FTSE 100 gains but concerns expenditure struck small caps

But analysts at Numis Promethean "add" to "buy". Commenting on prospects for management of company Whiteboard on the American market, analysts said: "we are pulling our forecast return to take account of this and an expectation of a further deterioration of here."

Axe public for Chancellor George Osborne spending hit Mouchel, which tumbling 38 p-, or 30 16pc - 88 percent as the company, which allows the Government to maintain highways and provides advice to local authorities, said that the immediate prospects remain displayed as Mouchel incertaine.Bien loss throughout the year, told that it was informed to benefit from an increase in subcontracting anticipated.

But blue-chips felt more healthy Thursday, WINS points 31.87 5677.89, results forecast-beating of Royal Dutch Shell helps lift sentiment.

The oil giant has increased from 10 p to £ 19.87 after a break for the benefit of the third quarter, thanks to rising prices for oil and gas.

Performance of shell illuminated other stocks with Essar energy reaching 7½ 543 p .but energy company focused on the Indian also had its own news announcing that he planned to increase the capacity of its plant to Vadinar.

After taking a blow earlier this week, chipmaker ARM Holdings is in demand, accusing the blue-chip leader Commission increased by 11.6 to 372 p.

H2O markets reiterated their position "buy" on the business of Cambridge, saying that he is exceptionally well placed to benefit from continued demand in smartphone and iPad markets.

Insurers are also supported with prudential WINS 17 630½p, Admiral 24 p to £ 16.35 and Standard Life reaching 3.1 226.9 p.

Panmure Gordon analysts Thursday reiterated their positive life insurance sector UK, with a rating of "buy" on prudential attitude.

But the broker has maintained a "hold" on the Standard Life, although worn his price target to 240 p 225 p.

"After share prices fall in 2nd quarter 2010, the sector has rebounded in the third quarter, largely following the resumption of stock markets," said analysts.

"From life insurance looks set to benefit from the relaxation of fears about the impact of [new capital requirements] and double-recession, which in turn facilitates the concerns of the default corporate bond sector."

Blue-chip heavy that Vodafone was lifted p 4.4 170.7 through solid results of peer channel, France Telecom, whose results third quarter exceeded forecasts of analysts. ""France Tel showed strength in France and Spain and KPN showed the German market was also performing all markets key for Vodafone," said analysts in the execution of noble.

But at the other end of the spectrum, pharmaceutical companies were as after AstraZeneca showed generic competition had improperly revenues for the third quarter.

Britain's second drug manufacturer slipped 106 p to £ 31.39½, while GlaxoSmithKline decreased 11½p to £ 12.33 sympathy and manufacturer of the medical device, Smith & Nephew abandoned to 13½ to 560 p.

21.55 Points 10848.83 acquired mid-cap market and among stars of index was crucial to SVG, checking up 13.1 to 202½p after the company stated that its net asset value increased close to one-fifth to the third trimestre.Analystes Liberum said it was a good quarter as labour Permira and SVG had to reduce the debt and drive growth private equity income repayment.

But lagging Thursday Croda International, fell 45% to £ 14.70 despite posting strong third trimestre.Le manufacturer of chemical products for customers including Estée Lauder was downgraded by Brewin Dolphin to "hold" "add" for reasons of assessment results.

Housebuilders fell after the Nationwide figures showed that housing prices continued to fall that buyers have remained away from the marché.Taylor lost 0.4 to 22.93%, Barratt Developments Wimpey fell 1.3 to 78.15%, Bovis Homes fell from 5.9 to 349 p and Redrow shed 1.9 to 114,3 p.

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Objective principal Marcus Stuttard defends market junior claims "volatility".

This week, value doubled Petroleum desire on speculation on oil find - despite no information publicly available on the market.

However, Marcus Stuttard, head of the defended on the London Stock Exchange aim market junior of the city as a stable place to do business.

"One of the reasons monitor us the market and share price movements is to ensure that there is known by the company may be disclosed", he said.

It is not within the competency in order to stop any person displaying false rumours on the internet, bulletin boards, but it can - and - report concerns the financial authorities.

"If we suspect any type of abusive behaviour or see any sign of concern we refer to the regulatory body."In some cases we provide information help regulatory agencies to further their investigations.

Mr. Stuttard disputes the idea that there is a widespread problem.

"If there is no a strong level of confidence in the market, then we see the high level of support of investors we."

"Actually, much emphasis has been to try to increase the liquidity on the but.Ce we have a tendency to find growth markets, need more buy and sell orders."

Last year, market combined corporate AIM values totaled of £ 59bn.Toutefois Dynamics raise capital has evolved over the ans.En 2006, £ 9. 6bn was raised by selling, more than £ 5. 7bn in trésorerie.Cependant, calls in the market this year, it was only 800 m £ 5.3 £ 4 in share offers and sales.

Mr. Stuttard believes it is still obliged to wider markets State account success.

"In most markets growth very little has been raised, while we raised a total of £ 5. 5bn.".

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Utilities stocks fail to boost lethargic FTSE 100

Leaping Board winners in wake of Scottish & South were reaching 10.4 percent 332.2 Centrica and National Grid ticking up to 6½ to 590 p.

But the utility companies failed to lift the blue-chip dull swung between gains and losses and ending almost flat.

The FTSE 100 lost 2.73 points investors 5675.16 marked time in advance of the meeting of Federal Reserve hotly awaited next week.

Languish at the head of the losers league table has British Airways, which nose dived 10 to 270.7 percent despite the swinging in the dark. Panmure Gordon analysts have been sticking to their "hold" rating, saying: "Momentum has been strong in the price of shares, powered by revenues, particularly in terms of demand for premium environment improved yields, ATI approval for the transatlantic joint venture with AA and Iberia and planned with Iberia merger".

Minors were also lower with Xstrata losing £ 12.09½ and Rio Tinto excretion 69½p 40½p to £ 40.36.

Having a better day was insurers with Aviva putting on 5.4 398.1 p Goldman Sachs reiterated its "buy belief" on shares.Next Tuesday, Aviva will report its results for the third quarter, which analysts believe will support the case of investment.

"In our opinion, the significance of the number of sales down played b.c market ' is understandable, because they have little bearing on the position of the group, capital dividend paying capacity and resilience in a prolonged low interest rate environment" said broker. "While the body is very focusing market better than expected sales of Aviva markets of Europe and the UK-based show some sustainability gains and that review group or the transition to the Solvency II are not disturbing the underlying transactions.»

Also benefit from a burst of Goldman Sachs was GKN, which rose 3.3% 177.3.Dans a note of the European automotive sector, the broker reiterated its "buy" rating on the manufacturer of parts for cars and planes and raised its price target to 285 p 220 p.

Travelers small caps automobile-related, was flat at 61 automotive dealer p.Le stated that he had seen a solid third quarter through its parts car combined with the increase in sales of new and used vehicles.

Earlier this week, there have been whispers of private investment capital interest in Miss, but Chief Executive, said Friday that they had received no offer.

Among second linings, Hikma Pharmaceuticals seeking particularly healthy, pulling 49½ at 786 p after it struck an agreement with Baxter International, American Society of health care.

Listed on the FTSE 250 Jordan-based undertaking bought Baxter us generic injectibles unit 112 m $, double the size of Hikma US business and giving more 14pc market.

Analysts said the acquisition will position Hikma as the second largest supplier of injectibles to the United States Citigroup.

"Existing expertise Hikma injection and desire of Baxter to divest non-core assets produced an attractive and financially reasonable agreement in our opinion," said the broker who Hikma "medium risk.

Oil and gas services company, hunting, has been on the rise too, breaking 41½ in 644½p .Chasse whose equipment is used in the construction and maintenance of oil, said shale drilling activity and demand for components in the West and to the Brazil he developed able top year-round market expectations.

Their "buy" rating on hunting and raised the prices kept RBS analysts 670 p 630 p.Le Broker target stated that in a context of market improvement, hunting was performing well.

But punters took their money out of the table for Partygaming, sending internet business down 10.8% 251.9 gaming.

Excitation of bidding pushed shares in resources from Berkeley to hereditary 112½p as Russian steel giant, Severstal, approached Berkeley on a possible takeover of uranium, a value on an exploration company 304 million senior dollars.Atout Berkeley is a project of uranium from Salamanca, Espagne.Severstal envisages a cash bid to $2.00 at Berkeley, appearing also in Sydney.

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Currency wars are necessary if all else fails

They are taking active steps to prevent America extricating itself from the worst unemployment since the Great Depression, now 17.1pc on the latest U6 index and rising again.

Each country is doing so for understandable reasons: Japan to avoid a deflationary crisis, China to hold together a political order that is more fragile than it looks. In both these cases they are trapped because they clung too long to a mercantilist export strategy, failing to wean themselves off American demand when the going was good.

