Alistair Darling, UK Chancellor of the Exchequer has announced that he is open to discussion on the possibility of scaling back on the interest rate charges which Iceland is required to make on the £3.4 billion pound losses from failed online bank Icesave. After talks between the governments in London, Darling was reported as saying that although British taxpayers "must get their money back" the Treasury could be willing to negotiate terms. The Treasury is considering two options to scale back interest rate charges while insisting that both options must see debts being fully recouped. The Icelandic government is seemingly eager to arrive at a more flexible compromise as opinion polls in the country suggest the initial deal that was hammered out would be more than likely rejected in a forthcoming referendum.

According to a very recent survey, the UK personal computer (PC) market saw fourth quarter growth for the first time in a year, despite a fall in sales from the business sector. Holding the top spot were Acer with 19.1 per cent market share, with HP hot on their heels with an 18.9 per cent market share. Dell was in third place with 16.5 per cent, followed by Toshiba and Samsung with 10.4 per cent and 6.5 per cent respectively. The total UK market in terms of shipments in the fourth quarter of 2010 was 3.8 million units. A market analyst reported that the personal computer market in the UK was becoming increasingly dependent on laptops (mobiles), which accounted for 70 per cent of the total PC market, with growth in demand reaching 24 per cent in the fourth quarter of 2009. However, the report did state that despite the overall growth, the professional PC market declined by 25 per cent in the fourth quarter of 2009.

The much loved general interest magazine Reader’s Digest UK has been forced into administration after failing to gain support from the UK pension’s regulator over an agreement for funding their £125 million pension deficit. The UK subsidiary of U.S. Reader’s Digest Association have recently brokered a deal with trustees of its pension plan and the Pension Protection Fund. The deal would have seen a capital payment alongside the transfer of a one-third interest in the equity of the UK business to the UK pension scheme trustees. The UK is the only branch of the multiple national Readers’ Digest Association with a large pension shortfall. The parent company said the UK insolvency is not liable to have a material impact on its other global operations.

Legal & General (L&G) has revealed plans to supply "longevity insurance" to pension funds, in a move which will see the insurer compete against the major European insurance companies. The launch of the new insurance product by L&G will precede similar plans by others in the insurance sector including Prudential, who are also considering moving into this market. A spokesman for L&G emphasised that the provision of longevity swaps will "develop alongside and not necessarily compete with" L&G’s bulk annuity business. Babcock International and RSA were reported to be the first companies to take out longevity protection in 2009.

Private equity group HgCapital Trust is seeking to raise more capital from investors by preparing a share issue to shore up its finances, amid expectation of a rise in new investments. Industry sources suggest the London-listed group could raise as much as 50 million pounds. As one of the best-performing listed private equity groups with a market capitalisation of 210 million pounds, HgCapital is hoping to appeal to investors from its position of strength by making a placing of ordinary shares with subscription shares attached. A spokesman for the company projected that HgCapital will invest more than it sells, as the market conditions present bargains.

Shares in Barclays were up 2.9 per cent to 302 pence on a positive response to their recent results. Ahead of their results due to be issued next week, Lloyds Banking Group rose 3.2 per cent to 50½ pence and Royal Bank of Scotland took on 1.9 per cent to 34 pence.

Sterling continued to slip against both the Euro and the Dollar. It closed at $1. 5392 while settling on 1.1409 against the Euro.

Overall, the FTSE 100 added 32 points to 5,307.85, meaning that it has risen for seven of the last eight sessions.

According to a report released on Thursday, certain of the states of the U.S. look like facing a total shortfall totaling no less than $1 trillion in their funds for employees’ pensions and retirement benefits. The state of Illinois is reported to be in the worst shape, with only 54 percent of its pension obligations funded, according to the report, taken into account only the fiscal years up to June 2008. That fact makes the picture even less than rosy as the downturn that began in the final six months of 2008 and continued till the end of 2009 – was when many funds’ investment portfolios suffered their most serious devastation. Regardless of stock market fluctuations, pension funds were destined to fall down a budget hole, the non-profit research center who prepared the report pointed out.

