Business news and markets: as it happened – 5 June, 2013

June 6, 2013 by  
Filed under Solar Energy Tips

David Buik, market commentator at Panmure Gordon, said:

There is just a tsunami styled wave of sellers and hardly a buyer has popped
his head above the parapet!

This is what I was talking about 2 weeks ago – the market feels disorderly
for no particular reason. The US data posted today was not that discouraging
– ISM Non-manufacturing was better at 53.7 and Factory Orders last month
were up 1pc.

16.54 Reuters has polled economists and found that on the whole,
they reckon Ireland’s economy is likely to have returned to growth in
the first three months of the year.

Unlike much of the ailing eurozone, Ireland’s economy has expanded for much of
the last two years. But, in the third quarter of 2012 it shrank, and in the
final quarter it was flat as weak external demand weighed on exports.

Economists polled by Reuters predicted for the third month in a row that gross
domestic product grew modestly between January and March, increasing their
forecast to a quarter-on-quarter rise of 0.3pc from 0.1pc previously.

Irish GDP data for the first quarter will be released later in June.

Ireland’s economy has fared better than the rest of the eurozone.

16.25 Emma Sinclair, a former investment banker who writes for Telegraph
Wonder Women
, has had enough of banker bashing. She argues that contrary
to the popular Goldman Sachs @GSElevator
Twitter feed, which spills the beans on idiotic bankers, the stereotype
of bankers being sexist, callous or greedy has become spineless

and boring.

Here I am, older and wiser. I know that there are plenty of intelligent,
talented, ethical and humane bankers who work in all banks and needless to
say that includes Goldman Sachs. I know this because I know some of them.
And many of them are my friends. That they are bankers doesn’t define them –
just like being a banker doesn’t mean they must be sexist or callous or
greedy. The suggestion that everyone behaves in a shoddy, shallow and
manipulative way in finance to get ahead is tedious, reckless and spineless.
Yes it gets a few laughs but honestly, I am so bored of these blanket

Banking and London’s financial centre is a part of what makes the United
Kingdom, otherwise a small island, able to stand tall as a major centre for
finance and investment on the world stage. The industry is not perfect – far
from it – but we don’t want to lose it. For anyone wanting to direct
profanities at me for defending banking and bankers, please breathe and
think for a minute. It is critical to our economy and our economic
prominence (but that’s a whole other argument I’m not having right now).

Graduate programmes and demanding jobs are the beginning of tough journeys,
intensive learning and the need to be part of a team, whatever the industry.
Yes banking is notoriously tough with long hours and very intellectually
demanding work at time but most of what @GSElevator had to say about tips
for interns is, in my view, rude and plays to outdated false stereotypes
that don’t need perpetuating.

16.05 The FTSE 100 is now down 2pc, and the FTSE 250 is
off 1.9pc, with market rumours of a false alarm about a suspect
package left outside the White House
doing some damage this afternoon.

15.55 The US government has announced a major sell-off of the
shares it holds in General Motors - the auto giant that it bailed out
four years ago. The move – to sell another 30 million shares of its GM stock
on Thursday – will bring forward the date at which the government will exit
partial ownership of the company. The sell-off coincides with GM’s return to
the SP 500 index tomorrow.

The US Treasury provided a $49.5bn loan to GM in 2008 and 2009 to prevent the
company, one of the biggest in the country, from collapsing into

15.33 The European Central Bank holds its monthly policy meeting
tomorrow. As well as the possibility of a further interest rate cut, the
meeting will centre on the possibility of imposing a negative deposit rate,
designed to boost lending by charging banks for parking their capital in the
central bank.

Last month one governing council member, Ignazio Visco, voiced his support for
such a move and said policymakers agreed to consider it.

But Think tank Open Europe believes there are more problems than
benefits with a negative deposit rate – here’s their handy analysis:

In Favour:

Banks and investors look for higher returns and begin lending
cross borders again. This aids financial integration and could help tackle
other issues such as the large Target 2 imbalances.

Increases the amount of times money is circulated through the
economy (the velocity of money) as lenders try to avoid getting stuck with
excess cash. This could in theory help boost inflation and growth.


Contrary to prevailing logic it could actually cause a drop in
liquidity. As excess reserves become more expensive banks begin repaying
loans they have taken from the ECB. All the while they are deleveraging (may
even speed it up), causing less money to flow to the real economy.

