According to a recent report by the Centre for Economics and Business Research (CEBR) UK house prices are liable to rise by about a fifth in the next four years. The forces that will push property prices up are increased lending levels by the banks and interest rates remaining at a low level.

Home values will rise 6.5 percent in 2010 and will have gained around 20 percent by the end of 2013, according to CEBR radically altering their forecast of October 2009, which house prices would increase by only 2.6 percent this year.

CEBR’s announcement strengthens reports from the Nationwide Building Society that showed house prices have begun rising again after the economy returned to growth. However their optimism was dashed by news that potential UK house buyers could soon face a chronic shortage of credit that will see mortgages ‘rationed’.

According to the Council of Mortgage Lenders (COML) as government schemes to keep mortgage lending afloat are due to dry up in 2014, their fears that a funding gap to the tune of £300 billion will open up. COML predicted in their recent report that the UK is at risk of a chronic under-supply of credit, bringing with it the rationing of mortgages for customers that will continue for many years. Before the financial crisis, the funding gap, meaning the difference between what banks took in savers’ deposits and what they lent out, was always covered by the wholesale market in mortgage debt.

As a result of lower oil and gas prices, oil giant BP have reported a 45% drop in annual profit Its replacement cost profit for 2009 was £8.75 billion, compared with £15.39 billion in 2008. The company said that its oil and gas production increased more than 4% in 2009 and its reserves had grown for the 17th year in a row. Profits during the final three months of 2009 were up 33% from the same period a year ago.

However, the fourth quarter results fell short of analysts’ expectations, causing BP shares to fall more than 4% in early trading.

Shares in Northumbrian Water surged 12 percent after press reports that the Ontario Teachers’ Pension Plan may bid £1.7 billion ($2.7 billion) for the company. The water utilities market in the UK is liable to benefit if the speculation on Northumbrian Water is confirmed as it will establish a higher trading range for the other water stocks. On the news, Northumbrian Water rose by 12 percent to close on 289 pence. The Ontario pension fund already owns 27 percent of the U.K. water company and wants to buy the remaining stake.

Severn Trent caught the wave and added 4 percent to 1,170 pence while United Utilities gained 2.8 percent to 551.5 pence.

South Korea’s National Pension Service, the world’s fifth biggest pension fund, will next week take a 12 per cent stake in Gatwick airport, stressing that investment in Britain will play a significant role in quadrupling its international exposure. The NPS, which is aiming to expand its overall portfolio, came to the attention of Britain’s financial community last year when it bought the headquarters of HSBC in Canary Wharf for £773 million. Gatwick airport was sold late last year to Global Infrastructure Partners, an infrastructure fund backed by Credit Suisse and General Electric, for £1.51 billion.

The longest running saga in recent UK takeover history drew to a happy close as US firm Kraft Foods sealed their takeover of Cadbury after shareholders in the UK chocolate maker voted in favour of the deal.

Cadbury said it had received valid acceptances of the offer from investors representing 71.7% of the firm. Kraft chief executive Irene Rosenfeld celebrated the takeover by announcing: "I warmly welcome Cadbury employees into the Kraft Foods family." Despite the warm welcome, Cadbury employees staged protests in London calling for government support to guarantee jobs

Budget airline Ryanair has raised its full-year profit forecast as passenger numbers continue to rise. The company announced that it said it expects full-year net profits of about 275 million Euros, whilst reporting a 10.9 million Euro; (£9.5 million) loss in fourth quarter of 2009, a considerable improvement on the 101.5 million Euro losses for the same period in 2008.

Ryanair said the result had been helped by a 37% fall in fuel costs and passenger numbers increased by 14%, which had offset a 12% drop in fares.

Europe’s second- largest tobacco company Imperial Tobacco Group Plc have announced a “good start” to the year with business “in line” with company expectations, despite the weak economic climate. Despite the news, their shares declined 1.2 percent, to 2,002 pence. The Royal Bank of Scotland Group Plc are to allow its top performing employees to convert a large portion of bonuses given in shares into cash within 12 weeks of receiving them, according to a letter sent to investors yesterday. On the day RBS shares rose 7.9 percent, to 34.86 pence.

The pound closed down at 1.5977 against the dollar, while the Euro traded at 1.1438

The FTSE 100 dropped 4.1 percent in January as the U.S. government called for limits on risk-taking by banks and China moved to restrict lending and cool economic growth. The gauge is still 49 percent higher than in March after governments and central banks around the world sought to encourage growth by maintaining low interest rates and committing more than $12 trillion to stimulate the economy.

