Markets down on Lehman plunge
Stocks on Wall Street suffered another rout as shares in Lehman Brothers plunged 45 per cent yesterday. Lehman executives said that it would release details of “key initiatives” on Wednesday when it reveals its third quarter earnings. The company has brought the date of this release forward in a bid to calm investors’ nerves, however buyers took fright after a Korean government official said that Korea Development Bank had decided against investing in Lehman. There is also worry over the ability of the company to raise capital.
Credit crunch wil get worse before it gets better 
Crude Oil up on OPEC call
The price of crude oil jumped after OPEC President Chakib Khelil told members of the cartel they should stop producing more than their set quota. Prices have slipped back to almost $100 per barrel, with the Organization of Petroleum Exporting Countries producing 520,000 barrels a day more than their 28.8 million barrels limit. The price of oil rose over 1 per cent to $104.67 in New York. It has fallen 30 per cent since it reached a record $147 in mid-July, with concerns over the global economic slowdown driving the decline.
China inflation at new low
Chinese inflation fell more sharply than expected last month to a 14 month low of 4.9 per cent, more than the 5.3 per cent which had been expected. July’s rate was 6.3 per cent. Economists said that food price pressures have now receded and they expect the level to fall to between 3 and 4 per cent in the coming months, increasing the ability of the Chinese authorities to apply stimulus to the economy as it slows. The government is thought to be preparing a package of tax cuts and public works spending.
Norway attacks Rio Tinto
The Norwegian government has fired a broadside at UK miner Rio Tinto, accusing it of “grossly unethical conduct”, and has sold its £500 million holding, reported The Independent. The statement from the Norwegian Ministry of Finance indicated that the country’s concerns centred on Rio’s Indonesian mining operations and the 230,000 tonnes of waste discharged every day into a local river. Ethical investment experts said that the unexpected move “might be replicated across the ethical investment sector”.
US govt goes to war with Google
The US justice department has hired top Washington lawyer Sanford Litvack to pursue a “possible antitrust investigation” into Google, said The Guardian. He will advise the government as it prepares its case in the wake of the recent advertising tie-up between Google and Yahoo. Analysts estimate that after this deal Google could end up controlling “more than 80 per cent” of the US online advertising market, a situation which has angered a number of rivals and trade organisations.
Google enters the browser wars
LSE traders lose breakdown fees
The seven hour breakdown that affected the London Stock Exchange’s trading platform on Monday, costing struggling brokers millions of pounds of revenue, is unlikely to result in compensation, said the Financial Times. The City’s large investment banks may have lost “about £700,000 a firm” in missed UK equities commission, but since there was 90 minutes of trading, and insurance against such events is rare, this money is unlikely to be recouped. Yesterday 5bn shares were traded on the LSE versus a normal average of 3bn.
...in brief..................
Origin shares fall and government unloads Qinetiq
Shares in Origin Energy, Australia’s biggest natural gas producer, fell sharply after BG Group said it wouldn’t look to complete its A$13.5 billion takeover approach. The UK gas and oil company admitted defeat in the wake of the investment in Origin by ConocoPhillips…………
Housebuilder Barratt Developments has unveiled an offer to pay up to £15,000 stamp duty for buyers, as well as other incentives such as a part-exchange plan and three year ‘price promise’ guarantee. Barratt profits fell 67 per cent last year, and the company has axed its dividend…………
Next profits fell 12 per cent in the first half, the company announced today, with Next Directory the only bright spot. The UK’s second largest fashion retailer expects to match consensus full year forecasts and maintained its interim dividend at 18p…………
Plans to merge interdealer brokers Tullett Prebon and GFI Group, creating one of the largest such companies in the world, have fallen apart. Sources suggest that the UK’s Tullett did not offer enough for its smaller New York-based rival, after recent shareprice weakness…………
The Pimco Total Return Fund has made $1.7bn following the US government takeover of US mortgage giants Fannie Mae and Freddie Mac, reported the Financial Times. Manager Bill Gross had moved more than 60 per cent of his fund into mortgage debt which jumped on the news…………
Scandal of the Freddie and Fannie bail-out
The Ministry of Defence has offloaded the last of its shares in defence-research company Qinetiq Group, by selling off the last 18.9 per cent tranche for £257m. There has been long-running criticism that the government has sold off shares in the company too cheaply…………
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