Rates could actually rise for a number of reasons. Larger
number of weaker banks forced onto the interbank market. Banks may simply
look to pass on increased costs to consumers.

If banks do not pass on costs or deal with them, then profits
will be hit – in many cases they are already worryingly low.

Could increase the flood of money to safe assets, particularly
from the core eurozone countries. The return on these would become even more
negative, increasing their costliness and driving divergence with the rest
of the eurozone.

The large money market fund industry, which plays an important
role for liquidity in bond markets, could struggle to stay afloat since it
relies on small positive returns on safe short terms assets (see above

The euro is likely to weaken, this combined with the other
effects could cause a large outflow of cash to other parts of the world,
exacerbating problems.

Banks and investors look for higher returns and begin lending
cross borders again. This aids financial integration and could help tackle
other issues such as the large Target 2 imbalances.

Increases the amount of times money is circulated through the
economy (the velocity of money) as lenders try to avoid getting stuck with
excess cash. This could in theory help boost inflation and growth.

15.15 As for the manufacturing sector, a separate survey by the US
Commerce Department
suggests that factory orders rose modestly in
. According to the official figures, factory orders rose 1pc in
April compared with March, when orders dropped 4.7pc. The big swing
reflected volatility in commercial aircraft orders, which were down sharply
in March but surged 53.3 percent in April.

15.05 More economic news from the US, where the Institute of Supply
has released the results of its gauge on the country’s
services sector for May. The reading of 53.7 indicates that the sector grew
at a faster pace than in April, which had a reading of 53.1.

15.00 Markets are down across the board this afternoon, as European and
US investors joined their Asian counterparts in their disappointment at
Japan’s latest package of measures to boot its economy. Continued
uncertainty over the course of US monetary policy also seems to be weighing
on trading.

The US jobs data compiled by ADP is not thought to be impacting markets, as
these figures are rarely replicated in the official monthly figures.

Across the pond its been a muted start to trading, with the Dow Jones
Industrial Average
down 0.2pc. Shares in London also remain weak, with
the FTSE 100 off 1.4pc this afternoon.

In France, the Cac is down 1pc, the German Dax has
slipped 0.72pc and the Ibex in Spain has fallen 0.36pc.

14.48 A special committee at PC-maker Dell has backed founder
Michael Dell’s offer to take the company private over a rival bid by
billionaire Carl Icahn.

Mr Icahn, together with Southeastern Asset Management, launched an alternative
offer in May, criticising Mr Dell’s bid as bad value-for-money and a “great
giveaway”. But his proposition, which would see Dell continue to trade
as a public company, presents a “significant liquidity gap”,
according to the committee.

13.55 Latest US jobs data has disappointed economists, showing
that the private sector added 135,000 jobs to the economy in May,
against hopes for as many as 165,000 posts. ADP, which compiles the report
with Moody’s Analytics, also revised down its figure for jobs created in
from 119,000 to 113,000.

13.40 Here’s the TSC’s full report on the appointments of Dame Clara
Furse, Richard Sharp and Martin Taylor to the Bank of England’s financial
policy committee:

13.23 The TSC’s concerns centre on Dame Clara’s ” awareness of the
importance of asserting the independence of the Financial Policy Committee”
and “her explanation of her role on the board of Fortis in relation to
the purchase of part of ABN AMRO and Fortis’s subsequent bailout, and the
lessons she said that she had learnt from that experience.”

13.21 Despite raising “serious concerns”,
the Treasury Select Committee has approved the appiontment of Dame Clara
Furse as an external member of the Bank of England’s Financial Policy
Committee. Conservative MP Andrew Tyrie, who chairs the committee,
has said:

We will expect to see evidence that the concerns raised in this report have
been taken on board.

Dame Clara Furse’s appointment to the Financial Policy Committee has
come with a health warning from the Treasury Select Committee.

13.02 The plot thickens! Remember our earlier
that China has launched a trade probe into EU wine imports in
retaliation for Brussels imposing punitive levies for Chinese solar panels?

It has emerged that the EU trade Commissioner who hit China with the solar
panel levies is himself a wine producer.
Karel de Gucht owns the Tuscan
vineyard that produces “La Macinaia”, a Chianti Classico that retails in
Belgium at €22,49 a bottle.