The benchmark FTSE 100 Index added 35.9 points to reach 5,283.31 at the close of trading in London.

US President Barack Obama has announced a $3.8 trillion (£2.4 trillion) budget plan for 2011, which includes increased spending for job creation, but cuts in other areas.

He also forecast the US deficit would rise to a record $1.56 trillion this year.

He scrapped plans to send astronauts back to the Moon and will seek to save $250 billion by capping a range of domestic spending programmes for three years.

Congress must approve the budget for the financial year starting on 1 October for it to take effect.

Mr Obama blamed the huge deficit on the decisions of President George W Bush, previous Congresses and his administration’s moves to prevent an economic collapse.

Stocks continued to extend gains after reports showing the U.S. manufacturing sector expanded more than forecast. The Institute for Supply Management’s factory index showed U.S. manufacturing expanded in January at the fastest pace since August 2004, spearheading the recovery from the worst recession since the nineteen-thirties.

On the news, the Dow Jones rose sharply, to close on 10284.91, while the NASDAQ rose 38 points, to finish on 2185.32

Gold lost some of the previous day’s sharp gains, dropping 0.1 per cent to $1,105. Oil rose 0.5 per cent to $74.81 a barrel.

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Tags: Banking, Barack Obama, British Economy, Cadbury, Centre for Economics and Business Research, Council of Mortgage Lenders, Credit Suisse, Dow Jones, Economy, Employment, Financial News, FTSE, Gatwick Airport, General Electric, George W. Bush, Global Infrastructure Partners, HSBC, Imperial Tobacco Group Plc, Kraft Foods, Money, NASDAQ, Nationwide Building Society, Northumbrian Water, Oil, Ontario Teachers’ Pension Plan, Property Prices, Recession, Retail, Royal Bank of Scotland, Ryanair, Severn Trent, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession

While the UK and with it almost all of Western Europe and the West Coast of the US are caught in the grip of the longest running and most severe cold spell that it has seen for close to thirty years without a break in the foreseeable future, many analyst are now scratching their heads and asking themselves "what will this do to the price of oil?"

Since the weather began to turn incredibly difficult about a week ago the price of oil has risen steadily from the around $78 to $82 within the space of one week, the highest price it has been all of 2009, and to those of you who may have forgotten, sat on a low of $32 a barrel towards the end of December 2008. With the news that the major economies, and especially China, were starting to build up stockpiles of oil, hopes were that prices would begin to fall and settle around the ideal figure of between $68 to $72 a barrel.

Analysts fear that if the span weather persists, and predictions are that at least in the UK it could continue to the end of January, and the increase in demand could push the price up oil even further, as stocks diminish. Meanwhile leading bodies in UK industry bodies have asked head- teachers to minimize snow-linked school closures to reduce levels of absence from the workplace. Although 61 percent of 200 companies surveyed by the British Chambers of Commerce said less than one in 10 employees was absent, the Federation of Small Businesses warned that childcare-related absences following school closures would become a serious problem. The cold snap looks likely to cost the economy close to £700 million pounds a day, meaning total financial damage of £14.5 billion pounds if, as expected. The bad weather lasts a further three weeks.

As expected UK interest rates will remain unchanged at 0.5%, meaning that the cost of borrowing has remained at a record low since March 2009. Economist are not expecting to see a rates increase s in the near term, despite expectations that the UK will finally have exited recession in the last quarter of 2009.

Formula 1 boss, Bernie Ecclestone is looking to buy a Saab, not the car but the company, and intends to do so in partnership with the Luxembourg-based private investment company, Genii Capital, which recently invested in Renault’s Formula 1 team.

Ecclestone’s dramatic announcement came shortly after the deadline for expressions of interest in the company closed without any public bids.

As well as Ecclestone’s offer, a second bid s also emerged, from the Dutch sports car maker, Spyker Cars.

U.S. food giant Kraft has received a ticking off from the principal shareholder Warren Buffett who has also thrown a spanner in the works of their proposed transaction. The Buffett-owned holding company Berkshire Hathaway who Hold 9.4% of Kraft’s stock announced that they will be voting against it is the proposal to issue up to 370 million shares to facilitate the Cadbury deal.

A spokesman for Kraft reacted to Buffet’s statement by saying that "Mr. Buffett is our largest investor and one of the most respected investors in the world. We take his opinion very seriously. We agree Kraft shares are deeply undervalued. We would not do anything to hurt shareholder value and we intend to remain disciplined in this process." Shares fell 7 pence, or 0.9 percent, to 772 pence on trading.

