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Wednesday's news and tips

Created:

8 October 2008

Updated:

18 October 2008

Written by:

Tanya Malick

■ Eight of the UK's largest and most powerful savings institutions have signed up to the government's bailout of the UK bank sector. The government will subscribe for preference share capital to boost banks' tier one capital ratios, and make funding available to compensate for the absence of interbank lending

■ HBOS is to sell part of its Australian operations, namely Bank of Western Australia (BankWest) and St Andrew's Australia, to Commonwealth Bank of Australia (CBA) for about A$2.5bn to boost its balance sheet.

■ Supermarket giant Sainsbury's lifted underlying like-for-like sales by 4.3% in the quarter to end September, in the middle of market forecasts.

■ A fire in the Channel Tunnel on 11 September caused a fall in Groupe Eurotunnel's quarterly revenues.

■ Mexican silver miner Fresnillo has lifted its stake in rival MAG Silver, buying 2.5m shares in the company.

■ Hedge fund manager Charlemagne Capital's assets under management tumbled in the third quarter with the total at end September down by nearly 50% on the start of 2008.

Continues below...

■ Tim Parker is to rejoin the board of catering company Compass as a non-executive director having stepped down temporarily to act as a deputy mayor of London.

■ USA and Germany focused oil and gas explorer Empyrean Energy said its Kennedy 1H well in the Sugarloaf prospect, Texas, had started commercial production.

■ Residential property group Grainger expects to reports a 17.5% increase in total full-year sales from its core and retirement solutions portfolio and said it continues to make profitable sales despite challenging markets.

■ New store openings and increased telephone and internet orders helped chocolate retailer Thorntons post a 4.7% rise in sales in the 14 weeks to October 4.

■ Convenience food group Uniq has seen a further significant deterioration in economic conditions, particularly in the UK and France, which will mean a trading loss this year.

■ Uncertainty over prospects in the construction sector has hit plant hire group Speedy Hire with first half profits now expected to be flat.

■ Financially troubled sofa retailer Land of Leather rolled out a full year loss compared to profit the year before as it endured the "most difficult period for the retail furniture industry in years."

■ Aim listed property and asset management group Rugby Estates fell into a first half pre-tax loss but 'views prospects with considerable confidence.'

FOR A SUMMARY OF LATEST MOVEMENTS IN EQUITY, COMMODITY AND CURRENCY MARKETS, SEE FT.COM'S MARKETS PAGE.

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NEWSPAPER SHARE TIPS (8 OCTOBER 2008)

Full round-up of newspaper share tips (sourced from Sharecast)

PRESS SUMMARY:

Britain's banks remained divided almost to the last yesterday on plans for a massive government recapitalisation of the industry but were eventually forced to accept that the initiative was inevitable. Barclays has consistently insisted that its capital position is strong enough to withstand market and economic pressures. But Royal Bank of Scotland, whose shares were battered yesterday, is thought to believe that the market now requires higher core capital ratios to feel secure about banks, reports the Independent.

The IMF has called on Darling to set up £100bn "toxic waste" fund before recapitalising banks. It is a sign of the times that one of the world's most free market institutions is now calling for the biggest and most dramatic international bail-out in history, writes the Telegraph.

Ben Bernanke, Chairman of the Federal Reserve, paved the way last night for an imminent cut in US interest rates as he sounded a warning that world financial turmoil will inflict a deeper and longer downturn on America, reports the Times.

The Bank of England's Monetary Policy Committee is widely expected to reduce interest rates tomorrow by at least 0.25%, but Philip Green, the owner of the retailer Bhs, said: "Fundamentally, if there is an interest rate cut in the short term, other than sentiment, it is not going to massively help the consumer," the Independent reports.

Pubs and property tycoon Robert Tchenguiz has sold his 29.7% stake in pub group Mitchells & Butlers (M&B) to a mystery buyer. The disposal of the £190m stake could be announced as early as this morning. It was not clear last night whether Mr Tchenguiz had sold the stake to a single party or a group of investors, writes the Telegraph.

AIG was warned by regulators and auditors about a lack of transparency in the months before the collapse of the US insurance giant, it surfaced yesterday as former company executives were subjected to a public grilling by politicians. News of the warnings came as it emerged that AIG spent $440,000 (£250,000) hosting a corporate retreat for insurance salesmen at a top Californian coastal resort a week after accepting an $85bn emergency loan from the US government, according to the Telegraph.

General Motors is cutting production at most of its 10 manufacturing plants in Europe in a stark sign of the growing toll the credit crisis is taking on demand in the real economy. GM said on Tuesday it was halting production or cutting shifts at the plants for between 10 days and three weeks in response to lower sales of its Opel, Vauxhall and Saab cars, reports the Financial Times.

Woolworths' woes have deepened heading into the Christmas period as it emerged that the last of the big three credit insurers withdrew cover for suppliers of the retailer amid growing concerns over the high street chain's financial health. French-owned Coface withdrew its cover to the retailer's suppliers, following in the footsteps of Euler Hermes and Atradius, which had already taken similar steps, writes the Financial Times.

Thousands of savers with deposits of more than £50,000 have been moving their money to the biggest financial institutions over the last few days, as smaller lenders have begun to come under greater financial pressure, reports the Independent.

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