Business News Up Date..............
Australia cuts interest rates
The Australian central bank cut its benchmark interest rate today for the first time in seven years. The rate was reduced by a quarter of a point to 7 per cent against a backdrop of deteriorating consumer and business confidence. The move is particularly aimed at helping homeowners, hit by rising mortgage rates. Prime Minister Kevin Rudd, said the cut will provide “some modest relief” to borrowers, and economists expect more reductions later this year as falling commodity prices help to cap inflation.
Oil down as storm fears recede
The oil price fell $4 yesterday as worries over the damage likely to be inflicted by Hurricane Gustav receded. It had risen by more than $1 earlier as almost all offshore production in the Gulf of Mexico was shut down and refining facilities amounting to 12.5 per cent of total US capacity. But in the event Gustav weakened to a category two storm as it approached land. The price of US crude receded by $4.19 to $111.27 a barrel, against July’s high of more than $147 per barrel.
Thai instability rocks market
The Thai currency fell to a year low and stocks plumbed levels not seen for 19 months as Thailand declared a state of emergency, reported Bloomberg.com. Prime Minister Samak Sundaravej made the announcement after fighting in the capital Bangkok between pro- and anti- government supporters resulted in one death and many injuries. The SET Index fell 1.8 per cent as domestic investors “sought the safety of government bonds” and foreign buyers exited the market. The Thai baht was down 0.4 per cent.
No respite for US mortgage market
The US mortgage market is “set to suffer further setbacks” in the next two years, as $96bn of flexible home loans are reset, reported the Financial Times. These loans initially had flexible payment options, but the switch to “more stringent terms” will raise borrowers’ monthly payments by about 60 per cent. ‘Option adjustable rate mortgages’ were issued between 2004 and 2007 and after a lower initial minimum monthly payment, after 5 years they are reset and full repayment is required.
Americans: Interest increases in Sheila Bair 
Manchester City sold to Abu Dhabi
A group of Abu Dhabi investors agreed to buy Manchester City Football Club on Monday from Thaksin Shinawatra, the former prime minister of Thailand. The deal valued the club at £200 million, against the £81.6 million that Shinawatra paid a year ago. The new owners immediately spent a reported £32.5 million on signing Brazilian forward Robinho from Real Madrid. The latest in a line of football clubs to fall to overseas buyers, the purchase is designed to diversify the oil-rich nation's assets.
Virgin boss plans to buy Gatwick
Richard Branson is planning to table a £2 billion bid for Gatwick Airport after the break-up of BAA, reported The Daily Telegraph. He has “already held talks with several potential bidding partners”, thought to include funds managing money for the Dubai royal family. However Branson is merely the latest in “a string of prospective buyers”, including Manchester Airport Group, Australian bank Macquarie and Hochtief, the German infrastructure investment group.
...in brief..................
Lehman bid nears and Ryanair revives offer
Speculation is mounting that Korea Development Bank is about to take a stake in Lehman Brothers, reported the Financial Times. A KDB spokesman said “talks are going on” between the two groups, and it is thought that agreement will be reached by mid September…………
The number of UK mortgage approvals plummeted 71 per cent in July, to a record low of 33,000. The number is the lowest since records began in 1993. Re-mortgages also dropped sharply to 69,000, the lowest figure since November 2001…………
Google is releasing its own internet browser to compete with rival Microsoft. Google Chrome will be pitted against Microsoft’s market-leading Explorer, used by an estimated 75 per cent of all internet users. A test version is to be released in 100 countries…………
Coors Brewers, the UK’s second biggest brewer, has raised its prices for the second time this year. The maker of Carling and Grolsch notified customers of a 3p rise after it hiked prices by 4p earlier in the year. The spiralling cost of ingredients is to blame…………
Ex-BT chief executive Ben Verwaayen has taken the helm at struggling telecoms giant Alcatel-Lucent. Since its formation through a merger in 2006 the company has struggled, but it hopes that the Dutchman, who reshaped BT's fortunes, will be its saviour............
Ryanair plans to revive its blocked 1 billion euros bid for Aer Lingus, reported The Times. The budget airline said it believes the worsening economic climate means that European competition regulators may become more flexible towards mergers…………
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