In their annual Christmas trading statement, Majestic Wine announced a rise in sales of 11.7 percent between Nov. 3 and Jan. 4 in the UK, with champagne sales regaining their seasonal appeal over Christmas. While champagne sales grew 11 percent, fine wine sales climbed 30 percent and online trading rose by 20 percent.

Family-owned brewer Fuller Smith & Turner also managed to increase its profits, sales and dividend in the six months to September, largely bucking the trend prevalent in the brewery sector. With members of the controlling families owning more than half of the company equity and 60 percent of the voting rights, executive chairman Michael Turner pronounced the effect that company’s long-term, risk-averse strategy was paying dividends.

The FTSE 100 brought in the New Year and new decade by closing above 5,500 for the first time since the start of September 2008 – before the Lehman Brothers collapse, coming after a 22% rise over the whole of 2009 and a 53% rally from the low last March. The FTSE 100 closed on Tuesday on 5522.5.

Britain’s currency weakened possibly due to U.K. Business Secretary Peter Mandelson hints that the pound’s devaluation aided the economy in the recession.

• Dollar 1,5967
• Euro 1.1126

The U.K.’s largest home builder by market value Persimmon Plc has announced that they completed the sale of 8,976 new homes in 2009 with a total value of around £1.4 billion pounds. On the news their shares gained 1.2 percent, to 469 pence. Wolseley Plc, the world’s largest supplier of heating and plumbing gear seemed to be moving in a positive direction, with their shares added 4.7 percent, to 1,361 pence.

The Vodafone Group PLC expects to be able to offer Google Inc.’s Nexus One smart phone to its U.K. customers in the next few weeks, with their rivals reported to be already in advanced talks with the Internet giant about the device.

Vodafone, the world’s biggest mobile operator, is also in early discussions with Google about supporting the phone in France, Germany and Spain, a Vodafone spokesman told Dow Jones Newswires Wednesday, and hopes to offer it across the rest of Europe through the course of 2010.

JD Sports Fashion Plc, the U.K.’s second- largest sportswear chain said sales at stores rose 6.6 percent in the five weeks up to the Ist of January .2010. On the news their shares jumped 6.2 percent, to 550 pence.

Marks & Spencer Group on Wednesday reported a small increase in third-quarter sales, despite not slashing prices in the run-up to Christmas, as customers snapped up cashmere sweaters and clothing for kids. But the company cautioned that trading will remain challenging this year.

Group sales at the iconic British retailer rose 2.6% in the three months to Dec. 26. In the U.K. same-store sales rose 0.8%, with general merchandise up 1.2% and food up 0.4%. Underlying sales returned to growth for the first time in two years.

Still, the results missed the consensus forecast for a 1.2% increase in same-store sales, partly because this year’s trading period excluded the first day of the company’s post-Christmas sales, when it typically sees a surge in revenue. Online sales increased 32% and international sales climbed 6%

Britain’s Home Delivery Network said it would buy DHL’s UK parcel delivery operations, DHL Domestic, from Deutsche Post DHL (DPWGn.DE), growing its market share in a sector profiting from a boom in online shopping.

With many of the UK s leading retailers, among them John Lewis and Next reporting significant online growth, companies such as Home Delivery Network have felt the impact.

The parcel delivery company, headquartered in Merseyside, northwest England, said the combined businesses would have annual revenues of more than £600 million pounds, delivering over 180 million parcels a year, with a combined market share of 17 percent.

Britain’s currency recovered slightly over the last two days

• Dollar 1,5992
• Euro 1.1198

The FTSE100 finished trading on Thursday in a fairly static position at 5526.72 barely moving on the week’s trading.

On Wall Street, the Dow Jones Industrial Average closed on Thursday up a further 24 points to 10,607 while the NASDAQ also dropped 8 points to 2,300.71.

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Tags: Bank, Banking, Bernie Ecclestone, British Chambers of Commerce, British Economy, British Pound, Cadbury, Currency, DHL, Dow Jones, Economics, Economy, Federation of Small Businesses, Financial News, Freezing Britain, FTSE, Fuller Smith & Turner, Genii Capital, Home Delivery Network, Interest Rates, JD Sports Fashion Plc, John Lewis, Kraft, Lehman Brothers, Majestic Wine, Marks & Spencer, Michael Turner, Money, Money Markets, NASDAQ, Nexus One, Oil, Persimmon Plc, Peter Mandelson, Recession, Saab, Spyker Cars, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession, Vodafone, Wall Street, Warren Buffett, Wolseley Plc

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Lloyds Banking Group is to cut 5,000 more jobs by the end of next year as it continues to reduce overlap following its merger with HBOS last year.