As we mentioned earlier, France has led the charge against the Chinese move,
and has the most to lose from any clamp down, with wine exports to the
Asian giant worth €546m to the French economy

Brussels correspondent Bruno Waterfield reports that suspicion is
mounting that France has been singled out for supporting the solar panel
levies. He says diplomats have noted that Hong Kong is exempt from the
Chinese investigation “presumably because British companies export European
wines there”, a trade worth €213 million.

12.51 Italy has lost tens of thousands of manufacturing companies to
the recession
in the last three years, according to latest figures from
the Italian employers’ confederation.

Around 55,000 manufacturers closed down between 2009 and 2012. Taking into
account new openings, the country had 32,000 fewer firms at the start of
this year than in 2007

12.43 So what does Latvia gain from joining a currency that many say is
doomed to fail?

Here’s David Dalton, Eastern European Analyst at the Economist
Intelligence Unit, explaining the benefits of membership:

Despite the crisis in the eurozone, accession has enjoyed broad support across
the political spectrum. This is because entry would remove the residual risk
of a forced devaluation of the lat (which would be highly damaging, given
the country’s large stock of euro-denominated borrowing).

The peg to the euro means that Latvia has already largely relinquished
independent responsibility for monetary policy.

Also, the government argues that adopting the currency will boost long-term
investment and growth.

12.37 Simon Nixon, the entrepreneur behind price comparison site
Moneysupermarket, has netted a £170m windfall by cashing a 15pc stake in the
business. According to chairman Gerald Corbett, Mr Nixon will remain
a major stakeholder in the company even after selling the 80 million shares.

The 45-year-old, who launched the website in 1999 with co-founder Duncan
Cameron, previously banked £103m when the business floated in 2007.

Moneysupermarket founder Simon Nixon. Photo: Jane Mingay

12.20 While packaging firm RPC Group, up 6.2pc, and support
services company Synergy Health, 2.5pc better, have both been
bolstered by well-received full-year earnings, falls in the wider market
have accelerated. The FTSE 100 is now off 1.4pc and the FTSE 250
has declined 1.3pc.

we reported that China has hit the EU with a trading probe on wine imports.
Now France – the continent’s (and indeed the world’s) biggest wine producer
– has shot back by trying to rally together an EU response to the move.

12.02 And as if on cue, the European Commission
has just given Latvia the green light to join the euro. If approved by the
European Parliament and EU leaders in coming months, it will become the 18th
member of the eurozone in January, three years after its neighbour Estonia
became the last country to join the single currency. Here’s the Commission’s

The Commission concludes that Latvia has achieved a high degree of sustainable
economic convergence with the euro area and proposes that the Council decide
on Latvia’s adoption of the euro as from 1 January 2014.

12.00 The European Central Bank has given its nod for Latvia
to become the 18th member of the eurozone
in January. The Bank’s
approval is not binding but its report will be key when the European
Parliament and EU leaders weigh up Latvia’s accession to the single

Although the ECB said Latvia met all the criteria to join the euro, it warned
that the Baltic state risks high inflation in the future and that its foreign
bank deposits pose a risk to financial stability

11.35 World leaders and business chiefs are descending on Myanmar for
the ‘East Asian Davos’. The country, formerly known as Burma, will be
trumpeting recent reforms in a bid to entice foreign investment to help
rebuild the economy in the wake of military rule.

Coca-Cola has led the way in returning to the country – with a new
bottling plant – after exiting more than 60 years ago.

Myanmar opposition leader Aung San Suu Kyi speaks to reporters after
attending an energy summit as part of the 22nd World Economic Forum on East
Asia, at the Myanmar International Conventional Center in Naypyidaw on
Wednesday. Photo:AFP

11.28 Embattled miner Eurasian Natural Resources Corporation (ENRC),
currently a takeover target by its trio of oligarch founders, is holding its
annual meeting in London. Sparks are likely to fly over fresh accusations of
fraud on top of the alleged disappearance of $100m at Kazakh unit SSGPO,
already being probed by the SFO.

A newspaper report on Monday, said to be based on a leaked document, claimed
staff had siphoned off company funds to buy a farming business, guesthouse
and horse farm, while dozens of employees had built up a network with
suppliers that led to ENRC paying vastly inflated prices for old equipment.