Yet this is an intolerable situation for the US. It should be no surprise that Washington has begun to retaliate in earnest, and not just by passing the Reform for Fair Trade Act in the House (not yet the Senate), clearing the way for punitive tariffs against currency manipulators.

The atomic bomb, of course, is quantitative easing by the Federal Reserve. America has in effect issued an ultimatum to China and G20: either you stop this predatory behaviour and agree to some formula for global rebalancing, or we will deploy QE2 `a l’outrance’ to flood your economies with excess liquidity. We will cause you to overheat and drive up your wage costs. We will impose a de facto currency revaluation by more brutal and disruptive means, and there is little you can do to stop it. Pick your poison.

This is what QE2 means, though Fed officials prefer to talk of their “mandate” of supporting employment. It is nothing like QE1, which was emergency action to halt the economic free-fall of late 2008 and early 2009. This time the Fed is using QE as a long-term tool to manage America’s chronic ailments.

Uber-dovish Fed comments over recent days have been enough to send the dollar crashing to a 15-year low of 82 against the Japanese yen, to below parity against Swiss franc, and back to the EMU pain barrier of $1.40 against the euro.

There was much tut-tutting about currency warfare at the IMF meeting over the weekend. "If one lets this slide into protectionism, we run the risk of the mistakes of the 1930," said World Bank chief Robert Zoellick.

You have to say this kind of thing if you run a Bretton Woods institution, but in real life wars occur because somebody finds the status quo unacceptable, perhaps justifiably so. As Nobel economist Paul Krugman puts it: “people are looking for innocuous ways to deal with this problem, and there aren’t any”.

Devaluation was not the mistake of the 1930s: it was the cure, albeit a bad one. The Gold Standard broke down during the inter-war years because the US and France had structurally undervalued exchange rates (like China/Asia today) and ceased recycling their trade surpluses (like China/Asia today). This caused a deflationary downward spiral for everybody.

Escaping from such a deformed system was a path to recovery. The parallel with modern globalization – though not exact – is obvious. So is the 1930s lesson that currency and trade clashes are asymmetric: they are calamitous for surplus countries, but not always for deficit countries. Britain enjoyed a five-year mini-boom after retreating into an Empire trade bloc in 1932.

Fed chair Ben Bernanke knows his history. In a speech as a junior Fed governor he described Roosevelt’s 40pc devaluation against gold as “an effective weapon” against deflation and slump, adding “1934 was one of the best years of the century for the stock market”.

I suspect that the Bernanke Fed is working with the Treasury to steer the dollar lower, and above all to stop it rising again, since the global dollar index looks poised for a powerful rebound.

There is certainly something odd about the latest Fed rhetoric. New York chief William Dudley said inflation had fallen to “unacceptable” levels. Has it really? The Dallas Fed’s `trimmed-mean’ CPE inflation index has been creeping up over the last three months.

His Chicago colleague Charles Evans has called for “much more accommodation". Why now? Bank credit has stopped contracting. The M2 money supply growth has accelerated sharply to a 7.4pc rate over the last month of published data. The St Louis Fed’s monetary multiplier has edged up at last. By the Fed’s own account, the double-dip scare of the early summer has abated.

I happen to think that the Fed will need to launch QE2 on a big scale as US fiscal tightening bites, the inventory spike fades, and the housing foreclosure crisis gathers pace. But we are not there yet. Fresh QE cannot be justified at this juncture under any normal understanding of central bank policy.

Is the Fed in reality trying to shore up consumption by juicing asset prices, and trying to ensure that the effect boosts jobs at home rather than in China, Germany, or Japan by holding down the dollar?

This is a dangerous moment for the world, and may backfire against the US itself. We are already starting to see the same sort of rush into oil and resources that played such havoc in mid-2008, and may have been a key trigger for the Great Recession. There is a risk that this commodity shock will hit before QE stimulus filters through.

And while the French deny that they are in talks with China over the creation of a new currency regime, I heard French finance minister Christine Lagarde say in person at a meeting in Italy that France would use its G20 presidency to push for an alternative to the dollar. She specifically cited the “Bancor”, the idea floated by Keynes in the 1940s for a commodity currency priced off a basket of metals. The US risks gambling away the “exorbitant privilege” it has enjoyed for two thirds of a century as currency hegemon.

Yet the surplus states have most to lose if this brinkmanship tips into commercial war. They must know this, but what we are witnessing may run deeper than a calculus of advantage. Was it naïve to think that Confucian Asia and the old democracies of the Atlantic seaboard can share an open global trading system?

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Gold is the final refuge against universal currency debasement

The US and Britain are debasing coinage to alleviate the pain of debt-busts, and to revive their export industries: China is debasing to off-load its manufacturing overcapacity on to the rest of the world, though it has a trade surplus with the US of $20bn (£12.6bn) a month.

Premier Wen Jiabao confesses that China’s ability to maintain social order depends on a suppressed currency. A 20pc revaluation would be unbearable. “I can’t imagine how many Chinese factories will go bankrupt, how many Chinese workers will lose their jobs,” he said.

Plead he might, but tempers in Washington are rising. Congress will vote next week on the Currency Reform for Fair Trade Act, intended to make it much harder for the Commerce Department to avoid imposing “remedial tariffs” on Chinese goods deemed to be receiving “benefit” from an unduly weak currency.

Japan has intervened to stop the strong yen tipping the country into a deflation death spiral, though it too has a trade surplus. There is suspicion in Tokyo that Beijing’s record purchase of Japanese debt in June, July, and August was not entirely friendly, intended to secure yuan-yen advantage and perhaps to damage Japan’s industry at a time of escalating strategic tensions in the Pacific region.

Brazil dived into the markets on Friday to weaken the real. The Swiss have been doing it for months, accumulating reserves equal to 40pc of GDP in a forlorn attempt to stem capital flight from Euroland. Like the Chinese and Japanese, they too are battling to stop the rest of the world taking away their structural surplus.

The exception is Germany, which protects its surplus ($179bn, or 5.2pc of GDP) by means of an undervalued exchange rate within EMU. The global game of pass the unemployment parcel has to end somewhere. It ends in Greece, Portugal, Spain, Ireland, parts of Eastern Europe, and will end in France and Italy too, at least until their democracies object.

It is no mystery why so many states around the world are trying to steal a march on others by debasement, or to stop debasers stealing a march on them. The three pillars of global demand at the height of the credit bubble in 2007 were – by deficits – the US ($793bn), Spain ($126bn), UK ($87bn). These have shrunk to $431bn, $75bn, and $33bn respectively as we sinners tighten our belts in the aftermath of debt bubbles.. The Brazils and Indias of the world are replacing some of this half trillion lost juice, but not all.

East Asia’s surplus states seem structurally incapable of compensating for austerity in the West, whether because of the Confucian saving ethic, or the habits of mercantilist practice, or in China’s case by the lack of a welfare net. Their export models rely on the willingness of Anglo-PIGS to bankrupt themselves.

So we have an early 1930s world where surplus states are hoarding money, instead of recycling it. A solution of sorts in the Great Depression was for each deficit country to devalue, breaking out of the trap (then enforced by the Gold Standard). This turned the deflation tables on the surplus powers – France and the US from 1929-1931 – forcing them to reflate as well (the US in 1933) or collapse (France in 1936). Contrary to myth, beggar-thy-neighbour policy was the global cure.

A variant of this may now occur. If China continues to hold down its currency, the country will import excess US liquidity, overheat, and lose wage competitiveness. This is the default cure if all else fails, and I believe it is well under way.

The latest Fed minutes are remarkable. They add a new doctrine, that a fresh monetary blitz – or QE2 – will be used to stop inflation falling much below 1.5pc. Surely the Fed has not become so reckless that it really aims to use emergency measures to create inflation, rather preventing deflation? This must be a cover-story. Ben Bernanke’s real purpose – as he aired in his November 2002 speech on deflation – is to weaken the dollar.

If so, he has succeeded. The Swiss franc smashed through parity last week as investors digested the message. But the swissie is an over-rated refuge. The franc cannot go much further without destabilizing Switzerland itself.

Gold has no such limits. It hit $1300 an ounce last week, still well shy of the $2,200-2,400 range reached in the late Medieval era of the 14th and 15th Centuries.

This is not to say that gold has any particular "intrinsic value"’. It is subject to supply and demand like everything else. It crashed after the gold discoveries of Spain’s Conquistadores in the New World, and slid further after finds in Australia and South Africa. It ultimately lost 90pc of its value – hitting rock-bottom a decade ago when central banks succumbed to fiat hubris and began to sell their bullion. Gold hit a millennium-low on the day that Gordon Brown auctioned the first tranche of Britain’s gold. It has risen five-fold since then.