The US Federal Reserve has predicted that the US economy is still on target to grow strongly during 2010, but unemployment will remain high, has warned. In its latest forecast, the Fed said that the economy would expand between 2.8% and 3.5% in 2010, with the unemployment rate expected to remain between 9.5% and 9.7% in 2010.

Encouraging January housing starts, better-than-expected earnings and receding fears on the European sovereign debt situation boosted risk appetite prompted Wall Street stocks to rise moderately for the second consecutive session. The Dow Jones Industrial Average was up 93 points to 10,392.9 while the NASDAQ Composite rose 15 points to 2,241.71

Hewlett-Packard (HP) has raised its outlook for its financial year after strong sales over the Christmas period lifted its profits by 25%.

Higher demand for its personal computers and servers saw its net profit for the three months to 31 January total $2.32 billion (£1.48 billion).

This compares with $1.86 billion for the same first quarter period a year earlier. HP’s revenues for the quarter were up 8% to $31.2 billion, as its results came in ahead of market expectations.

The price of oil has risen sharply as the dollar, the currency in which the commodity is priced, weakened against the pound and the euro.

US light crude rose by $3 to $ $77.01 with London Brent settling at $75.68 a barrel.

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Tags: Alistair Darling, Babcock International, Banking, Barclays, British Economy, British Pound, Credit Crunch, Currency, Economy, Financial News, FTSE, Hewlett-Packard, HgCapital, Icesave, Legal & General, Lloyds Banking Group, Money, NASDAQ, Reader's Digest Association, Recession, Retail, Royal Bank of Scotland, RSA, Savings, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession, Wall Street

U.S. President Barack Obama has celebrated his first year in office by showing a more brittle side to his personality, and in recent statements has been particularly vehement in his comments regarding the US banking system. Obama has stated his intention to raise legislation that would force around 50 banks, insurance companies and large broker-dealers to pay a tax of 0.15 percent on all of their U.S. assets, less their capital and deposits. Falling into that category will be the Royal Bank of Scotland (RBS), Barclays Banks and HSBC who, if the legislation is passed, could be forced to pay more than $10 billion to the U.S. government over the next 10 years. Analysts have already calculated that HSBC could be forced to pay around $3.8 billion dollars and Barclays could face a total bill of around $5.6 billion dollars over ten years. While the RBS will only be paying out around one and half billion dollars, they appear to be already in the process of raising capital to meet the bill, when it comes. They have announced that the Grosvenor House hotel, , is to be put up for sale by the part-nationalised RBS and proceeds for the sale is expected to raise between £600 and £700 million as part of RBS’s unwinding of its property portfolio. The Grosvenor House hotel, which has previously hosted events such as the CBI annual dinner, could be on the market as early as this month.

Meanwhile the Bank of England (BOE) are still feeling the effects of their quantitative easing programme, with the news of the loss of £3.6 billion s on its purchases of government bonds, whilst projecting that capital losses from the purchase, so far of £192 billion pounds in gilts would be £8 billion if these were sold today. The reason for the shortfall is the steep drop in government bond prices as a result of the strengthening economic recovery felt the past month. On the upside, losses will be offset by £4.4 billion pounds, which is the interest payment the BOE has received from the securities.

Construction companies made up more than 20 percent of UK business failures in 2009, a recent survey has disclosed. While the number of companies involved in the construction sector that closed their doors in 2009,

decreased slightly from 2008, there were still 683 who fell into administration during 2009, compared with 716 in 2008. The fourth quarter of 2009 saw a 17 percent decline in construction administrations according to Deloitte with 129 compared with 155 in the third quarter.

