Britannia Radio

...the main headlines..........

Markets tumble on earnings fears

Global markets slumped on concerns that government attempts to boost economies around the world will be too little to rescue them from deep recession. In the US yesterday the Standard & Poor’s 500 Index tumbled 3.5 per cent to a 12-year low and in Asia the MSCI Asia Pacific Index slid 2.3 per cent. Japan’s Nikkei 225 Stock Average lost another 2.3 per cent, putting it close to a 27-year low as investors worldwide trimmed stock portfolios to lessen risk. In London the FTSE 100 Index was slightly lower in early trade.

Warning over Royal Mail pensions

Around half a million Royal Mail staff have been told that their pensions “could be halved” if the plan to privatise the organisation does not go ahead, reported the Times. As a result one of a group of 140 Labour MPs “fiercely opposed” to the sale of a stake in the postal group accused the Department for Business of “crude” tactics, designed to put them under pressure. The department released details of a letter from the head of the trustees of the Royal Mail’s pension fund which said that without a sale the fund would be “far greater” than the £5.9bn envisaged.

Northern Rock bond losses feared

Northern Rock bondholders are worried they could lose “billions of pounds” under plans to re-capitalise the nationalised bank, reported theDaily Telegraph. Bond prices “slumped” after Northern Rock said it would spin off its “toxic mortgages” into a bad bank and start up again as a new legal entity. Creditors are concerned that they will find themselves in the bad bank, with the remaining capital used for new mortgage lending at the “cleaned-up” unit. The worries come after the government “tore up the rule book” last week, by changing Bradford & Bingley contracts.

Central Europe supports currencies

“Battered currencies” in central Europe rallied on Monday as central banks in the region issued co-ordinated statements, reported the Financial Times. Four of the banks called the recent weakness in their currencies “unjustified”, which led to speculation of intervention on the foreign exchange markets. It was the first time that there had been co-ordination from banks in Poland, Hungary, Czech Republic and Romania, with falling currencies raising fears over banking stability. Problems with banks here could impact further afield in Austria and Italy where their parents are based.

Bankers demand payrises

Senior City bankers are “demanding” pay-rises of up to 10 per cent to make up for their lower bonuses, reported the Independent. Senior head-hunter Shaun Springer told the newspaper that bankers were trying to “rebalance” their financial packages in favour of higher salaries and predicted that City salaries could “more then double” over coming years as a result. The comments support the view that in the City bonuses are no longer mechanisms to reward performance but have become an “integral” part of financial packages.

AIG to restructure bail-out

Insurer American International Group, which was bailed out by the US government, is set to restructure its rescue package “for the second time in four months”, reported Bloomberg.com. As the recession forces down the value of the company’s mortgage-backed bonds and corporate debt, it is making it necessary to raise more funds, and AIG is likely to announce the conversion of the government’s preferred shares into common shares to “relieve pressure” on the company’s liquidity. It pays a 10 per cent dividend on the preferred and none on common stock.

...in brief..................

Government refuses LDV loan and Primark reports surging sales

“Pleas” from Oleg Deripaska’s Gaz Group for £83m to rescue Birmingham-based van-maker LDV have been “rebuffed” by the UK government, reported the Financial Times. The group was seeking a £30m bridging loan as part of the funding for a management buy-out…………

Diesel, which has “consistently” cost more than petrol in the United States for nearly two years, is set to sell at a discount in April, reportedBloomberg.com. The drop has come as a result of the fall in demand for transport-fuel and higher inventories, and after the cold weather finishes it will be “exposed”…………

The Financial Services Authority has “back-tracked” on its promise to stop insurers using policyholders’ cash to pay for mis-selling costs, reported theIndependent. The regulator has released an update saying it would “no longer” be back-dating proposals to prevent the use of spare with-profits funds for compensation…………

Rupert Murdoch’s “right-hand man” is to leave News Corporation, creating a “power vacuum”, reported the Daily Telegraph. Peter Chernin, president and chief operating officer at the company, is to leave in June, leaving Murdoch to take on “much of” the current role…………

Some of the City’s “shrewdest” hedge fund managers have now turned their sights on the insurers, reported the Times. The moves come amid “heightened” worry over the strength of the sector and have seenLansdowne Partners – big winners in shorting Northern Rock – taking out shorts worth “tens of millions”…………

Discount clothing chain Primark has reported a “surge” in sales over the past six months, reported the Guardian. It said its like-for-like sales were up five per cent in the half-year to the end of February, ahead of parent company Associated British Food’s previous estimates…………