While almost half of these posts are among staff, 2,600 permanent jobs would be lost. The union Unite accused the bank of "corporate arrogance" and short-termism following the announcement, which will mean that Lloyds will have cut 15,000 jobs this year.

Japan’s second- largest carmaker Honda Motor Co have announced that they will be widening job cuts at its UK factory in Swindon, due to a major fall in demand in Europe as the end of government stimulus programs draws close.

According to a company spokesman, Honda plans to expand their voluntary early retirement plan, which succeeded in reducing the number of workers at the factory by 1,300 last December, although the spokesman declined to say how many additional jobs would be cut. The plant, which builds the CR-V and Civic models for the European market, saw production plunge by 75 percent to 400,000 units in the year until end September 2009.

A rapid recovery in UK commercial property values conditions could see the sector turn positive this year. The recovery comes after the deepest slump on record that looks like leading to an almost boom like situation according to forecasts. Real estate values are set to overturn most of the losses suffered in the first half as booming investor demand has taken prices back to near peak levels in some sectors.

As was widely expected, Cadbury have rejected the formal bid from Kraft on Monday, going as far as to describe the US food group’s offer as “derisory”. Roger Carr, Cadbury’s chairman, declared the formal offer “worse than the proposal the board has previously rejected” as it made no attempt to improve the terms of its original offer of two months ago. In the meantime Kraft’s share price has fallen steadily since their offer in early September, reducing the value of the bid from 745 pence a share to 717. Cadbury’s shares closed up 3 pence to 761 on the FTSE, while Kraft’s shares fell 31 cents in New York in midday trading to $26.47. However, Kraft have not rules out making an increased offer during the formal takeover offer period, which could last up to three months as analysts predict that the company may wait until towards the end of the offer period before making a final offer.

Company management at Sainsburys will be feeling the pressure as recent figures show that the supermarket group sales were expanding at the lowest rate of the UKs "big four " supermarkets. Sainsbury’s sales were shown to have risen by 4.7 percent in the 12 weeks to October 31, making for the lowest turnover expansion, less than the 5.6 percent recorded by Tesco, with Asda and Morrisons leading the way.

Unofficial reports have it that Orange UK sold more than 30,000 iPhones on launch day. Orange is the second carrier to offer the iPhone in the UK behind O2, while Vodafone has announced plans to begin offering the handset early in 2010, as well as the iPhone, Orange UK have also launched a so-called business homescreen for the soon to be launched Samsung Omnia Pro B7330. The Omnia Pro is reputed to be a smartphone based on a different concept from the iPhone, featuring Windows Mobile 6.5 and a full QWERTY keypad. Orange’s new homescreen provide quick access to email, voicemail, contacts, calendar and so on, “ensuring vital business applications are right at their employees’ finger tips”. The Samsung Omnia Pro B7330 will be soon available through Orange, coming as the carrier’s first “business WM6.5 device,” targeted at medium and large business customers.

For more information about The Samsung Omnia Pro B7330 Visit Compare-Mobile.co.uk

Sterling lost ground on Tuesday after a ratings agency said the UK was the major economy most at risk of losing its AAA credit rating , Since then the pound has weakened in value over the last two days against all the major currencies.

• Pound/US dollar 1.6719
• Pound/Euro 1.1161
• Pound/Japanese Yen 149.468
• Pound/Swiss Franc 1.6852

The FTSE 100 has rallied strongly since the beginning of the week up 86 points to 5,230.55. The FTSE 250 also rose 38.3 points to 9,120.96. London equities principally made progress on Monday, largely thanks to strong trading in insurance stocks.

As US carmaker General Motors (GM) were seen to be making efforts to calm the waves after their surprise decision last week to retain ownership of their European plants, a spokesman for the company has forecast that Opel and Vauxhall will retain consider independence as well as receiving considerable financial support . The US carmaker has announced that that they will provide a “reasonable and sizeable” portion of the restructuring costs for Opel and Vauxhall, rather than seek 100 percent government aid. GM have forecast that they will need €3 billion ($4.5 billion) to restructure the Opel and Vauxhall operations and intend to raise at least partial funding from interested European governments.

The Dow Jones has made some major steps forward since the weekend, up 243 points to 10246.97, closing at the highest level since October 2008.

The NASDAQ also jumped, reaching 2151.08.