We have a new world order where China and India are buying gold on every dip, where the West faces an ageing crisis, and where the sovereign states of the US, Japan, and most of Western Europe have public debt trajectories near or beyond the point of no return.

The managers of all four reserve currencies are playing fast and loose: the Fed is clipping the dollar; the Bank of England is clipping sterling; the European Central Bank is buying the bonds of EMU debtors to stave off insolvency, something it vowed never to do just months ago; and the Bank of Japan has just carried out two trillion yen of “unsterilized” intervention.

Of course, gold can go higher.

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Capital controls eyed as global currency wars escalate

Guido Mantega, the Brazilian Finance Minister, said an international currency war threatened the country's competitiveness.

Brazil, Mexico, Peru, Colombia, Korea, Taiwan, South Africa, Russia and even Poland are either intervening directly in the exchange markets to prevent their currencies rising too far, or examining what options they have to stem disruptive inflows.

Peter Attard Montalto from Nomura said quantitative easing by the US Federal Reserve and other central banks is incubating serious conflict. "It is forcing money into emerging market bond funds, and to a lesser extent equity funds. There has truly been a wall of money entering many countries," he said.

"I worry that we are on the cusp of a competitive race to the bottom as country after country feels they need to keep up."

Brazil's finance minister Guido Mantega has complained repeatedly over the past month that his country is facing a "currency war" as funds flood the local bond market to take advantage of yields of 11pc, vastly higher than anything on offer in the West.

"We're in the midst of an international currency war. This threatens us because it takes away our competitiveness. Advanced countries are seeking to devalue their currencies," he said, pointing the finger at America, Europe and Japan. He is mulling moves to tax short-term debt investments.

Goldman Sachs said net inflows have been running at annual rate of $520bn (£329bn) in Asia over the last 15 months, and $74bn in Latin America. Intervention to stop it creates all kinds of problems so the next step may be "direct capital controls", the bank warned.

Brazil's real has been one of the world's strongest currencies over the past two years, aggravating a current account deficit nearing 2.5pc of GDP. The overvalued exchange rate endangers Brazil's industry, especially companies that compete with Chinese imports. The real has appreciated to 1.7 to the dollar from 2.6 in late 2008, and by almost the same amount against China's yuan.

"Everybody is worried that global growth is fading and they are trying to use exchange rates to protect exports. Brazil has watched as the Asians intervened and feels it can't stand by," said Ian Stannard, a currency expert at BNP Paribas.

Brazil has used taxes to slow the capital inflows but the allure of super-yields and the country's status as a grain, iron ore, and commodity powerhouse have proved irresistible. It is a textbook case of the "resources curse" that can afflict commodity producers.

A $67bn share issue by Petrobras has been a fresh magnet for funds, forcing the central bank to buy an estimated $1bn of foreign bonds each day over the past two weeks. Such action is hard to "sterilise" and can it fuel inflation.

Japan has begun intervening to stop the yen appreciating to heartburn levels for Toyota, Sharp, Sony and other exporters. A strong yen risks tipping the country deeper into deflation.

Switzerland spent 80bn francs in one month to stem capital flight from the euro, only to be defeated by the force of the exchange markets, leaving its central bank nursing huge losses.

Stephen Lewis from Monument Securities said the Fed is playing a risky game toying with more QE. There are already signs of investor flight into commodities. The danger is a repeat of the spike in 2008, which was a contributory cause of the Great Recession. "Further QE at this point may prove self-defeating," he said.

Meanwhile, Dominique Strauss-Kahn, managing director of the International Monetary Fund, tried to play down the fears of a currency war, saying he did not think there was “a big risk” despite “what has been written”.

Get free advice when sending money abroad with Telegraph International Money Transfers

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IMF admits that the West is stuck in near depression

"Not all countries can reduce the value of their currency and increase net exports at the same time," it said. Nobel economist Joe Stiglitz goes further, warning that damn may break altogether in parts of Europe, setting off a "death spiral".

The Fund said damage also doubles for states that cannot cut rates or devalue – think Spain, Portugal, Ireland, Greece, and Italy, all trapped in EMU at overvalued exchange rates.

"A fall in the value of the currency plays a key role in softening the impact. The result is consistent with standard Mundell-Fleming theory that fiscal multipliers are larger in economies with fixed exchange rate regimes." Exactly.

Let us avoid the crude claim that spending cuts in a slump are wicked or self-defeating. Britain did exactly that after leaving the Gold Standard in 1931, and the ERM in 1992, both times with success. A liberated Bank of England was able to cut interest rates. Sterling fell. The key point is whether you can offset the budget cuts.

But by the same token, it is fallacious to cite the austerity cures of Canada, and Scandinavia in the 1990s – as the European Central Bank does – as evidence that budget cuts pave the way for recovery. These countries were able export to a booming world. They could lower interest rates, and were small enough to carry out `beggar-thy-neighbour' devaluations without attracting much notice. We were not then in our New World Order of "currency wars".

Be that as it may, it is clear that Southern Europe will not recover for a long time. Portuguese premier Jose Socrates has just unveiled his latest austerity package. He has capitulated on wage cuts. There will be a rise in VAT from 21pc to 23pc, and a freeze in pensions and projects. The trade unions have called a general strike for next month.

Mr Socrates has already lost his socialist majority, leaking part of his base to the hard-Left Bloco. He must rely on conservative acquiescence – not yet forthcoming. Citigroup said the fiscal squeeze will be 3pc of GDP next year. So under the IMF's schema, this implies a 3pc loss in growth. Since there wasn't any growth to speak off, this means contraction.

Spain had a general strike last week. Elena Salgado, the defiant finance minister, refused to blink. "Economic policy will be maintained," she said. There will be another bitter budget in 2011, cutting ministry spending by 16pc.

Mrs Salgado has ruled out any risk of a double-dip. But the Bank of Spain fears the economy may contract in the third quarter.

The lesson of the 1930s is that politics can turn ugly as slumps drag into a third year, and voters lose faith in the promised recovery. Unemployment is already 20pc in Spain. If Mrs Salgado is wrong, Spanish society will face a stress test.

We are seeing a pattern – first in Ireland, now in Greece and Portugal – where cuts are failing to close the deficit as fast as hoped. Austerity itself is eroding tax revenues. Countries are chasing their own tail.

The rest of EMU is not going to help. France and Italy are cutting 1.6pc GDP next year. The German squeeze starts in earnest in 2011.

Given the risks, you would expect the ECB to stand by with monetary stimulus. But no, while the central banks of the US, the UK, and Japan are worried enough to mull a fresh blast of money, Frankfurt is talking up its exit strategy. It risks repeating the error of July 2008 when it raised rates in the teeth of the crisis.

The ECB is winding down its lending facilities for eurozone banks, regardless of the danger for Spanish, Portuguese, Irish, and Greek banks that have borrowed €362bn, or the danger for their governments. These banks have used the money to buy state bonds, playing the internal "carry trade" for extra yield. In other words, the ECB is chipping at the prop that holds up Southern Europe.

One has to conclude that the ECB is washing its hands of the PIGS, dumping the problem onto the fiscal authorities through the EU's €440bn rescue fund. That is courting fate.

Who believes that the EMU Alpinistas roped together on the North Face of the Eiger are strong enough to hold the rope if one after another loses its freezing grip on the ice?

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Ireland should honour its debts, says Irish business federation chief Danny McCoy

Pressure is mounting on the Irish government to rethink its plans for a "haircut" on the subordinated debt of Anglo Irish and Irish Nationwide Building Society. Photo: AFP

"Ireland should honour its debts if it can," said Danny McCoy, head the Irish Business and Employers Confederation (IBEC).

"The country makes a living taking capital from people and looking after it, and you don't want to get a reputation for carrying out partial defaults," he told The Daily Telegraph.

Ireland's financial services industry is around 9.8pc of GDP, with big players such as Merrill and Citigroup operating from Dublin's 'Canary Dwarf'. But foreign investment is also the lifeblood of the country's manufacturing industry, led by computers and pharmaceuticals.

IBEC's comments come amid mounting pressure on the Irish government to rethink its plans for a "haircut" on the subordinated debt of Anglo Irish and Irish Nationwide Building Society (INBS).

Millhouse, the asset management group of Roman Abramovich, is the latest foreign fund to express fury, warning that Ireland faces possible legal action and a "huge reputation loss" if it imposes a haircut on creditors. The fund said it had been "misled and deceived" by the Irish government, though this class of debt was quietly dropped when the guarantee was extended last month.

The exact shape of any "burden-sharing" is still unclear. Brian Lenihan, finance minister, has said the junior bondholders should make a "significant contribution toward meeting the costs" of the state bailout.

These investors took extra risk to enjoy extra yield, and cannot expected shield when the bank collapses. The debt of senior bondholders is considered sacrosanct.

