Welcome to today’s round-up of business news from The Times: what we’re saying, what they’re saying, what you should be thinking
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The Times: BHP Billiton, the biggest mining company, raised its bid for Rio Tinto to more than £70 billion as it emerged that Chinalco, Rio’s new Chinese shareholder, was preparing to counterbid.
The Wall Street Journal: A bleak reading on the services sector fanned recession fears and led traders into by far the worst day for the Dow Jones industrial average this year.
Financial Times: Sir Brian Pitman, the man leading Virgin’s bid for Northern Rock, hit back at suggestions it would profit at taxpayers’ expense by saying the takeover would not be a ticket for a “gravy train”.
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From the commentators
Patrick Hosking in The Times: Once homeowners start to realise they are getting poorer at the rate of £471 a month, the residual heat in the British economy will very quickly fade. The Bank can afford to cut.
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Lex in the Financial Times: Even if the economy enjoys a second-half boost, a return to sustainable trend growth looks further off than many equity investors expect.
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Jeremy Warner in The Independent: The view among oil watchers is that, having been through its dark night of the soul, BP is now actually better placed than most of its rivals.
Good day
The Times: More than a million Norwich Union policyholders will share in a one-off £2.1 billion windfall after the insurer agreed to hand back almost half the surplus in its two main with-profits funds.
Reuters: NYSE Euronext’s quarterly profit more than tripled but its shares tumbled 11 per cent as the exchange operator pushed back some planned cost cuts.
The Wall Street Journal: Toyota boosted net profits 7.5 per cent in the December quarter owing to strong sales in China, Russia and other emerging markets.
Bad day
The Times: More evidence of the weakening housing market emerged on Tuesday when figures showed that house prices had fallen by 1 per cent in the three months to January.
International Herald Tribune: J?rôme Kerviel, the Soci?t? G?n?rale trader who lost nearly €5 billion, emerged in public to say he would not be made the bank’s scapegoat.
The Times: The chairman of Regent Inns, the pub and restaurant operator, said that the industry was suffering some of the toughest trading conditions of his 30-year career.
Mergers and shakers
The Times: BP accelerated its restructuring drive as it unveiled plans to cut 5,000 jobs and shave up to $1.5 billion (£764 million) from its annual cost base.
Bloomberg: Macquarie Group, Australia’s biggest securities firm, is to replace its retiring chief executive Allan Moss with its investment banking head Nicholas Moore.
The New York Times: David Li, a former Dow Jones board member, agreed to pay an $8.1 million civil penalty to settle charges of insider trading ahead of the News Corp offer.
Around Asia
Bloomberg: Japan’s economic growth probably peaked last quarter as exports resisted a slowdown in the US that is likely to cool the global expansion this year.
Financial Times: Temasek, the sovereign wealth fund, and Germany’s Tui are in talks to merge their shipping operations.
The Straits Times: China is capturing most of the growth in high-tech manufacturing among developing countries, with Latin America the main loser, according to a study.
Coming up
Financial Times: There is a growing risk of defaults on loans on commercial property this year, in a trend that could spill over into tumbling values and create more jitters in the credit world.
The Times: Royal Mail could be forced to pay £6.5 million in compensation amid accusations that it flouted employment law in its restructuring of the Post Office network.
The Times: BT could raise significantly the prices that it charges broadband rivals for accessing its network after securing a preliminary review from the regulator.
MARKETS
FTSE 100 5,868.00 down 2.6% (Tuesday close)
Dow 12,265.13 down 2.9% (close)
S&P 500 1,336.64 down 3.2% (close)
Nasdaq 2,309.57 down 3.1% (close)
Nikkei 13,178.16 down 4.1% (latest)
Hang Seng 23,486.67 down 5.3% (latest)
Sterling $1.9636 (latest)
West Texas crude $88.13 down 28 cents (latest)
Gold $891.80 up $1.50 (latest)
New York
Reuters: US stocks suffered their biggest drop in nearly a year on Tuesday after data showed the worst monthly contraction in the services sector since the last US recession and Standard & Poor’s warned that it could cut bank credit ratings. Recession fears hit sectors across the board, ranging from telecommunications to energy, and banks and other financial services stocks fell particularly hard. The Dow Jones industrial average fell 2.9 per cent, the S&P 500 declined 3.2 per cent and the Nasdaq retreated 3.1 per cent.
Asia
Bloomberg: Asian stocks fell after US service industries contracted at the fastest rate since 2001. Nintendo led declines on speculation that consumer spending in the US will wane. BHP Billiton fell after reporting its first earnings decline in more than five years. MSCI’s Asian benchmark was down 2.1 per cent, while Japan’s Nikkei had fallen 4.1 per cent in intraday trading.
Paul Larter
London
Next, the fashion retailer, was one of the biggest victims of a sell off of London shares. Next, which warned in January that it would see no sales growth in 2008, dropped 109p to £14.13. Panmure Gordon’s Philip Dorgan, who had been predicting a recovery after 18 months admitted he had been too optimistic. He cut his target price from £21.50 to £13.
London’s leading index closed down 158.2 at 5868 after dire service sector figures from the US.
HSBC’s John Fraser-Andrews downgraded property stocks. Hammerson was one of the top fallers, losing 78p to £10.67 as HSBC cut its price target from £12.30 to 765p saying its expensive development programme made it most vulnerable to a slowdown. He also downgraded every property he covered to underweight. Liberty International was down 69p at £10.09 and British Land lost 47p to 951p.
Schroders was another big victim, down 78p to £10.25 after Morgan Stanley’s Bruce Hamilton warned said the fund manager, whose growth has been driven by retail investors, will see no net retail growth this year.
Worries about Royal Bank of Scotland’s finances resurfaced and it lost lost 22.5p to 383p, wiping out its 16.75p Monday gain.
There were only three blue chip gainers, Shire, up 8p at 952p, Scottish & Newcastle, up 1.5p to 785.5p, buoyed by an agreed 800p bid and BP, up 1p at 543p after it offered a more generous dividend than had been expected.
ITV fell 4.2p to 74.4p as bid hopes faded. Virgin Media’s acting chief executive Neil Berkett talked down suggestions it would bid again.
Taylor Wimpey was the worst blue chip casualty down 16.25p to 184.75p after Kaupthing warned investors that its recent rally had gone too far.
Robert Lindsay
AGENDA
INTERIMS
BHP Billiton
British Sky Broadcasting
Quadnetics Group
FINALS
None scheduled
AGMS
Daily Mail & General Trust
Smiths News
EGMS
None scheduled
TRADING STATEMENTS
Daily Mail & General Trust
United Drug
NEW BUSINESS FIGURES
Aviva
ECONOMICS
UK Nationwide Jan consumer confidence (0001 GMT)
KPMG/Rec UK jobs report (0001 GMT)
UK BRC Jan shop price index (1030 GMT)
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