The planned merger, between British Airways and Spanish carrier Iberia Lineas Aereas de Espana SA, which is expected to get regulatory backing and be concluded by the end of next year, will create the world’s third largest airline.

According to Willie Walsh, British Airways (BA) chief executive the planned merger with Iberia is "great news for British Airways, our customers and our shareholders". His comments came after British Airways Plc agreed to the $7 billion merger ending more than a year of talks on a tie-up, largely aimed at fighting a slump in travel and closing the gap with competitors.

Under the all-share deal, British Airways investors will own about 55 percent of the business. The merger due to be completed by late 2010 is still subject to cancellation by Iberia if BA fails to resolve their pressing pension deficit issues.

UK engineering firm Rolls-Royce have announced that they have been awarded contracts to produce aircraft engines to the value of £1.2 billion, The engines will be used to power Airbus planes for Air China and Ethiopian Airlines. Rolls Royce made the announcement the first day of the Dubai Airshow on Sunday. The engines are scheduled to be delivered in stages from 2011 to 2017.

According to representatives from one of the UK’s most powerful unions, Unite, the leading banks have still to absorb the reasons behind the current credit crisis, and continue to set unrealistic sales targets for their staff in order for them to earn their salaries. Instead they continue to apply pressure

On staff to promote financial products, often to those who can ill afford them.

The union says that legislation forcing banks to pay theory staff higher basic salaries and placing less emphasis on bonuses should be implemented. The new breed of British bank should instead focus on high standards of customer service and pay fair wages for all staff. The British government will announce legislation next week giving regulators the power to stop bankers from pocketing big bonuses that could destabilize the financial system, a newspaper reported Saturday. Treasury chief Alistair Darling told the Sunday Telegraph that the new Financial Services Bill will allow financial watchdogs to cancel pay packages that reward undue risk-taking. The bill is due to be announced Wednesday as part of the Queen’s Speech, in which the government lays out its plans for the next session of Parliament.

Darling was quoted as saying that the legislation would give the Financial Services Authority the power to cancel contracts that breach a banking remuneration code agreed by the Group of 20 nations earlier this year. The regulator could fine banks that fail to comply.

Liberty International, the U.K.’s biggest shopping-center owner, added 3.9 percent to 504 pence. British Land, the U.K.’s second-largest real estate investment trust, rallied 2.8 percent to 498.2 pence. Land Securities Group Plc, the largest real estate investment trust, added 2.3 percent to 726.5 pence.

Investment Property Databank Ltd. today said the average value of U.K. stores, offices and warehouses rose 1.9 percent in October, a third month of gains, and the steepest advance since December 2005.

The total return for commercial real estate, which measures the change in capital values and rental income, rose by 2.5 percent in October.

U.K. supermarkets are getting a record amount of sales from promotions as they attempt to lure shoppers before the holiday season. At big supermarkets, 35 percent of sales by value are on promotion, compared with 26 percent a year ago. This year’s level is a record high

Recent figures released show a continued improvement in recruitment activity in October, within the UK financial services sector. Job offers in the month increased by approximately 4%, which is accredited to a significant increase in recruitment activity by stock brokers. On the downside, investment banks are reported to be reducing their intake of new people.

Sterling retreated on Friday before the strengthening dollar, gaining only against the Yen.

• Pound/US dollar 1.6668
• Pound/Euro 1.1201
• Pound/Japanese Yen 149.3497
• Pound/Swiss Franc 1.6883

The FTSE closed at a 14-month high, aided by gains in property shares. At end of trading Friday the guide was up 20 points to 5,296.55. The FTSE 250 also rose, up 83 points to 9,373.74.

It is now official- The French and German economies, the Eurozone’s two largest, are out of recession.

Figures recently release show that both economies show both grew between July and September, Germany by 0.7% and France by 0.3%. However, both the French and German economies grew by less than analysts had expected.

Lagging behind is the UK, still apparently bogged down in their longest economic contraction since World War II.

Recent figures show that the US trade deficit unexpectedly widened by the largest amount in 10 years in September.

The trade gap, the difference between US imports and exports, grew 18.2% to $36.5 billion (£21.9 billion) from August.

Imports or the same period rose by 5.8%, the strongest increase since 1993, providing yet another indication that consumer spending is recovering.

The Dow Jones made a late rally on Friday, closing for the weekend up 52.30 points to 10280.22. The NASDAQ was seen to be holding its own, up just three points 2160.96.

Hewlett-Packard has announced that they are to acquire the 3Com company for $2.7 billion. A spokesman for HP projected that the acquisition will give HP an added edge in the data centre networking sector. The deal will give HP capabilities in a number of areas in which the company was lacking, he said. Both 3Com and HP have been strong in the small and mid-size business networking space, However analysts predict that the addition of 3Com to their stable will create for HP an enterprise data switch portfolio to better compete with main rivals, Cisco.

Leaders of the 21 nation Asia-Pacific Economic Co-operation group(Apec) who are meeting have gathered in Singapore for the annual meeting of the have proclaimed that Asia is leading the world out of recession. Their claims may be backed by the announcement last month from the International Monetary Fund (IMF) that the Asian economy is expected to grow by 2.75% in 2009 and 5.75% in 2010. These projections compare very well with the flat to negative growth in the US and Western Europe. Statistics which can be seen to reflect the shifting balance of power between the US and Asia.

Gold prices were receding before the weekend, after rising above the $1,100 mark in the previous session. On the other hand crude oil prices were steadying after dropping more than $2 a barrel, which analysts interpreted as being because of fears of reduced US demand.

financial

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Tags: 3Com, Alistair Darling, Apec, Asia-Pacific Economic Co-operation group, BA merger, Bank, Banking, British airways, British Economy, British government, British Land, British Pound, Cisco, Credit Crunch, Crude oil, Currency, Dow Jones, Economics, Economy, Employment, Financial News, Financial Services Authority, Financial Services Bill, FTSE, Gold, Hewlett-Packard, HP, Iberia, Iberia Lineas Aereas de Espana SA, International Monetary Fund, Investment Property Databank Ltd, Land Securities Group Plc, Liberty International, Money, Money Markets, NASDAQ, Queen's Speech, Recession, Retail, Rolls-Royce, Stock Markets, Stocks and shares, UK Economy, UK government, UK Recession, Unite, Willie Walsh

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