US software company Adobe Systems has announced that it is to cut almost 10% of its workforce, a total of 680 jobs. Adobe Systems best known for Photoshop, Flash and Acrobat, said the cuts were necessary to cut costs.

Gold extended its record-breaking run above the $1,100 mark on Monday while crude oil raised more than $2 a barrel as markets made a strong start to the new trading week. Gold hit a record at $1,110.85 a troy ounce, a rise of 26.5 per cent this year, before easing back to $1,107.00, up 1.1 per cent on the day as analysts digested the implications of India’s decision last week to buy half of the gold the International Monetary Fund has put up for sale.

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Tags: Acrobat, Adobe, Adobe Systems, ASDA, Banking, British Economy, Cadbury, Currency, Dow Jones, Economy, Employment, Financial News, Flash, FTSE, General Motors, GM, Gold, HBos, Honda Motor Co, International Monetary Fund, iPhone, Kraft, Lloyds, Lloyds Banking Group, Money, Money Markets, Morrisons, NASDAQ, O2, Oil, Omnia Pro, Opel, Orange UK, Photoshop, property values, Recession, Retail, Roger Carr, Sainsburys, Samsung Omnia Pro B7330, smartphone, Stock Markets, Stocks and shares, Tesco, UK Banks, UK commercial property, UK Economy, UK government, UK Recession, Vauxhall, Vodafone

The government plan to create three new High Street banking chains, The move is expected to be in effect by 2015 as part of a major overhaul of the sector. The new banks will be recycled from the salvageable parts of Royal Bank of Scotland, Lloyds and the Northern Rock Building Society, all of which are majority owned by the UK taxpayer. Currently UK Ministers and the European Competition Commissioner are in talks over the move, which is aimed to recoup as much of the public’s money invested in the banks. The new chains will be standard retail banks concentrating on deposits and mortgages, with such "clean" UK high street retailers as Tesco and Virgin taking a share of the action.

According to the latest Land Registry figures, house prices rose by a further £1,400 in September, a 0.9% increase in prices last month, as the gradual recovery in the property market continued. The increase succeeded in pulling the annual rate of decline down to 5.6%, from its peak decline of minus 16.3% recorded in February 2009. The average house price has risen by £7,029 to reach £158,377 since that low point. Prices in London roses at the fastest rate, 1.3%, bringing the average price of house in the capital to £314,954, down 3.2% from the same period of a year ago.

The first phase of an increase on Air Passenger Duty went into effect on Sunday, that will effect only travelers who use British airports.

The increase, which at first glance appears fairly minor, a mere pound on short haul fights in economy class , become more significant for long haul flights in business and first class cabins where it can rise as high as £30 pounds per passenger.

The price increase has been condemned by British airlines and travel groups as one.

Sterling slumped yesterday against the dollar, as well as the rest of the major currencies.

• Pound/US dollar 1.6447
• Pound/Euro 1.1164
• Pound/Japanese Yen 148.2155
• Pound/Swiss Franc 1.6883

The FTSE 100 retreated to a three-week low this week, due to increased concerns that a rally this year may have driven share prices higher than genuine prospects for economic and earnings growth. The FTSE 100 still remains 47 percent up on its year low, recorded in early March.

The UK’s FTSE 100 suffered a major fall on Friday, down 93 points, or 1.8%, to 5,045. The FTSE 250 was also rocked on Friday by a further heavy reversal after the previous day’s gains. The index fell 76.64 points to close on 8855.77

A drop in US consumer spending dampened the enthusiasm that followed Thursday’s US GDP figures. The figures wiped out gains made on Thursday sparked by data showing the US economy was growing again. The US Dow Jones index lost 250 points, or 2.5%, to 9,713. The NASDAQ also lost most of last week’s gains, down 52.44 points to 2045.11

US consumer spending dropped by 0.5% in September after a 1.4% rise in August – the first fall in five months. The news confirms analysts fears that the financial recovery in the US propelled by stimulus-driven gains in consumer spending and home building may not be as strong as predicted.

The price of oil also fell sharply on Friday, with US light crude dropping $2.87 to $77 a barrel.

