Friday, 3 October 2008

    BUSINESS headlines    the business headlines


US scrambles to bail-out accord

Leading US House figures conducted a series of top level meetings to try to gain backing for the $700bn bail-out bill, reported the Financial Times. The revised bill will be debated on Friday morning in a 90 minute session, after which a vote will take place. It is hoped that after the passage in the Senate on Wednesday the changes to the bill, which include tax breaks for business and individuals and a raising of the limit on insured bank deposits, will allow the bill to pass this time. A “handful” of voters who opposed the bill last time have said they are now in favour.
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Asian stocks suffer more weakness

Asian stocks suffered their biggest weekly drop in over a year over worries that the $700bn US bail-out plan will not stimulate demand for the region’s exports. The MSCI Asia Pacific Index was down two per cent in afternoon trading today, a decline of over seven per cent on the week. Japan’s Nikkei 225 fell below 11,000 for the first time in over three years as Toyota shares slumped six per cent. The automaker moved to offer interest-free loans in the US after sales in the country nose-dived 23 per cent in September.
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Brown in attack on Irish banks

Gordon Brown on Thursday raised concerns to Irish prime minister Brian Cowen over the increase in government deposit guarantees. He wants Dublin to restrict aggressive marketing by Irish banks, as they take advantage of the new measures to protect the entire amount of investors’ deposits. The Irish government’s decision to guarantee all the debts of their six biggest lenders was made law yesterday but there are growing concerns that the institutions are now targeting  UK corporate and private customers.

Greece joins bail-out rush

The Greek government has issued a “blanket guarantee” on all banking deposits after panic withdrawals by customers in the country, said theDaily Telegraph. The move creates an “unstoppable” move across Europe for a co-ordinated approach to the issue, without which the banking system will become further unbalanced, analysts said. Greece has a runaway current account deficit, while across Europe governments have been forced to issue statements of support for their banks. It is thought that Ukraine is “on the brink of a currency crisis”.

Housing starts at 50 year low

New private house-building is at a 50-year low, adding to fears that the UK is in recession, reported the Independent. Housing starts are around 30 per cent lower this year than last, with 2008 likely to be the worst year since 1957. The Office for National Statistics suggests that about £5.6bn of private housing will be built this year, versus the previous low of £5.7bn in 1992. The credit squeeze is “throttling the construction industry” and its six per cent share of the country’s GDP may be enough to tip the UK into a slump.

ECB signals rate cut

The European Central Bank yesterday indicated that it is preparing to reduce rates, possibly as soon as next month, reported the Times. While the ECB kept rates at a seven-year high of 4.25 per cent for the third month in a row, its President Jean-Claude Trichet signalled a possible cut, saying that there was “clear evidence that the eurozone was now faltering”. He also said that inflation risks appeared diminished and as a result the governing council had even considered cutting rates this month but had opted to “defer any action”.

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Northern Rock to shut doors and Next buys teen brand

Nationalised lender Northern Rock may have to close its doors to new savers “within days” said the Times. A recent surge in deposits has put it near the 1.5 per cent maximum share of total UK retail deposits allowed under competition rules imposed after government intervention…………

Shell has proposed a $1.2bn takeover of Regal Petroleum in a letter to the company’s chairman within the last few days. An approach was rejected last year but it has now returned with a 300p a share offer, a massive premium to Regal’s closing price yesterday of 83p…………

Edinburgh-based chip maker Wolfson Microelectronics said fourth quarter sales would be as much as 25 per cent below market estimates as a result of a sudden drop in orders. Shares in the company crashed nearly 25 per cent to close at 82.25p…………

Panmure Gordon analysts have targeted Woolworths as one of the most vulnerable stockmarket-listed retailers in the run-up to Christmas. A major concern is poor availability of products in store and the broker reduced its target price from 4p to 3p…………

Swiss bank UBS said it is to cut 2,000 further jobs from its investment banking division yesterday and reposition it to reduce costs and improve efficiency. The additional job losses will bring to 6,000 total reductions since last year. The bank will also exit commodity trading…………

High street retailer Next has spent £17m on buying fashion brand Lipsy, stocked by the likes of Top Shop. The purchase is Next’s first since 1986 and comes as it sees sales fall sharply at its 500 stores. It is hoped that the addition will help it gain traction in the popular teen fashion business…………