Mr Lenihan has to walk a fine line: talk of debt restructuring for Anglo and INBS conflicts with his other message that Ireland is recovering from the crisis and still enjoys reserves of economic wealth.

Yet like finance ministers across the West, he also has to secure political support for austerity measures. This is increasingly hard to do without forcing bondholders to share at least some of the pain.

Hedge funds also have to watch their step. The political balance of power in Europe is moving against them. If they were to bring a small country like Ireland to its knees, the EU authorities would undoubtedly respond.

IBEC's Mr McCoy said the €40bn(£35bn) total cost of bailing out the banks had landed on the shoulders of 2m people in the Irish workforce, or €20,000 per person.

While this is an understandable cause of anguish, Mr McCoy said savings from a partial default on €3bn of Anglo and INBS subordinated debt, would be a small fraction of this.

Separately, Moody's called for a "credible plan" by the Irish government to bring its budget deficit back to 3pc of GDP by 2014, warning that the country could face a further downgrade. The report had no market impact.

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The hi-tech miracle rescuing Ireland from a banking crisis

Most of the world’s medical device giants have operations in an arc around this Atlantic outpost, where Gaelic can be heard again in the Guinness bars of Shop Street, spoken by the young. Nor are Galwegians cobbling together somebody else’s kit these days, as they did in the 1990s.

“We’re as good as Switzerland, Germany, or anywhere in the world,” said John Power, the founder of Irish start-up company Aerogen and holder of 40 patents.

He holds up his Aeroneb micropump, used to deliver drugs deep into the lungs to keep the airways open. The small contraption vibrates 140,000 times a second, emitting a superfine aerosol spray through invisible holes, each measuring just three microns. It is a surgeons’ tool, ending the need for uber-doses of intravenous drugs. One version is small enough for premature babies.

“We’re saving lives all over the world, it is a great feeling,” said Mr Power.

Besides two accountants, his team in Galway’s leafy suburbs are all scientists or engineers with degrees or PhDs. Production is farmed out. “Our annual revenues have grown 40pc a year for the past three years, and we expect the same this year. Japan is huge for us,” he said. So Japan’s aging crisis is a boon for someone, at least.

Medical products are a structural “play” on the two great trends in the world – the greying of the West and the accelerating health demands of middle-class Asia.

The medical technology plants along Ireland’s west coast – drawing on a small army of young science graduates – are together the world’s third-biggest exporter of medical devices in absolute terms, after the US and Germany.

Life sciences make up a third of Ireland’s €160bn exports. Boston Scientific alone has 4,500 employees in the country, mostly graduates, some making drug-coated stents to stop arteries clogging up.

The sector hardly missed a beat during the “Great Recession”, and will grow 10pc this year. It is insulated from Ireland’s banking debacle.

“We don’t even look at the Irish market in our planning,” said John O’Dea, head of the Galway start-up Crospon, which makes catheters with imaging technology for stomach surgery. Crospon’s products are sold to hospitals in Europe and the US.

“We got fat during the Celtic Tiger era but we’ve woken up pretty abruptly. Wages are not going up anymore – we’re bending the cost curve downwards,” said Mr O’Dea. Wages for entry-level jobs have dropped 10pc to 15pc, tracking cuts in public wages.

Barry O’Leary, head of Ireland’s Industrial Development Agency, said wage restraint has largely reversed the damage from the bubble. Unit labour costs are expected to fall 13pc viz-a-viz the eurozone from 2008 to 2011. Office rental costs

have dropped nearly 45pc. Dublin has fallen from being the world’s sixth most expensive city to 33rd.

Ireland has pulled off the remarkable feat of outright deflation to secure its place in Europe’s currency union without setting off violent protest, or even strikes.

Deflation is double-edged, of course. Ireland’s nominal GDP has shrunk by a fifth, while debt contracts are fixed. Public debt will rise to about 115pc of GDP, including the €40bn hit from Anglo Irish and other banks. The crucial issue is whether Ireland has the export base to trade its way back to life.

“When the global crisis hit, our higher costs came to the fore. We have been slowly clawing it back, giving nothing away,” said Gerry McDonnell, head of Stryker Orthopaedics in Limerick, which makes knees and hips.

Discipline has paid off, as has Swedish-style social solidarity. The US group is selling its plant at Caen in France – plagued by labour strains – and shifting the research operations to Ireland. “We’re moving up the value chain,” said Mr McDonnell.

There will be hitches.

A “patent cliff” is coming as licensing protection expires on best-selling drugs produced in Ireland: Eli Lilly’s Zyprexa for schizophrenia, Bristol-Myers’ Plavix for strokes, as well as Pfizer’s Lipitor for cholesterol – though not yet its patent for Viagra, produced for the whole world at a plant outside Cork. Drug sales tend to crash by 80pc within two months of patent expiry.

“We’ve become the Silicon Valley of the pharma industry, but the next few years are going to be very challenging,” said Eamon Judge, head of supply operations at Eli Lilly.

“It will turn up again from 2013 because we have 70 new products in the pipeline.”

Luckily for Ireland, IBM is to base its “Smart Planet” operations in Dublin, while Google, PayPal, eBay, Facebook and United Technologies are mostly recruiting again. So is Dublin’s “Canary Dwarf” and financial services export industry, ironically a safety net for the economy.

Whatever bond spreads of Irish debt seem to say from one day to the next, there is little doubt that this hub of global companies can pull the country out of its tailspin and contain the cancer of Anglo Irish Bank.

As the Habsburgs used to say: the situation is desperate but not serious.

View the original article here

Hedge fund chief David Harding earns £54m from predicting swings in commodity prices

David Harding's Winton Capital uses complex algorithms to bet on movements in the price of bonds, shares and commodities. Photo: CORBIS

The founder of hedge fund Winton Capital Management received a £54m dividend last year, according to accounts just filed at Companies House.

As the ultimate controlling party of Winton Capital, Mr Harding is also likely to be its "highest-paid director", who received £4m in pay last year, according to the accounts.

Many hedge fund owners have seen their fortunes continue to soar despite the economic downturn.

Louis Bacon, the London-based American who runs Moore Capital, saw his fortune nearly double to £1.1bn last year, according to a list compiled earlier this year. Moore Capital's global investor fund was up 18pc last year.

The latest accounts for Winton Capital, filed late last week, show that it paid out a dividend of £96.2m over the year to December 31, 2009.

Of this, £61.1m was paid to executive directors on their ordinary shareholdings in the company. Mr Harding's shareholding values his share of the pay-out at around £54m.

Over 2009, Winton Capital had a turnover of £102m, down from £395m in 2008. It made a pre-tax profit of £60.3m, compared to £288m the year before.

Although Mr Harding's recent bumper pay-out dwarfs most pay packages in the City, he actually took a cut in pay and dividends compared to 2008 due to the relatively weaker performance. Then, Mr Harding, 47, received £101m in dividends and £17m in salary.

Mr Harding used to own AHL, a commodities trading firm that was bought by Man Group. He left and in 1997 founded Winton.

The Kensington-based company uses complex algorithms to bet on movements in the price of bonds, shares and commodities.

It is thought to employ more than 50 researchers with PhDs in esoteric subjects such as extragalactic astrophysics. His staff are said to study historic data in minute detail to develop complex computer programs capable of predicting future trends.

Mr Harding himself studied theoretical physics before going into finance. He loves punk music and his hobbies include walking and economic history.

Last year, he was quoted as saying: "It is nice to have a golden life and a purpose to engage in, a reason to go to work. I wouldn't have set out to be a futures trader if I hadn't wanted to make a lot of money."

The accounts show that Winton Capital Management paid corporation tax of £16.8m in 2009, down from £86.2m the previous year when profits were higher.

View the original article here

US stock markets enjoy best September for 71 years

The New York Stock Exchange, where the Dow Jones and S&P 500 recorded their highest September rises for 71 years Photo: AFP

The broader S&P 500 rose 8.8pc on the month and the Dow Jones was up 7.7pc.

The last time Wall Street saw a stronger September, when the Dow Jones soared 13.49pc , was at the start of the Second World War, when traders anticipated a strong rise in demand for US manufactured goods and war materials.

However, on Thursday the S&P 500 fell 3.53 to 1141.20 and the Dow dropped 47.23 to 10788.05 as new data on jobs and economic growth continued to indicate the economy was recovering at a slow pace.

Gross domestic product, which measures the output of goods and services in the US, increased at an annual rate of 1.7pc in the second quarter and the number of Americans filing new claims for jobless benefits fell more than expected last week for the third time in four weeks.

Separately, the ISM-Chicago Business Survey rose in September to chalk up a full twelve months of expansion, showing an improvement in industrial activity in the key area.

Sentiment has been underpinned by solid company earnings, a spate of big corporate deals, poor returns from bonds as interest rates hovering around record lows, and hopes that the US Federal Reserve will step in if growth in the world's largest economy stalls.