Our mining correspondent Emma Rowley will be updating us from the

11.16 Reports are spiralling that Sun Capital Partners, who
rescued bed seller Dreams from administration in March, has ousted the
retailer’s chief executive of five years Nick Worthington.

11.00 Moneysupermarket shares are up 3.4pc, bolstered by the
surprise announcement that the group will pay a £70m special dividend
of 12.92p a share as well as news founder Simon Nixon is selling almost 15pc
of his stake
in the price comparison group, which will boost the
liquidity of the stock. Based on yesterday’s closing price of 207.7p, it
will also net Mr Nixon about £166m. Jefferies analyst David
Reynolds said:

QuoteThe material placing of 80 million shares by Simon Nixon, sweetened by a
special interim dividend of 13p, should go well. Investors will welcome the
increased liquidity [and] the punchy return of cash.

10.52 Shell chief executive Peter Voser is speaking on shale gas
and British nuclear at a Confederation of British Industry event.
Energy correspondent Emily Gosden has been keeping us in the loop:

10.43 Another vote of confidence for Tesco chief executive Philip
despite subdued sales this quarter.

10.38 Tensions over trade between China and the
EU escalated this morning when the Asian
giant launched a trade probe against EU wine imports
. The move would
appear to be in retaliation to Brussels imposing steep duties on Chinese
solar panels to protect European manufacturers. Szu Ping Chan and Bruno
have more details.

In a move that will increase tensions between two of the world’s biggest
trading blocs, the commerce ministry in China said the government had begun
an anti-dumping and anti-subsidy probe into EU wines at the request of
Chinese wine manufacturers.

“The ministry has already received an application from the domestic
wine industry, which accuses wines imported from Europe of entering China’s
market by use of unfair trade tactics such as dumping and subsidies,”
it said in a statement.

“We have noted the quick rise in wine imports from the EU in recent
years, and we will handle the investigation in accordance with the law.”

The ministry gave no further details about the scope or timeline of the

China imported 430m litres of wine last year, of which more than two-thirds
came from the EU, Chinese customs figures show.

The EU now has 31 ongoing trade investigations, 18 of them involving China.

10.30 Rebecca Clancy has more
on Co-op Bank’s appointment of Richard Pennycook and Richard
Pym as it launches efforts to restructure the troubled lender.

The Co-operative Group has hired a respected finance director and former
bank chief to help with the financial restructuring of the mutual which
faces an estimated £1.8bn hole in its capital reserves.

Richard Pennycook, widely regarded as a turnaround specialist, has been
appointed as group finance director. He joins from Morrisons supermarket
where he spent eight years in a similar role and restored the City’s faith
in the retailer after its botched Safeway acquisition

Mr Pennycook, who recently missed out on his annual bonus after Morrison’s
failed to meet growth targets, has simultaneously announced his resignation
from the board of Thomas Cook

He has also worked in the same role at RAC and JD Wetherspoon. He will join
in July 1 and replaces Steve Humes, who announced he was stepping down at
the end of last month.

The mutual has also hired Richard Pym, the former chief executive of
Alliance Leicester, as chairman of The Co-operative Bank with
immediate effect, replacing Paul Flowers who stepped down after three year.

10.25 Returning to those UK services figures,
which showed the sector is leading the charge in returning the UK economy to
health. Richard Driver, currency markets analyst at Caxton FX,
forsees sterling benefitting from the uptick:

QuoteThis is undeniably encouraging stuff from the UK economy – it’s the best
services figure in fourteen months.

All areas of the UK economy look to be performing at present, with the
notable exception of the high street.

Mervyn King has been bullish on UK GDP for Q2 and by the looks of it he is
bang on. With figures in the eurozone beginning to improve as well, the
outlook continues to brighten.

Despite the uncertainty surrounding Carney’s takeover of the Bank of
England, it’s hard to imagine a majority within the MPC will find it
necessary to top-up quantitative easing with UK growth at these levels.

Sterling will surely benefit from this latest development.

10.21 More economic news from the eurozone, where the statistics
office has confirmed that GDP contraction slowed down in the first three
months of the year, when it shrank 0.2pc

However, retail sales figures show little sign that demand is gaining muscle
in the bloc. Households spent 0.5pc less on retail in April than in March,
and 1.1pc less than the same time a year ago.

