LONDON (SHARECAST) - Data from the European Central Bank (ECB) show that the tentative rebound in the money supply over the summer may have stalled again in September. The broad M3 gauge -- watched by experts as an early warning signal for the economy a year or so ahead -- shrank by 30bn euros and is now down by 143bn euros since April. This is highly unusual. The narrow M1 gauge watched for signals of activity six months head has held up better but also contracted in September, falling by 16bn euros. "The message is clear," said Lars Christensen from Danske Bank. "The ECB needs to stop obsessing about fiscal issues and do real quantitative easing (QE) if it wants to stop the eurozone going the way of Japan." Loans to firms and households fell 1.3 per cent as banks continue to shrink their balance sheet to meet tougher rules. Private bank lending has been falling almost continuously since April, The Telegraph says.
Shares in the technology company Apple were briefly suspended before the release of its results and then fell up to 4% in after-hours trading in New York. A drop in iPad sales in the fourth quarter left profits at $8.22bn, trailing the $8.3bn that analysts had forecast. While sales of iPad, Apple's newest product, missed forecasts, iPhone sales beat them. The stunning success Apple has enjoyed since the launch of the iPhone in 2007 has left the Californian company facing ever higher bars to sustain its valuation as the world's most valuable company. "What people are going to focus on is that the iPad was a bit weak and the iPhone was solid during the quarter," said Shannon Cross, an analyst at Cross Research, The Telegraph reports.
Nine of the world’s biggest banks are facing increased scrutiny from US state prosecutors probing alleged attempts to manipulate the lending gauge known as Libor. Eric Schneiderman, New York attorney-general, and George Jepsen, Connecticut attorney-general, have sent subpoenas to Bank of America, Bank of Tokyo Mitsubishi UFJ, Credit Suisse, Lloyds Banking Group, Rabobank, Royal Bank of Canada, Société Générale, Norinchukin Bank and West LB as they investigate whether the banks participated in any schemes to rig the London Interbank Offered Rate, a person familiar with the matter said, according to the Financial Times.
It was once the dirtiest coal-fired carbon dioxode-emitting power plant in Western Europe. From next year Drax will become Britain’s biggest weapon in the race to produce renewable energy. Drax has been Britain’s single biggest electricity-producing plant for decades, providing at times as much 10% of the nation’s energy production. However, in plans unveiled yesterday, the South Yorkshire-based plant is to convert three of its six units to burning biomass rather than the black stuff. It is a move that will produce 2 gigawatts of green electricity, enough to power millions of homes a year. Dorothy Thompson, the chief executive of Drax, which is a £1.8bn stockmarket-listed company, said the leap to pushing Britain into a greener future was “enormous,” The Times explains.
Troubled fund manager Man Group drew the market’s attention yesterday after the company revealed Crispin Odey has been building up a stake in the business. Man said Odey Asset Management, the hedge fund founded and run by Mr Odey, held 5.15% of the group’s voting rights, including ordinary shares and contracts for difference. The announcement gave a lift to the shares, which traded at over 150p in March, but closed up 3 at 80.05p today. The FTSE 250 company has come under pressure as it struggles to stop clients from withdrawing money from its funds. The group revealed net third-quarter outflows of $2.2bn (£1.4bn) earlier in October, the fifth consecutive quarter of withdrawals, The Telegraph explains.
The vicious circle linking the outlook for banks with their economies continued on Thursday night after Standard & Poor’s rating agency cited increased economic risks as the main reason for downgrading BNP Paribas, France’s biggest bank and changed the outlook to negative for 10 other French banks, including Societe Generale and Credit Agricole. “The economic risks under which French banks operate have increased in our view, leaving them moderately more exposed to the potential of a more protracted recession in the eurozone,” S&P said in a statement. BNP Paribas’s rating was downgraded by one notch to A plus from AA minus with a negative outlook. The A rating of SocGen and Credit Agricole rating was confirmed but their outlook was cut to negative from stable, The Telegraph writes.
Oilfield engineering firm Sparrows Offshore has landed financial backing from a US-private equity firm understood to be worth more than £100m. The Aberdeen-based company said the support from AEA Investors LP would give it “funds for acquisitions and organic growth and will help the company fast track its global expansion strategy”. The heavily indebted crane engineering specialist grew sales from £149.5m in 2011 to £172m and narrowed pre-tax losses from £66.6m to £20.1m. The investment from the New York and London-based private equity firm comes well ahead of a debt repayment deadline. In August Sparrows had refinanced its £200m net debt which was brought forward to be repayable in June next year, The Scotsman reports.
Santander has raised the prospect of a fresh wave of mis-selling claims against banks by taking a £232m provision to cover future payments. The Spanish-owned lender refused to give details, but banks are braced for a raft of legal claims from small businesses over allegations that they were mis-sold insurance products to cover the risk of rising interest rates. Further claims may also come in the form of compensation to customers who dealt with CPP, the credit card protection company. The bank said yesterday that the £232m provision was made in September “in relation to conduct remediation for historic customer conduct issues,” The Times says.
EE, which owns Orange and T-Mobile, will employ the frequencies it uses for 2G services for 4G when it launches Britain’s first service on Tuesday, ahead of its rivals who cannot go live until next summer. However, the airwaves that will be used for EE’s new network are in a high-frequency range that means the mobile phone signals will struggle to penetrate the walls of buildings. An EE spokesman told The Times that it had initially focused its efforts on building out its 4G network to cover outdoor areas and that it would fill in gaps to boost indoor coverage over the coming months. He said customers would receive a 4G signal indoors and could connect to Wi-Fi for a stronger signal. Vodafone, one of EE’s main rivals, has warned that this could leave many early adopters of the new 4G network frustrated when using their new smartphones at home, at work or in a shopping centre.