The FTSE 100 has joined has rally, ending the month up 6.2pc as investors looked beyond Europe's debt woes and focused on signs that the US economy is stabilising.

London's index of leading shares, down 20.6 at 5548.62 on Thursday, has risen 323 points since the end of last month, when fears of a double-dip recession weighed on equities.

The FTSE 100's performance this month compares to a 4.6pc rise last September and a 13pc fall in 2008 - when the global financial system to the brink by the collapse of Lehman Brothers.

Other major European and Asian bourses also rose strongly during September. Germany's DAX gains 5.1pc boosted by bullish consumer sentiment and strong exports. France's CAC gained 6.1pc.

In Tokyo Nikkei 225 rose 6.18pc and Hong Kong's Hang Seng jumped 8.9pc, although mainland China's Shanghai Composite only edged 0.6pc higher.

"This year’s behaviour [in equity markets] is more akin to a broad consolidation phase with underlying support from earnings, which have been stronger than expected," said Mike Lenhoff, chief market strategist at Brewin Dolphin.

He said the "recovery mometum" lost during August had returned and could continue if newsflow on the US economy stays positive and third-quarter corporate results due in two weeks remain upbeat.

"Although, we could go from under-bought to oversold," he cautioned. He said volumes have been thin which has exaggerated moves in the market.

John Brady, senior vice-president at MF Global in Chicago, said: "We could be seeing the last vestiges of the idea that too much bad news was built into the market. We could go from being overly pessimistic to overly optimistic."

However, there is still caution.Michael James, equity trading managing director at Wedbush Morgan Securities, said :"It would be a mistake to draw a conclusion that the market strength is a vote of confidence in a significantly improving US economy."

View the original article here

Harbinger Capital considers sale of Inmarsat stake

Harbinger Capital, which owns about 28pc of Inmarsat and is run by Philip Falcone, is understood to be considering a sale after it received several approaches from investors who want to acquire some or all of the shareholding.

However, Harbinger has not yet made a final decision on whether it should dispose of its stake, said people familiar with the matter. Harbinger – which in 2008 tried to buy Inmarsat – declined to comment. Inmarsat edged up 5 to 668½p.

Overall, the FTSE 100 climbed 44.28 points to 5592.90 and the FTSE 250 rose 60.67 points to 10592.47.

News that Sinopec is to invest $7.1bn (£4.5bn) in Repsol's Brazilian unit helped BG Group top the blue-chip leaderboard. BG Group which has extensive oil and gas interest in Brazil, put on 51½p to £11.70. There was also some talk in the market that Royal Dutch Shell, up 31p to £18.88, could be preparing a bid for BG Group.

Tullow Oil, meanwhile, gained 34p to £13.08. Traders reckon the company is a target for Sinopec or CNOOC, two state-backed Chinese organisations.

BP advanced 12.7 to 440½p as TNK-BP was rumoured to have made an offer for the London-listed group's Venezuelan and Vietnamese assets. ?

In the mining sector, Fresnillo increased 28p to £12.70 after JP Morgan Cazenove upgraded the stock to "neutral". David Butler, an analyst at the broker, is relatively bullish about the prospects for gold and silver prices. This is because very low US and European central bank rates have yet to translate into decisive economic growth figures but are fuelling fears that inflationary conditions are being created.

Mr Butler added that low yields on government debt in combination with high government deficits have encouraged money to flow into gold-backed exchange-traded funds. JP Morgan Cazenove also lifted its price target on African Barrick Gold, up 9½ to 599½p, to 900p from 755p. Elsewhere in the sector, Randgold Resources moved 155p higher to £65.25.

BT Group rose 2.8 to 142.8p as JP Morgan Cazenove said it sees the pension issues facing the company as a "reducing concern". "Given the numbers involved, this is very material for BT's equity value and underpins our overweight recommendation," said Paul Howard, an analyst at the broker.

Amec climbed 24p to £10.10 as Credit Suisse took up coverage with an "outperform" rating and a price target of £11.80. Analysts at Credit Suisse said: "Amec is poised to benefit from exposure to significant areas of upcoming capex [capital expenditure] growth in Canadian oil sands, mining and nuclear. We think this theme of defensive, reasonably-priced growth driven by a recovery in energy spend is compelling in the context of an uncertain outlook for the general economy."

Goldman Sachs put HSBC on to its "conviction buy" list, which helped the shares put on 8.6 to 653.6p.

On the mid-cap index, Brewin Dolphin surged 10¾ to 142½p after it said in a pre-close statement that assets under management have and the group has experienced strong levels of trading commission during the fourth quarter.

Spectris rallied 11p to £10.84 following its acquisition of N-TRON, a privately-owned US manufacturer of rugged industrial networking components, for $51m (£32m).

However, CSR fell 14.6 to 344.4p as several brokers downgraded the technology company. Exane BNP Paribas, for example, downgraded the shares to "underperform".

Small-cap Asterand jumped ¼ to 12¼p after it said it had won a $24.3m five-year contract with the National Cancer Institute to supply clinically annotated human biospecimens for The Cancer Genome Atlas project.

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Week ahead: company results, economic data

Interim results

None announced

Trading update

XP Power

Economics

Markit/CIPS construction PMI, Chancellor George Osborne expected to speak at Tory party conference

Meetings

None announced

Full-year results

Epistem Holdings, St Ives

Interim results

Tesco

Trading update

Aberforth Smaller Companies Trust, British Airways, Northern Foods, Tui Travel

Economics

Markit/CIPS services PMI

Meetings

None announced

• J Sainsbury, the supermarket, will report its second-quarter results on Wednesday. The chain is thought to have had a strong quarter, and analysts expect like-for-like sales to have grown by 2pc compared to 1pc over its first quarter. New store growth is expected to accelerate throughout the year. The retailer should benefit from its South East bias, where it has its highest concentration of stores and where the looming Government cuts will have the least impact.

• Greggs, the sausage roll maker, will update the market on recent trading. The retailer said in August that first-half profits had risen by 12.3pc to £18.6m. However, Ken McMeikan, chief executive, warned that the pressure on the trading environment would increase over the second half of the year as the austerity measures kick in.

• Robert Walters will kick off a round of reporting from recruitment companies on Wednesday, as it updates on third-quarter trading.

At its results for the six months to June 30 e_SEmD issued in August – the white-collar recruiter revealed that it had swung back into the black, recording a pre-tax profit of £5.1m compared to a loss of £2.6m last time. Growth had been boosted by increasing demand in Asia.

Recruitment peers Hays and Michael Page will follow with trading updates on Thursday. At its full-year results in August, Hays revealed a slump in pre-tax profits to £29.7m from £151m the previous year, but said the outlook across 90pc of its markets was continuing to improve.

Ahead of the first-quarter trading update, analysts at Panmure Gordon said in a note last week that comparatives from last year were soft, which should lead to progress in Asia Pacific and Europe. Michael Page will update on third-quarter trading. More than 70pc of the recruiter's gross profits came from overseas markets in the first half of the year. At the time of the half-year update, Steve Ingham, chief executive, said an increase in permanent jobs did show a level of confidence in the market.

Full-year results

Sportingbet

Interim results

None announced

Trading update

J Sainsbury, Marston's, Dunelm, Hays, easyJet, Greggs, Robert Walters

Economics

None scheduled.

Meetings

Adept Telecom (AGM)

• Investors in Marks & Spencer should not expect any big strategic statements from new chief executive Marc Bolland this week. Those are going to be unveiled at the retailer's interim results next month. What observers can expect, however, is an update covering the summer months when trading on the high street was volatile due to the patchy summer weather.

• Ted Baker, the clothing retailer, will report its first-half results. Ray Kelvin, the company's founder and chief executive, said in June that sales had been robust over the first half of its year.

Trading in the UK was strong, and sales in its overseas markets were improving.

• Rank's trading statement will be eagerly watched for signs that bingo admissions are stabilising and that its Mecca Full House concept, aimed at a younger generation of players, is delivering decent returns. Any acceleration of the rebranding of Rank's G Casino format is also likely to be welcomed. Credit Suisse expects full-year pre-tax profits of £53.3m.

Full-year results

Victrex

Interim results

Ted Baker

Trading update

Hays, Halfords, Marks & Spencer, Michael Page, Rank, UK Mail

Economics

Bank of England rate announcement, UK manufacturing, US jobless claims

Meetings

IG Group (AGM)

Full-year results

None announced

Interim results

None announced

Trading update

Cerep

Economics

UK producer prices, US jobs data

Meetings

Dignity Sutton Coldfield (EGM) SIR Terry Leahy, the Tesco chief executive, will oversee his final results at the helm of the UK's biggest supermarket on Tuesday.