Shares in Premier Foods have fallen by more than ten percent after the food manufacturer announced that full-year pre-tax profits would be lower than expected, at around £165 million pounds for the financial year to February 16. Total sales increased by 1.5 percent during the fourth-quarter with sales of the company’s branded goods increasing to around £1.7 billion, making up to two thirds of the total turnover for 2009, compared with 61 percent the previous year.

The bus operator FirstGroup has reported a drop in turnover of around 20 percent for the company’s U.S. Greyhound operation during the first half of their financial year. A little ray of sunshine was that revenue for the third quarter was only down by 11.4 percent and passenger revenue for the group’s UK bus business grew by 0.7 percent during the three months to December 31. On the upside, FirstGroup announced that they remain on course to achieve earnings targets for the year and that trading, was in line with management expectations.

The European electrical groups DSGi, who own and operate the Currys and PC World chains in the UK, have announced trading figures that are in excess of most City analyst’s projections. Group sales rose by eight percent during the 12 weeks to January 9, much higher figure than the three percent expected by most analysts, with the reason attributed to an upturn in consumer sales.

Home Retail Group (HRG) have also updated their predictions for its full-year profits, which they now expect to be around £20 million higher than the £265 million initially forecast, following a four percent improvement in sales at HRG’s DIY chain Homebase.

One of Cadbury’s major shareholders has indicated that US food giant Kraft will have to increase their hostile takeover offer if it wishes to win support.

Legal & General Investment Management, which owns 5% of Cadbury shares, said Kraft’s current offer did not meet "the long term value" of the UK firm. Legal & General’s comments come ahead of Tuesday’s eagerly anticipated deadline for Kraft to increase its offer to Cadbury shareholders.

Reports continue to gather strength that Hershey is also planning a rival bid for Cadbury which may be announced as early as this week. The current state of affairs is that Kraft is currently offering £10.5 billion or 761 pence per Cadbury share, which was rejected by the chocolate-maker’s shareholders. .

Kraft’s current bid is worth less than Cadbury’s share price which closed on Friday at 793.5 pence.

British Telecom (BT) announced their intentions to enter a price war with Sky over the price charged for fans to watch premium sports events on TV, including football and cricket.

The telecoms firm is awaiting the outcome of an Ofcom probe, which will be known in March, examining whether Sky must drop the wholesale price it charges rivals for content.

BT Vision has leaked their intentions to charge about £15 a month for Sky Sports 1, about £10 cheaper than Sky currently charges. A spokesman for BT projected that there would be benefits to the viewing public for choosing BT as they would be getting more choice

Vodafone UK has launched a new online business centre, bringing information and insight on its full range of capabilities in mobile, fixed and unified communications together in one place. The site, www.vodafone.co.uk. Has been designed to make it even easier for private and business customers to find the information they need and the solutions that best suit them. Meanwhile Vodafone (has become the third mobile phone operator in Britain to begin to market the Apple iPhone in the UK. Results are encouraging with a total of 50,000 units delivered on the first day of sales. Until recently, Vodafone had been disallowed from marketing the premier smartphone due to exclusivity rights brokered between Apple and O2.

Vodafone is now the fourth company in the U.K. to carry the iPhone, following O2, Orange and Tesco. While O2 once enjoyed a two-year exclusive deal with Apple to offer the iPhone in the U.K., that exclusivity ended last year and Orange and Tesco began offering the Apple smartphone in November and December, respectively.

Orange sold 30,000 iPhones on its first day of its launch in November 2009 while Tesco has not disclosed any sales figures.

Also enjoying some good trading on the back of the iPhone launch is the Carphone Warehouse. Their trading update for the last quarter of 2009 is expected to show a four percent increase in the number of phone connections compared to the same period in 2008. Sales of the most expensive products, such as the Apple iPhone and BlackBerry, are believed to contribute considerably to sales and profits, while the company’s fixed-line division TalkTalk is reported to have added 46,000 new subscribers during the last three months of last year.

