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Wednesday's news and tips

Created:

15 October 2008

Written by:

Tanya Malick

■ The turmoil in global markets has caused miner and bid target Rio Tinto to reconsider the timeline of the first wave of its proposed sale of assets.

■ As it forecast recently, data search software giant Autonomy's third quarter figures came in right at the top of forecasts with a profit leap of 160%.

■ Stockbroker Panmure Gordon has appointed ex-Merrill Lynch managing director Greg Wright as boss of its US business, ThinkPanmure.

■ Management and consultancy firm WSP Group has announced two major contract wins in Dubai.

■ Ukrainian iron ore producer Ferrexpo has delayed a decision on development of the Yeristovskoye mine and an upgrade to its existing Gorishne-Plavninskoye Lavrikovskoye mine due to the current uncertainty over commodity prices and slowing demand for steel.

■ Fund manager Rathbone Brothers has completed the sale of its offshore trust operations in Jersey for up to £28.5m and agreed the sale of its Singapore-based trust company for £0.5m in cash.

■ British Airways said it will drop its fuel surcharge from midnight, in line with crude prices slumping from record highs in the summer.

Continues below...

■ Publishing group Pearson has received a boost to profits from the resurgent US dollar.

■ The likes of Tesco and Sainsbury are losing out as German discount retailers continue to gain market share in the UK as the credit crunch forces consumers to watch the pennies.

■ Diageo has kept its guidance for full year organic operating profit growth of between 7% and 9% despite the recent plunge in global stock markets and looming recession.

■ Strong demand for armoured cars is keeping weapons group BAE Systems on track this year.

■ A resilient performance at Marston's leaves the pub group predicting earnings before exceptional items for the year to 4 October will be in line with expectations after benefiting from a slightly reduced tax charge.

■ Growth accelerated during the second quarter at credit checking firm Experian, lifting revenues for the half year by 13%, with organic growth of 3% helped by 5% growth in the second three month period.

■ Strong net inflows from institutional investors over the first quarter have been partially offset by fund depreciation at fixed income fund manager BlueBay Asset Management.

■ Book publisher Bloomsbury's operating performance since July has met expectations and the group is confident for Christmas despite the impact of the credit crunch and end to the Harry Potter series.

■ Online sports betting and gaming group Sportingbet said full year pre-tax losses narrowed as it remains cautiously optimistic for the current financial year.

■ Trading at specialist care provider CareTech is in line with expectations and the acquisitions of Beacon Care and Valeo are performing better than forecast.

■ First half trading in line with expectations has energy and environmental consultant AEA Technology looking to the rest of the year with "cautious optimism".

■ Full year profit at zip and valve maker Thomas Walker slumped after challenging trading conditions but it remains confident that the fundamentals of its operations remain sound.

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 (15 OCTOBER 2008)

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

BANKING CRISIS:

Britain's largest banks are pressing the government to rethink the terms of its £37bn bail-out of the industry as investors take fright at the requirement for the banks to stop paying dividends to shareholders.

The government condition, imposed during negotiations last weekend, has undermined the share prices of Royal Bank of Scotland, Lloyds TSB and HBOS – the three lenders participating in the rescue – making it more likely that the government will be forced to take up its full shareholding in the banks, writes the FT

The Independent adds that the government is considering a controversial U-turn that would allow Lloyds TSB to pay dividends to shareholders while still taking advantage of its £37bn bank bailout scheme.

The £37bn of public money being injected into Britain's three weakest banks may not be enough to stabilise the banking system, according to the Treasury Select Committee chairman. John McFall called on the rescued banks to provide much more detail of their exposure to derivatives and other complex assets, many of which have been plunging in value. He said: "It's a minefield we are tiptoeing through. That £37billion might not be enough," reports the Times.

Adam Applegarth, Northern Rock's deposed chief executive, and his colleagues have escaped legal action over the downfall of the bank. The nationalised bank revealed yesterday that it would not sue its former directors - including Mr Applegarth, who was criticised for his role in the bank's move into risky short-term funding - or its auditors over the bank's collapse, writes the Times.

The US government announced plans buy shares in the nation's top financial institutions as part of a new plan to restore confidence in the battered banking system. The Treasury Department will spend up to $250bn (£143bn) buying equity stakes in US banks as well as guaranteeing new debt by US financial services groups and acting as buyer of last resort for commercial debt, reports the Telegraph.

OTHER PRESS HEADLINES:

M ortgage lending is continuing to fall, leading home-loan providers to demand further clarification of the small-print in the Government's bank bailout which appears to require a return to levels of advances last seen in 2007. New figures, published by the Council of Mortgage Lenders, highlighted the desperate state of the British mortgage market, revealing a 63% drop in mortgage lending in August, compared to the same month last year, reports the Independent.

Sir Philip Greenis facing competition from TPG, the US private equity group, in his attempt to gain control of Baugur's UK high street assets by buying the debt of the Icelandic company. TPG has told the Icelandic government that it is interested in acquiring the £1bn-£2bn of debt owed by Baugur to the country's collapsed banks. The investment group's assets include House of Fraser and Hamleys, says the FT.

A spike in inflation is due to blow a £3bn hole in Britain's welfare budget, the country's leading public finance analysts said. The 16-year peak in inflation registered last month has direct consequences on public spending, since pensions and benefits are uprated each year by a figure based on the September retail price index (RPI), reports the Times.

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