He hands over the top job to Phil Clarke in March next year having led the retailer since 1997. It is a tenure that has seen Tesco grow from a largely UK chain to one of the world's biggest retail groups with operations in 14 countries. Analysts expect his last results e_SEmD which will cover the first half of Tesco's financial year e_SEmD to show that sales over the six months to August 28 rose by around 8pc to £30bn while pre-tax profit is expected to be up 3.4pc to £1.6bn.

The retailer's Asian operations will show strong growth, helped over this half by favourable currency movements.

Analysts at broker Jefferies International expect a more "muted" recovery in Central Europe. Tesco's loss-making Fresh & Easy chain in the US is also expected to have remained a drag on profitability. The City expects first half losses of around £80m from the division. Overall, international trading profit is expected to be up 28pc year-on-year. THE Bank of England is expected to keep the base rate at its record low of 0.5pc when the Monetary Policy Committee (MPC) announces its decision on Thursday.

Policymaker Andrew Sentance is widely predicted to repeat for a fifth month his call for rates to rise, while his fellow MPC member Adam Posen has just come out in favour of more quantitative easing (QE), presenting the possibility of a three-way split on the MPC over how to manage the fragile economic recovery.

Monday's construction data is expected to show growth is slowing after the second-quarter spike following the harsh winter. The next day's services PMI could prove an indicator of the likelihood of QE, if more weak data suggests the recovery is stalling.

Chancellor George Osborne is expected to address the Tory party faithful in Birmingham on Monday, which could offer some policy insights.

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Investors see silver lining in economic gloom

The ratio varies wildly. In 1970, it was about 20 and it peaked at just under 100 in 1991. The average is around about 40 – and that is the key to any silver bull's argument. Historically, it appears that silver is undervalued in relation to gold, they argue.

In 2010, the ratio has been as high as 72, recorded in February, and is now just below 60. Many believe it could have further to fall.

The reasons for gold's outperformance are well documented – inflationary fears, currency woes and safe-haven demand – but does the declining ratio towards its average mean that silver is going to continue with its charge forward?

Most analysts are not that bullish – with a price of about $24 targeted for next year. There are some, however, that believe the silver price will become much more lustrous over the coming years.

James Turk, who founded bullion dealer GoldMoney in 2001 and manages $1.2bn (£758m) of assets, thinks prices could hit $50 by the end of next year, but accepts that there will be volatility along the way.

Mr Turk believes quantitative easing will devalue currencies and send precious metals much higher.

"Just pick up your newspaper to see what central banks are doing to destroy currencies," Mr Turk says. "Unlike the 1970s, there are no safe havens from currency debasement – such as the deutschemark."

Mr Turk is more bullish on silver than gold. "The problem is the volatility," Mr Turk says. "Essentially it is a cheap form of gold, but it is not for everyone because of the volatility."

He says investors should always buy the physical metal and not paper and advises a portfolio of one-third silver to one-third gold.

Suki Cooper, a precious metals analyst at Barclays Capital is not so bullish. She has an average target for silver next year of $22.2, expecting the metal to peak in the second quarter at an average price of $23.7.

"Silver mine supply is still growing and industrial demand – although improving – remains relatively weak. Silver is still in surplus, but it has benefited form safe-haven buying," Ms Cooper says. "The price could fall sharply if investor interest wanes."

Already investor interest this year is much lower than last year, which is surprising given the recent bull run.

In the current year to date investment inflows into silver have amounted to 1,377 tonnes. In the nine-months to September 2009 it was 2,942 tonnes – with full year 2009 inflows at 4,112 tonnes, Ms Cooper notes.

However, Mr Turk remains unbowed. "I expect the gold-silver ratio to fall back below 23 over the next three-to-five years," he says, despite most analysts thinking this is unlikely.

Precious metals consultancy GFMS also believes that there is a risk of a sharp fall in the silver price.

Silver has risen on gold's coat-tails, but it is also used in industrial processes so it has risen on hopes of a recovery in the global economy too.

Philip Klapwijk, GFMS's chairman, said last week that the absence of an improvement in the economy will be a negative for the silver price.

"If you think gold will continue to advance in the medium term, then why wouldn't silver necessarily follow suit? One reason could be that if economic prospects take a bath, that side of the argument for silver becomes a lot weaker," Mr Klapwijk said.

"In the current situation, silver is benefiting from both general optimism on industrial production in emerging markets, and the investor interest in safe-haven assets like gold," he added.

All of this implies that, on a fundamental basis, silver is looking more toppy than gold at the moment after its recent outpeformance.

Instead of chasing the price of the physical metal, investors may want to invest in silver mining companies that are expanding production, such as the FTSE 100 group Fresnillo.

In the first half of this year, the group's cash cost of production was just $3.58 an ounce – one of the lowest in the industry. It aims to bring on line one new mine or expansion per year until 2014.

Of course the share price will be hit if the silver price falls, but the company will remain highly profitable. But cautious investors may want to wait for a dip before they pile in.

Quantitative easing could boost oil prices

Oil prices could rise by more than a quarter if there is more QE – even if demand stays weak, according to new analysis from Bank of America Merrill Lynch.

The broker's economists expect the Federal Reserve to expand its easing programme by $500bn (£317bn) to $750bn as early as the first quarter of 2011.

If the global money supply expanded at the same pace as this, gold would move 15pc higher and oil prices by 26pc, the broker argues.

This could bring Brent crude oil prices up from an average of $78 a barrel this year to an average of $83 a barrel next year irrespective of demand, Merrill said.

COPPER for delivery in three months hit a two year high on the London Metals Exchange on Friday, following upbeat manufacturing data from China.

The price rose to $8,078 (£5,101) a tonne, the highest level since August 1 2008, but prices eased in the afternoon.

The purchasing managers index rose to 53.8 in September from 51.7 in August, the China Federation of Logistics and Purchasing said. A figure above 50 indicates expansion.

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FTSE marks time as Asian shares hit two-year highs

Asian stocks shot to a two-year high, boosted by interest in emerging markets, as the dollar remained close to an eight-month low against a basket of major currencies, with expectations increasing that the Federal Reserve will add to money supply before the year is over to support the US economy.

The MSCI index of Asian stocks outside Japan rose to the highest level since June 2008, as investor confidence in the region's prospects was boosted by signs Chinese manufacturing activity has held up well.

"Continued foreign buying, amid the US dollar's recent weakness and an increasing preference for emerging market stocks, has lifted the market to a new high," Lee Jin-woo, a market analyst at Mirae Asset Securities in Seoul, told Reuters.

Strong foreign portfolio flows into the region have lifted Asian currencies, putting pressure on regional central banks to step up intervention to limit the inflow of speculative "hot money" and to support their export-oriented economies.

In South Korea, foreign investors were buyers of a net 141 billion won ($124.8 million) worth of stocks, poised to pick up shares for a 14th straight session, the longest buying streak since April.

The MSCI index of Asia Pacific shares outside Japan, which has risen for six consecutive weeks, was up 1.1pc with a 2.3pc gain in the energy sector leading the pack on the back of firm crude prices.

Hong Kong's Hang Seng index led regional exchanges, rising 1.4pc to 22662.15 points.

However, the Nikkei closed 0.25pc down at 9381.06, as trading in Japan remained nervous ahead of a Bank of Japan policy decision on Tuesday.

Former BOJ Deputy Governor Toshiro Muto said on Friday the central bank may ease policy as inaction would run the risk of spurring further yen gains, given the prospects for easing by the Fed.

Traders are not expecting the BOJ to make a substantial change to policy but may hold off on big bets on the yen ahead of central bank meetings in Britain and the eurozone on Thursday, as well as the September US payrolls report on Friday.

"Nervous trade will likely continue this week, even after tomorrow's event, as US jobs data is also set to be released later in the week," Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities, told Reuters.

In Europe, the French CAC and Germany's DAX were each 0.5pc lower in early trading.

View the original article here

Wolseley climbs on Credit Suisse note but miners drag down FTSE 100

"We believe the US non-residential market will trough in 2011 and start to deliver positive growth from the second half."

Wolseley, the plumbing supplies group, ended up 19p at £16.01.

National Grid took the top spot after adding 12½ to 553½p as the City warmly welcomed the appointment of Andrew Bonfield, Cadbury's numbers man, as its new finance director.

Mr Bonfield, who replaces Steve Lucas who is retiring at the end of the year, is said to have a played a key role in forcing Kraft to increase its takeover offer for the Crunchie and Wispa maker.

Analysts at RBS said Mr Bonfield has both US experience from his time as chief financial officer at pharmaceutical group Bristol-Myer Squib and energy nouse from his days as finance director of BG Group.

National Grid was also boosted by news that Ofgem, the energy regulator, reckons £32bn needs to be spent on the UK's energy infrastructure over the next 10 years.

