency’s rise.
Traders said the Bank for International Settlements was active in the market on behalf of the Swiss National Bank, first buying Euros against the Swiss franc and later buying dollars against the Swiss currency.

Oil prices continued to edge lower falling below the $70 mark to $ 68.48.

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Tags: Bank, Banking, Bernard Madoff, European Central Bank, Financial News, Recession, Swiss National Bank, UK Banks