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.

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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

Qatar Holdings, who were and still remain Barclays’ largest shareholder, have realized their profits on 3.5% of their stake in the bank, taking home a tidy £615m profit in the process. People in the know are saying that Qatar Holdings, who act as the emirate’s private investment vehicle, will use the money to increase their holdings in UK supermarket giants, J Sainsbury. The share sell off transaction, valued at around £1.4billion, would allow the Qataris sufficient funding to increase their existing 26% stake in Sainsburys. Despite the share disposal, Qatar Holdings will still retain 7.1% equity in Barclays.

BAA has finally reached an agreement to sell Gatwick for a sum of £1.5 billion, setting the long-awaited break-up of the UK’s biggest airport group in motion. Final details of the sale were expected to be announced early on Wednesday morning before the FTSE opened its doors. After lengthy and intricate negotiations, the Competition Commission finally approved the late on Tuesday. The anticipated sale sees the end of a process which began when BAA, a subsidiary of Spain’s Ferrovial infrastructure group, put Gatwick up for sale in an attempt to head off competition concerns about its market dominance. Initially BAA had hoped to receive around £1.8 billion for Gatwick, and held on grimly for this sum; till the realization sunk in that they were pricing themselves out of the market. They reduced their asking price to £1.6 billion and finally have accepted even less for the airport from Global Infrastructure Partners, an infrastructure fund backed by Credit Suisse and General Electric who already own London City Airport. The Competition Commission expects BAA to sell two of its remaining six airports, within the next two years: while still leaving the group in control of the country’s biggest airport, Heathrow.

The Euro zone’s largest bank, Santander, continues to generate turnover and profit at such an outstanding rate it may have no option but to pay their shareholders a significant cash dividend in the coming year, according to a leading executive of the company. The ongoing financial crisis has prompted regulators to press European banks to increase their capital ratios, with Santander setting a target of seven per cent of their risk weighted assets, regarded as adequate for its retail banking model.

By the end of June, half way through their financial year, Santander had succeeded in increasing their ratio to 7.5 per cent, and have since added a further 0.6 % in October alone with the bank now expected to surpass their target and reach as high as 8.5 per cent of capital ratio, some of which will be able to be dispersed to their shareholders. RBS eat your heart out…

In the money markets, the pound continued its steady rise, despite faltering slightly against the Euro and the Swiss Franc.

• Pound/US dollar 1.6373
• Pound/Euro 1.10971
• Pound/Japanese Yen 147.9728
• Pound/Swiss Franc 1.6587

Tesco was among the few stocks to beat a weakening trend as the FTSE 100 began to lose some of the heights it had achieved in the last week or so. The UK grocery chain has been described by analysts as a “cash cow” and ripe for rapid expansion, both in grocery and non-grocery sectors in the UK as well as overseas. Shares in Tesco closed higher on Tuesday by 1.2 per cent at 383½p.

Their progress was overshadowed however by J Sainsbury who were the day’s biggest gainer, up 5.4 per cent to 348 pence after Qatar holdings looked likely to add to its 26 per cent stake in the company or even make a takeover approach after selling a block of shares in Barclays. Barclays did less well, and closed down 4.8 per cent to 364 pence.

An upbeat trading statement from Pearson, owner of the Financial Times, lifted its shares by 4.4 per cent to 858½ pence which had a knock on effect on many players in the publishing sector. Reed Elsevier was among those feeling the ripples, and their shares rose 1.4 per cent to 466 pence. This increase may have been largely fired by reports that Reed was potential bidder for United Business Media, whose shares also rose in turn, up 0.5 per cent to 504½ pence. .

Shares in National Express edged 1 per cent higher at 404 pence after news broke that the company’s largest shareholder is backing the merger proposal from Stagecoach, the bus and train operator and National Express competitor. The move, which shines a light on the depth of boardroom divisions within the company. In a meeting with the National Express board on Monday, Jorge Cosmen, the company’s deputy chairman and its largest shareholder, announced his support for Stagecoach’s approach.

Shares in Greggs, the high street bakery chain were down by 3.7 per cent weaker at 448 pence, largely due to misplaced speculation that the group was considering outsourcing its bakery operations.

The FTSE 100 had a good day, up 91.34 points to 5281.54 The FTSE 250 rose strongly on the day’s trading, up 138.44 points to close on. 9564.64.

In the US, the number of new housing starts was reported to have increased in September, but at a lower rate than expected, raising limited concerns about the strength of the recovery in the country. Housing starts rose by 0.5% to a 590,000 homes, compared with a revised figure of 587,000 in August, down by 28.2% on the 822,000 homes started in September 2008, according to the US Department of Commerce.