A new finance director also helped boost Yell, up 1 to 15.5p. The struggling FTSE 250 directories group's shares put on more than 10pc at one point following the appointment of Tony Bates, a former Colt Telecom executive, to the finance role.

BT took second spot in the bluechip index, up 3 to 145.8p, as traders absorbed positive news flow from last week.

Standard Chartered put on a late surge adding 3 to 145.8p after it announced plans to aggressively expand its small and medium-sized business operations.

The Asian-focused bank plans to hire 1,200 people to help small business over the next three years. "Almost everything we are trying to do, we want to double" said Standard Chartered's head of global consumer banking Steve Bertamini.

African Barrick Gold benefited from the continued belief that gold prices will continue their upward trajectory as calls grow for a fresh round of quantitative easing. The gold miner ended the day up 5½ to 605p after JP Morgan raised its target price to 900p from 755p.

However, the rest of the miners languished at the foot of the table and helped drag the FTSE 100 index down 36.93 points to 5555.97. Kazakhmys dropped 38p to £14.23 and Xstrata fell 32½p to £12.09. Xstrata was also hit by speculation that Singapore's Sin-Tang Developments maybe planning a bid to rival Xstrata's $416m offer for Australia's Sphere Minerals.

Inmarsat end the day down 13½ at 655p after its largest shareholder Harbinger Capital Partners confirmed that it is considering a possible stake sale.

The Daily Telegraph reported on Saturday that the US hedge fund manager was considering disposing of some of its 28.1pc stake in the telecoms group.

After the market closed Harbinger announced that it would sell 13pc of its stake. Credit Suisse and UBS have been appointed to run the sale.

The 60m share sale will weigh heavily on the shares because many believed that Philip Falcone, who manages the hedge fund, had been plotting a takeover.

Mr Falcone said: "Inmarsat has been a terrific investment for Harbinger and its investors. Although we have determined that we are not going to make an offer for all of the company, I remain a strong believer in Inmarsat's future and am extremely happy to maintain a core position in the company's stock and our partnership with Inmarsat through LightSquared."

In addition, LightSquared, a US broadband and satellite network provider, said it would accelerate the implementation of its spectrum co-operation plan with Inmarsat.

BP dropped 10.4 to 430.1p after the oil major announced it is to borrow €2bn (£1.7bn) to help it prop up a $20bn fund to compensate the victims of its Gulf of Mexico oil spill disaster.

Premier Foods led the FTSE 250, which lost 28.66 points to 10,563.8, after the Hartley's jam to Branston pickle food conglomerate confirmed that it is has received approaches for its Quorn meat-substitute business.

A sale of the division, which makes sausages out of fungi, could net Premier £250m, which would help reduce its £1.4bn debt mountain.

Rumoured bidders include Nestle, Unilever, Danone, Campbell's and host of private equity firms.

Martin Deboo, analyst at Investec Securities, said: "This is probably the one business within Premier that will attract the likes of Unilever and Nestle and their attendant deep pockets and ability to transact quickly."

The shares end the day up 1.7 at 17.9p.

Wellstream Holdings, increased for a third day, climbing 15.5 to 789p after General Electric was named as the group that made an £800m bid for the Brazilian-focused oilfield services group.

The US conglomerate made the approach last month through VetcoGray, an Aberdeen-based oil services subsidiary.

Rentokil Intitial slipped 0.2p to 101.3p despite renewed rumours that a European company is planning a takeover of the pest control and parcel delivery group.

Among the minnows engineering group MS International put on 9.7 to 134.7p after it won a $28.6m contract to supply the US Navy with 30mm naval gun weapons system.

Encore Oil was boosted 7½ to 135p after it discovered a substantial column oil at the Cladhan field in the North Sea. Alan Booth, chief executive, said: "It is still too early to put a precise figure on how large the discovery might be, but we are now very confident that we have a potentially significant commercial accumulation."

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Super-rich buy gold by the ton

The world's wealthiest people have responded to economic worries by buying gold by the bar - and sometimes by the ton - and by moving assets out of the financial system, bankers catering to the very rich told Reuters, the news agency.

Fears of a double-dip downturn have boosted the appetite for physical bullion as well as for mining company shares and exchange-traded funds, UBS executive Josef Stadler told the Reuters Global Private Banking Summit.

"They don't only buy ETFs or futures; they buy physical gold," said Stadler, who runs the Swiss bank's services for clients with assets of at least $50 million to invest.

UBS is recommending top-tier clients hold 7-10 percent of their assets in precious metals like gold, which is on course for its tenth consecutive yearly gain and traded at around $1,314.50 an ounce on Monday, near the record level reached last week.

"We had a clear example of a couple buying over a ton of gold ... and carrying it to another place," Stadler said. At today's prices, that shipment would be worth about $42 million.

Julius Baer's chief investment officer for Asia is also recommending that wealthy investors park some of their assets in gold as a defensive stance following a string of lackluster U.S. data and amid concerns about currency weakness.

"I see gold as an insurance," Van Anantha-Nageswaran told Reuters. "I recommend 10 percent as minimum in portfolios and anything more than that to be used for trading purposes, to respond to short-term over-bought or over-sold signals."

Billionaire financier George Soros, echoing comments from investment guru Warren Buffett, last month described gold as the "ultimate bubble" because it is costly to dig up and has no real value except its market price.

But a rising price for the precious metal has in itself generated more and more demand from investors looking for a way to hedge against a fresh recession. Gold bears no yield and is uncompetitive in an environment of rising interest rates.

The uneasy outlook for inflation, hard currencies and global growth has triggered a five-fold increase in a physical gold fund launched by Pictet one year ago, the Swiss private bank said.

UBS's Stadler said the precious metal has become a staple of investors' portfolios, despite questions about whether it makes for a smart long-term investment.

"If you talk to ultra-high net worth individuals, that level of uncertainty has never been higher in the last two, three, four years," he said. "If they ask me, 'Is inflation going up or are we entering a deflationary cycle?,' I don't know. But obviously nobody knows."

Anthony DeChellis, managing director of Credit Suisse's Americas private banking unit, said at the Reuters summit in New York that clients are more interested in capitalizing on the rise in gold prices than using the precious metal as a safe-harbor investment.

"They're asking, 'If it's a bubble, how far can I ride that bubble,'" he said. "I cannot say we've seen a spike in gold interest, but there's an interest in the phenomenon of it."

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Yen weakens as Bank of Japan surprises markets with rate cut

For months, the central bank had eschewed government calls for more decisive action, such as buying more government bonds, focusing instead on a limited funding scheme.

But in the face of growing evidence that the yen's strength was hurting the economy, the Bank of Japan cut its overnight rate target to a range between zero and 0.1pc from 0.1pc and pledged to buy 5 trillion yen worth of assets.

It also said it would keep its benchmark rate effectively at zero until price stability is in sight. Core consumer prices have been falling from a year earlier since early 2009.

The purchases would roughly match the size of extra stimulus being considered by Prime Minister Naoto Kan's cabinet.

The assets, ranging from government bonds and short-term government securities to commercial paper and corporate bonds, would come under a temporary scheme that would also cover 30 trillion yen of such assets as collateral under an existing loan programme.

"The BOJ is bringing its monetary policy closer to quantitative easing, allowing market rates to hover near zero and pledging to keep a near-zero interest rate policy in the longer term until prices stabilise," said Naomi Hasegawa, senior fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities.

BOJ policymakers have signalled in past weeks that they were considering a further easing of policy after Tokyo's intervention in the currency market in mid-September to check the yen's strength offered only temporary relief.

Most market players, however, had expected the central bank to opt for a relatively minor adjustment of its 30 trillion yen loan scheme that supplies banks with funds at its 0.1pc rate.

"These steps are more aggressive than markets had expected. The BOJ's decision is a surprise and will have an impact on currencies due to the message it delivers."

The surprise move weakened the yen against the dollar, pushed up Japanese government bond futures and helped stock prices turn positive.

The decision to cut interest rates was made by a unanimous vote, but board member Miyako Suda opposed the inclusion of government bonds among the types of assets the BOJ could buy using its pool of funds.

The BOJ is not the only central bank under pressure to do more to support an economy that is showing signs of faltering.

Financial markets expect the Fed to embark upon another round of asset buying to bolster a sluggish recovery as early as its November meeting. There are also calls within the Bank of England for further easing, although the bank has kept markets guessing on whether it will indeed do so.

In Japan, slowing export growth, a surprise fall in factory output and companies' worries that the strong yen may hurt the outlook have heightened the case for the central bank to ease policy.

The BOJ had already been edging nearer to quantitative easing by allowing the yen pumped into markets through currency intervention to remain in the financial system, instead of draining it.