10.03 The FTSE 100 remains weak this morning and is off 0.7pc
on lingering concern about the future of US Federal Reserve bond buying.
Gerard Lane, strategist at stockbroker Shore Capital, says:

QuoteIf the economic data improves, as we would believe in coming months on the
back of lower oil prices and an acceleration of the US housing market
recovery (putting aside the debate about whether this is healthy and
sustainable for another day) the tapering talk around QE may actually morph
into action, and we expect this to cause US and global equities to struggle,
especially if bond yields rise and earnings estimates fall as they have done
in recent months.

10.05 Shares in $14.1bn hedge fund Man Group have slumped
11pc this morning
after it said major losses at its flagship fund AHL
have wiped out its profits so far this year. Man Group has lost money in
three of the past four years and would need to return almost 12pc this year
to maintain its five-year track record.

09.57 More airlines plan to adopt budget-carrier strategies to impose
add-on charges on customers, reports transport editor David Millward.

Passengers are set to face more add-on charges as mainstream airlines look
to boost their profits and follow the trail blazed by no-frills carriers
like Ryanair.

The prospect of yet more levies for luggage, seat allocation, meals and
priority boarding tempered the good news for passengers that fares are
likely no to rise for the first time in three years.

Known in the industry as “ancilliary revenues”, the extra charges now
account for five per cent of airlines’ income – compared with 0.5pc six
years ago.

While some of the cash is raised by additional services like car hire and
larger seats even in the economy cabin, the rest comes from charging for
items wich were once included in the price of the ticket.

The process known as “unbundling” has seen more mainstream carriers
following the example of no-frills airlines in stripping out as much as they
can such as the right to pick a seat ahead of boarding the plane.

“Unbundling works for some passengers,” said Brian Pearce, chief economist
at the International Air Transport Association. “It also creates a revenue
stream for airlines.”

09.45 Ikea’s octogenarian founder Ingvar Kamprad has retired, and named
his son as chairman of the Swedish furnishings giant, according to reports
by the Wall Street Journal. Mr Kamprad founded Ikea in 1943.

Ingvar Kamprad founded Ikea in 1943

09.30 The UK services sector continued
to be the economy’s star performer in May as it grew at its
fastest pace for more than three years
. A key survey measuring how
services businesses in Britain are faring, gave the sector a PMI reading of
54.9, where any figure above 50 indicates growth.

The growth in the services sector rounded off a month in which the
construction and manufacturing sectors also reported higher levels of

Chris Williamson, chief economist at survey-compiler Markit, hailed
May’s growth across all sectors as a sign the British economy has “moved
up a gear”:

The UK economy has moved up a gear with all cylinders now firing.

The data suggest that economic growth will have picked up in the second
quarter compared to the 0.3pc increase in GDP seen in the first quarter,
shaping up to reach 0.5pc if June sees sustained growth.

There’s good reason to believe growth can accelerate further. Across all
three sectors, new business showed the largest jump for three years in May.
Firms are also taking on staff in increased numbers, responding to the
brightening outlook.

09.28 Meanwhile at the Co-op Bank, new chairman Richard Pym has
vowed to secure the future of the troubled lender, which is currently
scrambling to fill a black hole believed to be as large as £1.8bn. As the
former boss of Bradford Bingley, he has plenty of experience of
crisis-hit banks.

I’ve run good banks and bad banks and I have confidence that Co-op will be a
very good bank. There is an absolute determination to resolve the questions
that have been asked with our regulator.

Richard Pym, formerly chairman of Bradford Bingley, has been
appointed to chair the board of Co-op Bank.

09.24 More reaction to Tesco’s disappointing first quarter.
Despite falling sales at the grocery giant, Dan Coen at restructuring
firm Zolfo Cooper, has confidence in Philip Clarke’s strategy.

Tesco seems to have hit a rough patch. The recent horsemeat scandal, cold
weather and poor performance in the US have all put a strain on Britain’s
biggest grocer. Philip Clarke’s turnaround plan is yet to look convincing,
but it is still early days.

Despite recent hiccups, Tesco is still leading the charge for British
retail. The recent acquisition of restaurant chain Giraffe, along with its
stake in coffee shop Harris + Hoole, are examples of the innovative ways the
retailer is looking to diversify its offering for customers. By installing
these outlets in its larger stores, Tesco will make more effective use of
its vast floor space and become a more attractive destination for consumers.