The pound improved a little against the dollar before the weekend, closing at 1.6301, while the Euro being traded at 1.321

The FTSE 100 Index dropped 43 points before closing on Friday finishing on 5,455.37.

Wall Street bank JP Morgan Chase has reported profits of $3.3 billion (£2 billion) for the last three months of 2009, compared with profits of $702 million for the same period in 2008, which was the height of the financial crisis. Total profits for the bank for year were $11.7 billion, with investment banking providing the bulk of the profit.

The Dow Jones Industrial Average took a tumble before closing on Friday down 81 points to 10,609.65. The NASDAQ Composite was also down. 23 points to close on 2287.99

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Tags: Apple iPhone, Bank of England, Banking, Barack Obama, Barclays Banks, BlackBerry, British Economy, British Telecom, BT Vision, Cadbury, Carphone Warehouse, Currys, Deloitte, Dow Jones, DSGi, Economy, Employment, Financial News, FirstGroup, Grosvenor House hotel, Home Retail Group, Homebase, HSBC, JP Morgan Chase, Kraft, Legal & General, Money, NASDAQ, O2, Ofcom, Orange, PC World, Premier Foods, Recession, Retail, Royal Bank of Scotland, Sky, Stock Markets, Stocks and shares, Tesco, UK Banks, UK business, UK Economy, UK government, UK Recession, Vodafone UK, Wall Street

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

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

According to data released by the Halifax Building Society, property prices increased by more than one percent. Halifax, one of the UK’s leading building societies also reduced their forecast reduced how far they reckoned property values would fall in the remaining part of 2009. Their updated prediction is that house prices will fall by just seven percent in 2009.

Halifax stated hat prices had fallen by 0.8 per cent during the first seven months of 2009, with average house prices at £159,623 in July compared with £160,861 in December 2008. July house prices were 12.1 per cent lower than the same period in 2008, with the annual rate of change showing an improvement for the third consecutive month.

On a more sober note a recent report released by the Royal Institution of Chartered Surveyors has reiterated their well known standpoint that there is little chance of a quick return to a housing boom, despite the fact that UK prices may well rise in 2010, while standing firm on their forecast of a price fall of 10-15% this year amid a “considerable shift” in the market. Tight credit and job losses are the principal causes for limited transactions in 2009 and if they continue may still cause prices to slip back in 2010.

Despite their expected £4 billion loss in the first half of 2009, shares in Lloyds Banking Group surged by 11% due to mounting bad debts at HBOS. The only reason that analysts could come up with were that most of the bad news that the bank could dish up was now out in the open, and investors now had a clearer picture to build on.

Lloyds Banking Group, of which 43% is owned by UK taxpayers, announced that although they were still sitting on £13 billion of toxic loans and investments, such charges for bad loans would be smaller in the future.

Meanwhile it seems increasingly likely that the sale of the healthy parts of Northern Rock will be held off until after the general election. Alistair Darling, UK chancellor said he was in “no hurry” to offload the bank he nationalised in February 2008 after they announced reasonable half-year losses of around £700 million. The chancellor remains adamant that the rescue operation could still reap a profit for the taxpayer.

A recent study also shows that the pension-plan shortfalls of the U.K.’s top publicly traded companies more than doubled to an unprecedented 96 billion pounds in June.
The deficit of these companies all of whom are listed on the FTSE-100 Index with a 41 billion-pound shortfall in the same period last year, The signs are that employers are cutting back on pension benefits after the global financial crisis eroded profits and stock prices. Europe’s second-largest oil company, BP Plc, announced in June their intention to close its final salary pension plan to new U.K. workers, while Barclays Plc are asking their 18,000 employees to surrender similar benefits that the bank now claim to have become too costly.