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Tags: Air Passenger Duty, Bank, Banking, British Economy, British Pound, Credit Crunch, Currency, Dow Jones, Economics, Economy, Financial News, FTSE, Gordon Brown, High Street banking, House Prices, Land Registry, Lloyds, Lloyds Banking Group, Money, Money Markets, NASDAQ, Northern Rock Building Society, Oil, property market, Recession, Retail, Royal Bank of Scotland, Stocks and shares, Tesco, UK Banks, UK Economy, UK government, UK Recession, Virgin

Chancellor of the Exchequer Alistair Darling now appears likely to give Lloyds the go ahead to test the seriousness of its ambitious £25 billion refinancing plan. Darling’s tacit agreement will be looked upon by city watchers as a definite indication that the chancellor could be prepared to release the bank from its obligations to the government’s toxic asset insurance scheme. It would appear that Darling has concluded that Lloyds’ plan to bring in more private capital is in the public interest. However it would appear that his final decision will only be positive when he is convinced that the market is ready for such a bold initiative. Darling is expected to announce his decision to the Lloyds at the early part of next week. The move will mean that the bank can then begin to appoint underwriters and test the market. Only then will Darling make the final decision and may even withdraw approval for the plan if he concludes the move carries to many risks for the already under siege UK taxpayer.

As expected, the European Union (EU) has approved plans for nationalized bank Northern Rock to be split into two parts, a move that is expected to pave the way for a partial sale of the bank.

One half of the bank, known as the "good" bank, would trade as retail bank holding deposits including some of the Rock’s existing mortgages, as well as lending money to consumers only.

The toxic side of the bank will remain in government hands, whose unenviable task it would be to attempt to salvage as much as the taxpayer’s money tied up there. The chancellor has ruled out the possibility of completing the sale of Northern Rock before the general election, in spite of winning approval from Brussels.

Meanwhile Spanish banking giants Santander continue to clean up on the UK high street. The bank announced that profits during the first nine months of the year for its UK banks have risen by more than a third.

Abbey, Alliance & Leicester and Bradford & Bingley banks, owned by Santander announced a £1.2 billion profit, up 38% from the same period in 2008.

Debt laden bus and rail operator National Express has wound up their discussions with rival Stagecoach regarding a possible merger. Instead they will press ahead with their plans to mount a rights issue to re-finance the company. Yesterday’s announcement follows weeks of speculation over a possible tie-up between the groups that would have created a transport giant with an estimated worth of £1.7 billion.

Oil and gas supply group BG, announced on Wednesday that their post-tax profits for the third quarter had fallen 39 per cent to £474 million from last year’s £777 million. A spokesman for the company said that the fall in gas and oil prices had been partially offset by advance sales of liquefied natural gas at advantageous prices. Although natural gas has rallied since early September, it had not done as well as crude oil during continued signs of economic recovery.

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

• Pound/US dollar 1.6393
• Pound/Euro 1.1131
• Pound/Japanese Yen 148.0908
• Pound/Swiss Franc 1.6804

London’s FTSE 100 dropped 2.32% or 120.55 points to close on 5080.42. The FTSE 250 plummeted a further 3.19% percent yesterday, down 291.78 points to close on 8849.50

For the first time in half a year, sales of new homes in the US fell as buyers opted for bargains on existing and foreclosed houses. Unexpectedly new home sales fell by 3.6 per cent from August to September, defying economists’ expectations that they would increase. Compared with a year ago, sales of new homes were down by 7.8 per cent, according to commerce department figures

On Wall Street, the Dow Jones Industrial Average closed down 1.21% after news that the annual rate of US new home sales had fallen unexpectedly in September.

At close of trading Wednesday it had fallen 119.48 points to 9762.69. The NASDAQ Composite index also took a tumble down 56.48 points to 2059.61.

It was announced on Wednesday that new orders for durable goods rebounded in September after slumping the prior month, offering another sign that manufacturing activity is stirring in the US

European shares also fell fairly sharply yesterday, largely due to disappointing company results and negative US economic data.

Norway has become the first European country to raise its interest rates since the beginning of the global financial crisis. The country’s central bank raised the cost of borrowing from 1.25% to 1.5% in a move that was widely expected. A spokesman for the bank stated that the increase was necessary due to increases in inflation and recent unemployment figures that were considerably lower than previously projected.

Oil prices dropped by more than $2 a barrel on Wednesday, as the latest US weekly inventories data continued to show supply outstripping demand. All in all the expected recovery in the dollar weighed on investor sentiment towards the commodities market.

financial

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Tags: Abbey, Alastair Darling, Alliance & Leicester, Bank, Banking, BG, Bradford & Bingley, British Economy, British Pound, Chancellor of the Exchequer, Currency, Current Account, Darling, Dow Jones, Economy, Employment, Financial News, FTSE, gas, llo, Lloyds, Lloyds Banking Group, Money, Money Markets, Mortgage, NASDAQ, National Express, Northern Rock, Oil, Recession, Retail, Santander, Savings, Stagecoach, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession, Unemployment, Wall Street

As oil prices began to surge towards a record high for the year an important official from the International Energy Agency (IEA) warned that the world economy cannot sustain any further increases in the price of crude oil.

