The FTSE 100 was nearly two per cent lower in early trade, as stock markets in Asia declined on concerns over poor earnings. After record gains yesterday on the $2tr global banking rescue, today reality hit the region with Korean steelmaker Posco dropping 8.8 per cent on declining demand and Japanese shipper Kawasaki Kisen tumbling 8.6 per cent after marine shipping rates hit a three-year low. The MSCI Asia Pacific Index fell 1.8 per cent in early afternoon Tokyo trade, with the Nikkei 225 down 1.2 per cent. In spite of government action around the world aimed at improving liquidity and credit conditions, the cost of bank borrowing remains "highly elevated", said the Financial Times. Analysts say it will "take time" for the effects of government-sponsored funding to come through, with three-month Libor, the most looked-at interbank lending rate, still having "barely moved". Sterling three-month Libor is now at 6.25 per cent, some way above the UK base rate of 4.5 per cent. Similarly Euro three-month Libor is at 5.225 per cent. Continental European banks have rejected the EU offer of funds, which has followed bank bail-outs in the UK and US, said the Financial Times. French lenders Credit Agricole, BNP Paribas and Societe Generale denied that they needed more capital, and German banks also "played down" their need to go to the government for funding, although some of the regional "landesbanks" are likely to require aid. On Tuesday the banks which rallied were the stronger institutions - Barclays, Deutsche and SocGen. The £37bn of public money being used to buy shares in the UK's banks"might not be enough" to stabilise the system, said Treasury Select Committee chairman John McFall. He suggested that the three rescued banks, Royal Bank of Scotland, HBOS and Lloyds TSB, should reveal more detail of their derivatives exposure in order to illustrate how severe their situations are. Yesterday the committee announced an enquiry into the banking crisis and while giving the rescue a cautious welcome, it pointed to concern over exposure to credit default insurance. UK inflation unexpectedly spiked to a record 5.2 per cent last month, as utility companies raised gas and electricity prices, said the Guardian. The annual rate in the consumer prices index rose from 4.7 per cent in August, with economists having expected the rate to move up to five per cent. The retail prices index rose to five per cent, meaning the government faces "paying out billions more" in pensions and benefits, which are based on the measure. The annual rate of energy inflation hit 15 per cent. Northern Rock chairman Ron Sandler said that he has had informal discussions on the possibility of merging its loan book with that ofBradford & Bingley. Analysts believe that the government could combine the two businesses to cut costs and generate higher returns. Northern Rock was nationalised in February this year and the government took over B&B's £42bn loan book last month. Sandler said that "it would not be a surprise" if a close look was taken at putting the two businesses together in the future. The European commission is to propose that depositors receive a refund within three days of an EU bank failing, senior officials indicated yesterday. It is also set to raise the minimum payout to €50,000 with immediate effect and to €100,000 by the end of 2009………… Northern Rock says it has been "swamped" by savers wanting to open accounts at the nationalised bank, reported the Financial Times. As a result of the 100 per cent government guarantee on deposits the bank has seen £3bn of inflows since the end of June………… The Local Government Association has called for an investigation into the credit rating agencies. They are critical of the high ratings given to the Icelandic banks by the agencies until only a few days before they went into administration. The 116 councils represented have £858m tied up in Iceland………… House-builder Bellway Homes has seen pre-tax profits plunge from £234.8m to £34.76m as sales of completed homes drop. A £130.9m write down on its land holdings reduced earnings and has led to a cut in its workforce of 35 per cent since May and other cost-cutting measures………… Pepsico, the owner of the Pepsi brand, announced disappointing third quarter earnings and a $1.2bn cost cutting plan on Tuesday. Economic turmoil meant that the company would not give earnings guidance for 2009, and it said 3,300 jobs will be cut worldwide………… Rio Tinto, currently fighting a $86bn takeover by rival BHP Billiton, said it is to delay its planned sale of $10bn of assets because of the financial crisis. The company had planned the sale to help fund its $38.1bn purchase of aluminium producer Alcan last year…………..the main business the headlines.business .........
Stock markets reverse gains
Japan is proof that busted economies can come back 
Global borrowing costs still high
Cash was king - now gold is God European banks opt out of rescue
Daniel Hannan: Euro federalists spot credit crunch opportunity UK bail-out ‘not enough’
RBS: a failure made in Scotland
Financial crisis is a mess of Brown's own making Inflation jumps to 5.2 per cent
Northern Rock in B&B merger talks
HBOS: Lloyds rides to the rescue ...in brief..................
EU improves bank failure measures and Rio Tinto delays sale
Let's renationalise our other failing industries
Wednesday, 15 October 2008
Posts