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FTSE 100 edges up as travel, utility shares rise

TUI Travel, topped the movers list, with a jump of 4.8pc to 227.2pc after it reported "strenghtened" winter travel bookings.

The company, which released a trading update on Tuesday, stated that full-year results will be “in line with previous guidance” and in addition, that net debt is expected to fall. British Airways likewise rose 2pc to 243.9p.

Utilities climbed by 1pc on boosts to Centrica, National Grid and Severn Trent. Centrica, gaining 1.3pc to 326p, has embarked upon a pilot recycling project, which attempts to turn human waste into renewable gas at Didcot sewage works.

However, performance in utiliies and travel was offset by slumps elsewhere as Inmarsat led the loserboard with a fall of 4.35pc following the sale of 65m ordinary shares in the telecommunications group by US hedge fund Harbringer Capital Partners.

Trading volumes remained thin as investors stay cautious in anticipation of this week's US jobs report – which may provide clues for investors on the health of the world's top economy.

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Nestor Healthcare jumps on talk of raise offer

Shareholders had better not be too picky, though. Acromas is also looking at US-listed Allied Healthcare as part of its plans to consolidate the domiciliary care and healthcare staffing market.

Indeed, The Sunday Telegraph revealed that Acromas has been holding tentative negotiations with Allied Healthcare after it appointed advisers from US investment bank Oppenheimer to look at "strategic options" for the group. Sources, though, cautioned that Acromas has yet to make a formal offer for Allied Healthcare.

Overall, the FTSE 100 jumped by 79.79 points to 5635.76 and the FTSE 250 surged by 118.15 points to 10681.96.

Joshua Raymond, market strategist at City Index, said: "Better-than-expected service sector data out of the UK and eurozone helped indices across Europe. News that the Bank of Japan may expand the size of funds its uses to buy assets and stimulate its economy is also boosting stock demand."

British Airways climbed to the top of the blue-chip leaderboard after better-than-expected traffic figures. The airline's shares surged 15½ to 254.6p after it revealed a 1.3pc increase in revenue passenger kilometres for September, helped by an increase in first and business-class travel. The rise is the biggest gain since August 2008, the month before the collapse of Lehman Brothers.

Citigroup upgraded technology group Invensys to "buy", which helped the shares gain 9.2 to 307.2p. Mark Fielding, an analyst at Citigroup, said: "Concerns over its late cycle nature and the risks to growth in rail have weighed on the shares over the last year. However, our analysis suggests continued growth... at rail. When this is combined with recovery continuing across the rest of the portfolio we see renewed attractions in the share."

InterContinental Hotels Group advanced 19p to £11.46 as JP Morgan Cazenove gave the stock a push on valuation grounds. Tim Barrett, an analyst at JP Morgan Cazenove, said: "The outlook for 2011 is favourable and likely to be an increasing focus for investors after Marriott and Starwood publish 2011 guidance with their third-quarter results. We believe low supply growth in 2011 is likely to support [revenue per available room] growth of between 5pc and 8pc in 2011."

BT Group put on 2.7 to 148½p amid talk Ofcom will this week announce a decision on superfast broadband that is likely to be favourable to the telecoms company.

Tui Travel rallied 9.1 to 225.9p after it said in a trading update that it had a good summer and bookings were picking up. Elsewhere in the sector, rival Thomas Cook increased 6.7 to 179¾p.

Hedge fund group Man Group perked up 9½ to 227.1p after it said its Athena Guaranteed Futures rose 0.55pc last month and had risen 10.5pc over the past 12 months.

Gold mining stocks were in vogue as the price of the precious metal flirted with a fresh high. Randgold Resources climbed 195p to £66.55.

Rising risk appetite gave base metal mining companies and banking stocks a lift. Anglo American put on 103½p to £26.41 and Barclays edged up 9 to 308.8p.

Aviva advanced 3.4 to 396.2p despite the fact that Bank of America Merrill Lynch argued that the latest "bid" related spike in the transport group's shares will unwind as the likelihood of any corporate activity lessens.

On a less positive tack, Inmarsat fell 26 to 629p. After the market closed yesterday, Harbinger Capital confirmed it had sold 65m shares - about 14pc of the company – at 630p a share in a move that raised £410m. The share sale was larger than expected and triggered speculation Harbinger could sell the rest of the its holding once the 180-day lock-up expires.

Among the smaller companies, Computacentre jumped 22.9 to 322.9p as Investec upgraded the stock to "buy" from "hold". "We believe earnings quality has improved through operational efficiencies, managed services traction and cost savings. The outlook suggests a continuation of these trends, reasonable revenue progress and modest forecast momentum," said Julian Yates, an analyst at Investec.

"Buy" advice from Barclays Capital lifted Carphone Warehouse 3¼ to 266p. Karen Howland, an analyst at Barclays Capital, said: "We expect Carphone Warehouse to report another set of strong figures during its second-quarter results on November."

Homeserve also rallied 17.1 to 459.1p after Credit Suisse took up coverage with an "outperform" rating and a 720p price target. Analysts at Credit Suisse said: "HomeServe offers one of the most compelling combinations of growth, profitability and value in Europe."

Weir Group put on 33p to £14.86 as Bank of America Merrill Lynch argued it is likely to offer "superior growth" in an economic cycle that is "settling down".

However, oil services company Wood Group slipped 3.3 to 424.6p as Morgan Stanley downgraded it to "equalweight". "The recovery we identified in engineering as the key 'swing factor' for its earnings recovery in 2011 is being priced in," said Martjin Rats, an analyst at Morgan Stanley.

Vallar, Nat Rothchild's investment vehicle, is still trading below its issue price of £10.00 a share. When Vallar floated in July, investors had high hopes for the financier's plans to consolidate some of the mining sector. However, Vallar, up 15 to 920p, has failed to carry out a transaction since its float and some investors are preparing to kick up a fuss if the shares fail to move higher.

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US shares rally on stimulus hopes

 Investors? confidence was lifted holding of interest rate in Australia, Japan cutting rates to zero and calls for the Fed to do more to spur growth.

The Dow Jones Industrial Average closed up 193.45 points, or 1.8pc, at 10944.72, its strongest since May 3. The Standard & Poor’s 500 fared just as well, ending up 2.1pc at 1160.75.

Investors’ confidence was lifted on a day that began with Australia’s central bank unexpectedly deciding to keep interest rates on hold, rather than raise them, and ended with Charles Evans, the president of the Federal Reserve Bank of Chicago, arguing that the Fed must do more to spur growth in the world’s biggest economy.

In between, the Japanese central bank delivered a surprise rate cut and pledged to buy more bonds. The Nikkei 225 index closed up 1.5pc at 9,518. 76 as did markets across Europe. The FTSE 100 finished 79.79 points higher at 5,635.76.

“Central banks didn’t have a choice but to take steps like this, and it’s what the market wanted to see,” said Uri Landesman, president of Platinum Partners in New York.

However, it wasn’t just central bankers that lifted markets on Wall Street. A widely-watched index of America’s services industry from the Institute for Supply Management rose more than expected last month.

Investors also eyed with some optimism the third-quarter earnings season for US companies, which aluminium producer Alcoa kicks off on Thursday.

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FTSE 100, global markets rise on hopes of more stimulus

By midday, the London's benchmark index was up 41.12 points, or 0.7pc, to 5,676.88, following gains of 1.4pc on Tuesday, its highest close since late April.

Miners were the biggest support to the index as gold hit a record high and copper rose to its highest since July 2008 as the demand outlook brightened on expectations that governments would do more to stimulate the global economy.

Antofagasta, Xstrata, Anglo American and Kazakhmys added 3.6pc to 4.2pc.

The Bank of Japan unexpectedly cut interest rates on Tuesday, supporting a view that other governments will act further to bolster economic recovery.

The Nikkei rose 1.8pc overnight to 9691.43, while in lunchtime trading in Europe, France's CAC 40 and Germany's DAX were both up more than 1pc.

In London, Energy firms were also stronger with crude oil hitting its highest level in five months. Royal Dutch Shell gained 1.4pc.

In the United States, the Institute for Supply Management's index showed the pace of growth in the US services sector accelerated more quickly than forecast in September, while hiring also picked up.

German manufacturing orders rose in August by 3.4pct on the month, surpassing forecasts.

"Macro stuff like the industrials order number is giving heart to the bulls while the bears are getting squeezed," Giles Watts, head of equities at City Index, told Reutuers. "There's a feeling that the market can keep going higher at the moment."

A survey by the British Retail Consortium showed that a jump in the cost of agricultural commodities drove British shop price inflation to a five-month high in September.

Autonomy was the top faller, down 12pct after it said it expected to review its full-year internal model with a revenue reduction of around 3pc. This wiped out most of the 16pc rise seen in September.

Sainsbury was also among the top fallers, down 1.1pc, after reporting sales at the top end of forecasts.

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