The benchmark price of $70 should not be breached otherwise a damper would be placed in the path of world economic recovery, the official warned.
Prices for crude oil reached a high for the year on Monday of $73.75, with analysts from the IEA explaining that the increase was spurred by results of improved manufacturing statistics coming out of China and as well as a steady rise in construction starts in the US.

There have been increased fears over recent months that as the economic situation begin to improve in the West and the demand for crude oil begins to increase as a result, the oil producing nations will begin to push their prices up. The results could be that higher energy prices will make a serious impact on the fiscal measures taken by western governments to get their economies out of recession.

French President Nicolas Sarcoxie and Gordon Brown the UK prime minister, have already called for increased scrutiny of the energy markets. In addition the US commodities regulator instituted a series of hearings designed result in increased limits on oil futures trade.

Overall fears that the demand for crude oil in China demand would the most important determinant factor in oil prices, which could set an indeterminate edge to the worldwide supply and demand balance could become very tight if other countries began to grow in 2011 or 2012.

World crude oil prices reached up to $147 in July 2008, but crashed to below $40 by the end of the year. In response to the statements issued by the IEA, leading mark analysts have stated that the tolerable range of oil prices appeared to be somewhere between $70 and $80 a barrel. If prices rise to $90-$100 a barrel even China could be affected.

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Tags: Gordon Brown, Money Markets, Nicolas Sarcoxie, Oil, UK’s oil and gas

The FTSE was at the centre of UK financial news with many of its major companies announcing or about to announce their half year results. Which till now have been mostly encouraging.

The UK companies owned by Spanish bank Santander saw their profits rise by a third in the first half of the year as bad debts showed a second consecutive quarterly decline.

Santander announced that their bad debt provisions in its UK business were £176 million pounds in the second quarter, up from £92 million pounds a year ago but still considerably less than the £189 million in the first quarter of this year. The first-half provision of £365 million pounds doubled from a year ago.

Most of the UK banks are expected to report a jump in bad debts when they report next week, while analysts and investors as one are looking for clues as to whether the levels of bad debt have been arrested

UK Profits for Santander, taking in includes Abbey, Alliance & Leicester and Bradford & Bingley were £790 million in the six months to the end of June, helping the bank’s Spanish parent to a net profit of 4.5 billion Euros, down 5 percent on the year but ahead of forecasts.

British Airways has reported a pre-tax loss of £148 million in the three months to the end of June, compared with a profit of £37 million in the same period last year, with revenues falling l 12.2% to £1.983 billion for the quarter.

Also falling deep into the red were German airline Lufthansa, Europe’s largest measured by turnover, who reported to a net loss of €216 million from a net profit of €381 million a year ago.

Leading airline chief executives have told the European Commission the industry on the ground as well as in the air is facing “the worst economic conditions on record”.

Meanwhile British Airports Authority (BAA) continue to make every effort to offload Gatwick Airport, but not at any price.

This example of possibly false bravado came as the UK’s largest airports operator revealed interim pre-tax losses for the six months to June 30 widened to £545.7 million from £135. 3 million

On one of the busiest results days of the year eight FTSE 100 companies released their half year results on Thursday including the BT Group which announced first-quarter adjusted earnings of £1.37 billion, larger than the £1.27 billion originally forecasted.

Pay TV operator BSkyB announced year end profits of £456 million an increase of £60 million. Company revenue rose by 8.2 per cent to £5.4 billion. BSkyB announced that during the last quarter It added a further 124,000 subscription holders.

Also rising was the FTSE 100, up 84 points to 4,631.6 and only seven points from away from its year high. The index has gained 9 per cent so far this month and is looking good to overtake its best monthly gain, reached in September 1992.

The FTSE 250 leapt forward 172.04 points to close on 7,934.63

Sterling was among the best performing of the major currencies against a generally weaker dollar, as rallying equity markets and better-than-expected housing data drove appetite for risk

Pound/US dollar 1.6516

Pound/Euro 1.1695

Pound/Japanese Yen 157.3943

Pound/Swiss Franc 1.7916

According to a prominent US financial regulator, the Obama administration’s plan to give US states more power to protect consumers from unfair banking practices would make it more difficult and costly for large lenders to operate across the country.