09.22 Reuters is reporting that Amazon is ready to roll out its
grocery business.
The online retailer, which has been testing out its
‘AmazonFresh’ service in its hometown of Seattle for at least five years, is
set to launch in Los Angeles as early as this week and San
later this year, according to the news agency.

Words of warning for the rest of the grocery retail sector from consultant
Bill Bishop:

The fear is that grocery is a loss leader and Amazon will make a profit on
sales of other products ordered online at the same time.

That’s an awesomely scary prospect for the grocery business.

09.16 Back in the corporate world, easyJet has accused travel website
eDream of “misleading” thousands of customers into paying over the
odds for tickets with the airline. Consumer affairs editor Steve Hawkes
has more

Peter Duffy, the airline’s marketing chief, said the final fares quoted by
eDreams were up to 60 per cent more expensive than a ticket would have been
if booked directly with easyJet.

The Civil Aviation Authority (CAA) last night said that easyJet and other
airlines had also complained about the “booking practices” used by
eDreams – who were unavailable for comment.

A CAA spokesman said: “We are now considering these concerns carefully
as part of our ongoing work to ensure travel companies comply with consumer

09.08 Staying in the eurozone, latest figures on private sector growth suggest
the bloc remained in recession this quarter

The survey of thousands of businesses across the single currency area showed
that the private sector shrank in May, albeit at a slower rate than in
April. The index, compiled by Markit, gave a reading of 47.7, where any
figure below 50 indicates contraction. April’s reading came in at 46.9.

Markit said the figures suggest the eurozone economy will contract roughly
0.2pc between April and June.

09.02 Finland has slipped into recession for the second time
since the onset of the financial crisis. GDP fell 0.1pc in the first three
months of 2013 after slumping 0.7pc in the previous quarter.

The Nordic economy, one of the few eurozone economies to have held on to its
AAA credit rating, has seen exports hit from sluggish demand from the single
currency bloc.

08.39 The Japanese government has rushed to declare that its plans to
boost the economy did not fall short of market expectations, after the
Nikkei plunged nearly 4pc to a two-month low on Wednesday. Chief Cabinet
Secretary Yoshihide Suga told a news conference the economy was
recovering without a doubt.

08.33 The Frankfurt Stock Exchange is making way for two major
flotations as two major German companies take advantage of the buoyant
market to launch IPOs. This morning Heidelberg-based Springer Science,
the academic pubilsher, confirmed plans to raise €760m in a share offering
before the European summer break. It follows Kion Group, the world’s
second biggest forklift truck maker.

The blue-chip DAX index in Frankfurt, which has advanced 6pc this
year. Photo: Reuters

08.22 The FTSE 100 has opened and is trading down 0.67pc. Tesco,
which unveiled declining sales in the first quarter, is among the top
fallers, sliding 1.8pc. Investors are also jittery after a senior
official at the US Federal Reserve hinted that the Bank is close to reining
in its monetary stimulus

08.15 The Apple – Samsung battle rages on, and this round, it looks
like a win for the South Korean tech giant.

Late in America the International Trade Commission ruled that Apple
has infringed on Samsung patents
which could lead to a ban on the
sale of some iPhones and iPads in the US

“We believe the ITC’s final determination has confirmed Apple’s history
of free-riding on Samsung’s technical innovations,” said Samsung in a
statement. Apple said it plans to appeal.

08.12 Jon Ibbotson of consultancy Retail Vision has described
Tesco’s first quarter results as a “dive-bomb”.

While Philip Clarke has revamped the management team, refreshed the stores and
taken some tough decisions, specifically withdrawing from America, this is
clearly no guarantee of getting Tesco UK back on the road to growth.

The uncomfortable reality for Clarke is that Tesco’s 30pc market share in
the UK will be hard to grow even with the return of consumer confidence and
economic growth.

Tesco will have to adjust to low growth and look for return on investment.

The good ol’ days of globe-trotting and high growth are over. Tesco may yet
be able to Build a Better Tesco but a Bigger Tesco, maybe not.

The stellar progress of the international operations may also be over,
threatened by increased competition, market saturation and government
interference. South Korea, Poland, the Czech Republic and Turkey are all
under the cosh.