As a possible reflection, the Dow Jones was down 50.71 points to close on 10041.48 The NASDAQ Composite index continued to fluctuate, this time down 12.85 points to close on 2,163.47.

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Tags: BAA, Bank, Banking, Barclays, British Economy, British Pound, Competition Commission, Credit Suisse, Currency, Dow Jones, Economics, Economy, Ferrovial infrastructure group, Financial News, Financial Times, FTSE, Gatwick, General Electric, Global Infrastructure Partners, Greggs, J Sainsbury, London City Airport, Money, Money Markets, NASDAQ, National Express, Qatar Holdings, RBS, Recession, Reed Elsevier, Retail, Royal Bank of Scotland, Sainsburys, Santander, Stagecoach, Stock Markets, Stocks and shares, Tesco, UK Banks, UK Economy, UK government, UK Recession, United Business Media

The Bank of England have announced that they will be holding interest rates firm for the sixth consecutive month, at a record low of 0.5%.

The bank also announced that their quantitative easing program is not to be expanded, remaining at £175 billion.

The ownership saga at National Express seems to be drawing to a close, after the company reached an agreement to allow a consortium comprising its largest shareholder to examine its books. The next step is likely to be a £765 million takeover of the group, which operates both bus and rail networks in the UK. The successful bidders are a consortium headed by Spain’s Cosmen family, who already own 18.5 per cent of the group, private equity firm CVC Capital Group and Stagecoach who operate a similar facility in the UK. The consortium has apparently raised their cash offer to 500 pence per share from 450 pence, which had been magnanimously rejected by the board.

Shareholders in Cadbury are apparently not being coy, and are pressing Kraft to raise their takeover bid for the UK confectionery group and as soon as possible.

Reports have it that some of Cadbury’s principal shareholders are anxious to see the deal go through, as they are afraid to see any takeover become a long drawn out issue. A spokesman for one of Cadbury’s largest shareholders expressed their fears by saying: “The longer Kraft dithers, the more chance of a counter-bidder appearing on the scene."

On the FTSE, the U.K.’s third-largest oil and natural gas company, BG Group Plc, saw their share value rise by 3.8 percent after announcing that the Guara oil field, of which they hold 30 percent, has been found to contain between one to two billion barrels of oil.

Stock in the Hilton Food Group Plc climbed two percent, to 192.5 pence in anticipation of positive half year results. The U.K. meat-packer works with most leading supermarket chains including Tesco Plc. Home Retail Group Plc, owners of the Argos store chain is also scheduled to release their second quarter trading statement. The stock rose 0.6 percent, to 329.7 pence in anticipation of promising results. Not looking quite so promising was the outlook for Kesa Electricals Plc who owns the Comet appliance stores group. Their stock fell 0.9 percent to 151.6 pence pre-release of their first-quarter interim management statement

The FTSE 100 index failed to maintain its above 5,000 points status on a flat days trading on Thursday. The index closed down 16.62 points at 4,987.68

The FTSE 250’s rise was checked yesterday, with the index falling 11.34 points to close on 9,125.71

The pound rose against the Euro for the first time in almost a week, as well as continuing to improve against the dollar, and the other major currencies.

• Pound/US dollar 1.669
• Pound/Euro 1.1426
• Pound/Japanese Yen 152.8564
• Pound/Swiss Franc 1.7312

The Dow Jones Industrial Average continued to rise, up 70.29 points to 9617.51 while the NASDAQ Composite also rose by 20.31 points to close on 2080.7.

General Motors (GM) have finally reached a decision regarding the European based Opel and Vauxhall plants. As expected the successful bidder is the Canadian car parts manufacturer Magna

German Chancellor Angela Merkel was reported to be "very pleased" about GMs decision, especially as Magna, who are Russia’s Sberbank, has made it obvious that all four German plants will remain open.

However the long term future of Vauxhall and its 5,500 UK workers still remains uncertain.

Oil prices have risen above $72 a barrel following Opec’s decision not to change the amount of oil being produced by its members.

US light sweet crude rose 85 cents to $72.16 in Asian trading, as the euro continued to gain ground against the US dollar in currency markets.

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Tags: Angela Merkel, Argos, Bank, Bank of England, Banking, BG Group Plc, British Economy, British Pound, Cadbury, Currency, CVC Capital Group, Dow Jones, Economy, Employment, Financial News, FTSE, General Motors, Global Credit Crisis, Guara oil field, Hilton Food Group Plc, Interest Rates, Kesa Electricals Plc, Kraft, Magna, Money Markets, NASDAQ, National Express, Opel, Recession, Sberbank, Stagecoach, Stock Markets, Stocks and shares, Tesco, UK Banks, UK Economy, UK government, UK Recession, Vauxhall

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