Insurance group Legal & General have announced that they have succeeded in “considerably reducing” their losses in the first six months of the year, as well increasing their capital surplus. L&G claimed that the cuts were brought about by reduced workforce headcount, and closing down activities in less profitable business areas.
Despite the fact, the insurance group halved its interim dividend as it pressed ahead with a programme to save costs, causing their shares to drop in value by 5.6 per cent to 62 pence. , For the half year, Legal & General’s showed pre-tax losses decreased by 81 per cent to £74 million on revenues that slid 6 per cent to £3.1 billion.

Industry tycoon Rupert Murdoch’s News Corp announced losses of £2 billion in the financial year to the end of June. A year which Murdoch claimed to have been “their most difficult in recent history”.

The loss, largely due to $8.9 billion in write-downs already announced, compares with a $5.4 billion profit a year earlier.
Revenues at the media giant, owners BSkyB, 20th Century Fox and the Sun newspapers among many others, were down 7.8%.

It appears that ITV is set to sell Friends Reunited to DC Thomson, the Dundee-based publisher, for £25 million, less than four years after the company bought the social network for £170 million, a sum that included £50 million in performance-related bonuses.

The FTSE 100 reversed early gains to close down 24.24 points at 4,647.13.
Meanwhile the FTSE 250 continued to gain, climbing a further 23.57 points to close on 8,266.08

The pound continued its rise against the dollar as well as all the other major currencies on Wednesdays trading.

Pound/US dollar 1.7009
Pound/Euro 1.1799
Pound/Japanese Yen 161.1997
Pound/Swiss Franc 1.8028

As a result of ongoing controversies, the US Senate looks likely to push through their $2 billion extension of the “cash for clunkers” car subsidy programme before it breaks up for its August recess on Friday.

In a change of position from Monday, when senators from both parties expressed reluctance to follow the House of Representatives in extending the highly popular scheme the extension could be passed by the end of the week

Yesterday on Wall Street, the Dow Jones lost a lot of its previous days falling 39.22 points to 9280.97. The NASDAQ also crept back a little, down 18.26 points to close below the 2,000 mark on 1993.05

In the face of the global economic slump computer firm Cisco Systems have announced a fall in its quarterly profits by 46%, $1.1 billion compared with $2 billion for the same period a year earlier. Analysts, who had expected an even steeper decline, also were encouraged as was the company who announced that the quarter may have seen the last of the recession-related downturn.

Following the latest US weekly inventories data, US crude oil prices fell to $71.97 a barrel, after hitting a high of $74.89 in the previous session.
US crude stocks have risen to 1.7 million barrels.

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Tags: Alastair Darling, Barclays, BP, British Economy, Economics, Economy, Employment, Financial News, Halifax, Halifax International, Legal & General, Lloyds, Lloyds Banking Group Plc, Mortgage, Mortgages, News Corp, Recession, UK Banks

According to their recently released annual report, the Financial Services Authority (FSA) Britain’s financial regulator, whose role in life is to supervise UK banks and help them to reduce debt; themselves have shown a deficit of £23 million pounds for the year.

In order to ease cash flow problems, the FSA have had to take up £100 million-pound loan from Lloyds Banking Group Plc As the FSA raises its revenue through fees that financial-services companies must pay to be regulated, and this latest bombshell is bound to mean some moments of discomfort for them. The agency announced that they will be raising their fees for the coming financial year to cover unexpected overheads.

Pension scheme burdens at U.K. banks HSBC and Barclays are reported to have increased dramatically during the first half of the year, largely due to an ongoing collapse in corporate bond yields. The deficit in HSBC’s main U.K. pension scheme was reported to have increased almost ten-fold from $392 million at the turn of the year to $3.9 billion at June 30.

It was announced on Tuesday that Australia’s ANZ have agreed to buy part of Royal Bank of Scotland’s Asian banking assets for $550 million. ANZ will be acquiring RBS units in Taiwan, Singapore, and Indonesia as well as in Hong Kong, the Philippines and Vietnam. The sale goes through as RBS continue in their drive to curtail their international activities after posting the biggest loss in UK history last year.