The regulator, Mr. John Dugan, head of the Office of the Comptroller of the Currency, who job it is to oversee national banks as comptroller of the currency, announced recently that the proposals to create a federal consumer protection agency and give states more leeway to crack down on unfair practices would have negative “ramifications for companies operating across state lines”.

On Wall Street the Dow Jones made a strong recovery on Thursday’s trading, up 83.74 to 9154.46 The NASDAQ also rose by 16.54 points to 1984.3

Japanese industrial output rose in June for its fourth straight month and it appears that they will be no looking back as electronics manufacturers, steel makers and chemical producers begin to climb back to full production…

Preliminary data has shown that in June industrial production was up 2.4 per cent from May, less than half the revised 5.7 per cent growth recorded the previous month but broadly in line with economists’ expectations.

However despite encouraging growth over the last quarter, production in June was still down 23 per cent compared with the same month of 2008.

A spokesman for Arcelor Mittal, has predicted that world steel demand will pick up by at least 10% next year, as emerging economies were coming out of the downturn “reasonably quickly” and that stimulus spending in the US and Europe was having an impact. Arcelor Mittal reported a second quarter net loss of $792 million, against a $5.8 billion net profit a year ago, causing their shares to fall 4.4% to €24.20.

Two of the world’s largest oil companies, Exxon Mobil and Royal Dutch Shell, have announced major profit setbacks in the wake of tumbling international oil prices and weaker demand.

Exxon, the largest US oil group, and Shell, the biggest in Europe, on Thursday unveiled post-tax profits for the second quarter that were roughly a third of those a year ago, with both companies attributing the blame to the continuing global economic crisis and softer demand for the collapse in their revenues..

Exxon’s profits dropped by two thirds $3.95 billion, the steepest fall in profits for more than a decade, and Shell’s 70 per cent decline in post-tax profit to $3.24 billion.

On the day US light crude was up $3.66, or almost 6%, to $67.01 a barrel, while London Brent was ahead by $3.68, at $70.21.

US light crude slumped $3.88 on Wednesday after figures showed a rise in US oil stockpiles, indicating too much supply in relation to demand

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Tags: Abbey, Alliance & Leicester, Arcelor Mittal, BAA, Bank, Banking, Bradford & Bingley, British Airports Authority, British airways, British Economy, British Pound, BskyB, BT, Credit Crunch, Currency, Dow Jones, Economics, European Commission, Exxon, Financial News, FTSE, Gatwick Airport, John Dugan, Lufthansa, Mobil, Money, Money Markets, NASDAQ, Obama, Oil, Recession, Santander, Shell, Stock Markets, Stocks and shares, UK Banks, Wall Street

“A cartel is a formal (explicit) agreement among firms. Cartels usually occur in an oligopolistic industry, where there are a small number of sellers and usually involve homogeneous products. Cartel members may agree on such matters as price fixing, total industry output, market shares, allocation of customers, allocation of territories, bid rigging, establishment of common sales agencies, and the division of profits or combination of these.” Source – Wikipedia

By far the largest Cartel is the oil cartel. In most other industries, the competition authorities would be up in arms at such behaviour. Yet, with home values plummeting, and stock market diving to its worst week in history and the inflation rate sitting uncomfortably outside central bank’s target areas, OPEC has signalled that it will cut production in an attempt to keep oil prices artificially high.

Why is there no outrage across suffering economies at such blatant profiteering? Why do the media and governments sit on their hands and say nothing about one of the most widely used commodity prices being rigged and not subject to open market forces on the downside? Why are ordinary people allowed to suffer from increasingly unaffordable fuel prices as unemployment rises and the cost of basics like food and energy surges?

The oil prices weren’t subject to any cartel controls when they went to $147 a barrel, but yet when economic activity slows, every person on the planet is forced to pay more than they should at a time when they can least afford it.

The answer is that the game is rigged, as the very nature of OPEC suggests. Allowing oil prices to fall with market forces as they rose with market forces would cost oil producers a lot of money. OPEC couldn’t raise output in a meaningful way when the oil price was rising to help offset the higher prices and stop the economies from falling into recession during the inflationary spike.

Maybe the peak oil crowd is right…may be the end of oil is in sight, and the oil producers are determined to squeeze every single dollar of profit from their dwindling resources before the game ends and our love affair with oil finishes. If that is true, looking at the current market turmoil, baby, you ain’t seen nothing yet.

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Tags: Cartel, Money Management, Oil, OPEC