08.05 Meanwhile, Tesco has has posted declining sales across the
world, including a 1pc slump in UK revenues, in its first quarter. Graham
has more

Philip Clarke, chief executive of Tesco, said the economic environment
remains “difficult” for consumers, with Tesco in the UK suffering a decline
in non-food sales and an impact to frozen and chilled food sales from the
horsemeat crisis.

Outside the UK, Tesco said that like-for-like sales fell by 3.8pc in Asia
and 5.5pc in Europe.

Tesco sales in Asia were dragged down by a restriction on Sunday trading
hours in South Korea, its biggest international market, while sales in
Europe are under pressure from the economic uncertainty across the

08.00 The boardroom shake-up at the troubled Co-operative

Richard Pennycook, formerly head of finance at Morrisons, is becoming
group finance director. Mr Pennycook was a key figure in turning around the
fortunes of the supermarket five years ago.

Veteran banker Richard Pym is stepping into Paul Flowers’ shoes as chairman
of the board, while Martyn Wates has resigned as a director of the

07.45 In Japan, the Nikkei stock index tumbled
3.83pc overnight
, spurred in part by premier Shinzo Abe’s unveiling
the ‘third arrow’ of his economic strategy
, which centres
around boosting incomes by 3pc every year. The first two arrows are
dramatically increasing the money base and ramping up government spending.
Some analysts questioned the attainability of the income gain target.

The Nikkei soared 53pc in the months after Abe swept into power in December on
vows to catapult the deflation-dogged Japanese economy out of its
decades-long slump, but lost momentum last week amid fears the US could wind
down its stimulus programme, falling back by around 15pc.

The Nikkei has retreated from a five-year high last month, falling
15pc in recent weeks.
Photo: Reuters

07.15 Our business pages lead with news that MPs
and peers have tabled the option of breaking RBS into a “good bank” and “bad
bank” in a major report into banking standards
. The Commission
on Banking Standards, is expected to say the current strategy of running the
bank, which is 81pc owned by the taxpayer, is no longer sustainable.

Szu Ping Chan writes that Britain’s
fragile construction industry received “a shot in the arm” from a jump in
, fuelled by government efforts to spur the housing

Harriet Dennys reports that Roger Jenkins, Barclays’ former head of investment
banking in the Middle East, is buying
up a string of luxury car dealerships on the West Coast of America

and plans to float the business on the New York Stock Exchange.

Sir Mervyn King gave
a brighter forecast for the British economy as he signed off the central
bank’s accounts for the last time
, reports Harry Wilson.
The outgoing governor, who will be replaced by Canadian Mark Carney in July,
said there were “good reasons to suppose that a gentle recovery is under
way”, but warned that a full recovery would require confidence in the
banking system to be “restored.”

07.05 Here’s a look at this morning’s business pages

Google’s foray into renewable energy is deepening, reports the Financial
After investing $12m in a South African solar power plant a week
ago, the tech
giant has unveiled a 10-year deal to buy wind-generated energy from a
Swedish outfit
. Google has already invested heavily in renewables
back in the US.

Ministerial procrastination over ordering new trains for London
– which links the north and south of the city – could threaten
the future of the project, reports The Times. The £6bn project could
be derailed if the Department for Transport fails to confirm its £1.6bn
order for 1,200 carriages from German manufacturer Siemens, according to the
National Audit Office.

George Osborne’s Help to Buy scheme, which is designed to help
first-time buyers on to the housing ladder, has been branded ‘moronic’
by a leading city analyst, says the Guardian. Albert Edwards, head of global
strategy at Societe Generale, hit out at the scheme for artificially
inflating property prices and driving young people deeper into “indentured

The Independent reports that the high street is ‘in deflation’. May
prices were 0.1pc lower than a year earlier
due to desperate
discounting, especially among furniture shops, where prices fell 1.5pc,
according to figures from the British Retail Consortium.

The Sun reports that an app designed in East London’s Tech City which
suggests 15 things to do in the capital every night has been endorsed by
actor Ashton Kutcher. The actor was a major contributor to the app’s £7.84m
first round of investment, which will see it launch in New York.

07.00 Good morning and welcome to our daily business and markets live
blog, your one stop shop for all the breaking business stories of the day.

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