It was announced that nearly 75 percent of British shoppers now choose supermarket own labels, compared to only 25 percent a year ago. According to a recent survey, the rise was attributed supermarkets increasingly expanding their own ranges as well as cost-conscious consumers arriving at the conclusion that the fact that own brand ranges despite being cheaper do not fall for the quality of the “brand” products. In response, certain some private label brands such as Heinz, and Reckitt Benckiser (recently reported resurgence in demand for their branded products

Data centre provider Telecity announced an outstanding increase of pre-tax profits of 80 per cent for the first half of 2009 as their expansion program continues.
In the six months to June 30, revenue increased 33 per cent to £82.2 million, Telecity, are halfway through a three-year new-build programme that will almost double in its capacity, measured in megawatts of power available to customers.

The company announced that internet usage continues to grow, maintaining demand among Telecity’s customers, including technology services companies such as Hewlett-Packard as well as large telecommunications groups such as BT and AT&T.

Aerospace and defence stocks were under pressure on Tuesday as the FTSE 100 slipped from its 2009 high.

Defence contractor Qinetiq dropped 4.7 per cent to 135 pence after their interim trading statement reiterated profit would be weighted towards the second half due to US defence budget delays. Also shares in Rolls-Royce were down 1.8 per cent to 412 pence after brokers announced that the decline in demand for the company’s products would continue for several years.

Standard Chartered was the sharpest faller in the insurance sector, losing 7.5 per cent to 1328 pence after launching a surprise share issue to raise £1 billion in a drive to fund growth. Legal & General saw their shares down 4.8 per cent to 62 pence after their first-half operating profit were lower than market expectations due to investment losses as well as damped speculation that it might sell its asset management arm.

Pharmaceutical giant GlaxoSmithKline closed 0.1 per cent weaker at 1147½ pence after it was once again mooted as a potential bidder for Allergan, the Californian maker of breast implants and Botox.

After the announcement that they had struck oil in Uganda, shares in Tullow Oil outperformed a weak commodity sector, rising 2.6 per cent to 1021 pence.

Dana Petroleum was down 1.3 per cent to 1402 pence after Tethys Oil, its partner in Morocco, said it had plugged an exploration well after gas levels proved non-commercial.

Weakness among the banks and insurers led the FTSE 100 to close down 0.2 per cent, fading 11.09 points to 4,671.37.

Meanwhile the FTSE 250 continued to make considerable gains, climbing a further 84.4 points to close on 8,242.51

The pound has continued to gain against the dollar, rising as high as $1.7005 before falling back to $1.6938.

Pound/US dollar 1.6938
Pound/Euro 1.1763
Pound/Japanese Yen 160.6581
Pound/Swiss Franc 1.7985

US consumer spending climbed for the second consecutive month in June, despite growing unemployment and falling personal income.
Spending rose 0.4%, ahead of analysts’ estimates against 0.1% in May with rising food and fuel costs blamed.
Personal income fell 1.3% from the previous month – which had seen one-off stimulus payments from the government.
Consumer spending makes up about 70% of economic activity in the US.

Yesterday on Wall Street, the Dow Jones continued to climb up 33.63 points to 9320.19. The NASDAQ also crept up a little, 2.7 points to close on 2011.31.

The US House of Representatives has caused no little amount of consternation through inserting an amendment into their $33 billion spending bill that disallow any government money being spent on cars other than those made by the US “Big Three”, car manufacturing concerns. The proposed amendment has created considerable alarm from US trading partners in Europe and Japan, sparking claims of protectionism. A flurry of behind-the-scenes lobbying activity to make sure that the amendment is removed when the House bill is merged with a Senate version after Congress’s summer recess is already expected.

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Tags: AT&T, Bank, British Economy, BT, Economy, Financial News, Financial Services Authority, FSA, GlaxoSmithKline, HSBC, Legal & General, RBS, Retail, Rolls-Royce, Stocks and shares, Telecity, UK Banks