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Monday newspaper round-up: Housebuilders, HBOS, Yell

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Date: Monday 16 Jun 2008

LONDON (ShareCast) - Leading housebuilders have blasted the government for failing to help out the ailing sector amid warnings that just 100,000 new homes will be built this year against the Prime Minister's target of 240,000.

Senior figures described the Government as "dithering" and having its "head in the sand" and warned of mass redundancies across the sector without state intervention, reports the Telegraph.

Alistair Darling, the UK chancellor, will say this week that tough rules announced on Friday for anyone “short selling” shares in a rights issue are temporary and he is seeking dialogue with the City to find a lasting solution. In his annual speech to the City of London on Wednesday, the chancellor will announce that he is setting up small working groups with City figures to discuss ways to promote the financial sector in London and maintain its international competitiveness, writes the FT.

Martin Sullivan, the British-born chief executive of AIG, the world’s largest insurer, has resigned and will be replaced immediately by the group’s chairman. Mr Sullivan is believed to have submitted his resignation at an emergency AIG board meeting called last night.
The New York insurer said Robert Willumstad, AIG’s chairman and former chief operating officer at Citigroup, will take over from Mr Sullivan immediately, reports the Times.

HBOS was under pressure from shareholders last night to provide more details about its exposure to struggling British housebuilders after a company that formed one of the bank’s big investments called in restructuring experts. The UK Shareholders’ Association (UKSA), whose members form part of HBOS’s 2.1 million army of retail investors, said yesterday that the bank should be more forthcoming about potential losses on its property investments, including whether it has written down the value of any of its assets, writes the Times.

The spiralling price of fuel and food will push inflation to a high of 3.8% this year and keep it above 3% for the next ten months, the CBI said in its quarterly economic forecast, published today. More than 200,000 people will lose their jobs before the end of next year as the economy slows markedly, the CBI said, driving the number of people out of work to a ten-year high of 1.89m, reports the Times.

Shareholders in Yell, the owner of Yellow Pages, have called for decisive action from the group's management, amid concerns over its falling share price and high levels of debt. Yell's shares have fallen by 80% over the past year and its market capitalisation has dropped to £757m, far lower than its £3.8bn debt level, reports the Times.

Hedge funds have suffered major losses after wrongly betting that market inflation expectations would fall, the Bank of England has said.The Bank reported that many hedge funds had been badly burnt after market expectations for inflation rose to a new high, most recently hitting 4pc for the first time since 1997, writes the Telegraph.

Retailers in central London bucked the economic gloom last month, boosted by promotions, warm weather and shoppers from the Continent taking advantage of the strong euro. Retail sales in the capital rose by 8.2 per cent in May compared with the same month last year – their best performance since February 2008. The buoyant figures were significantly better than those for retailers outside the capital, where sales rose by just 1.9%, writes the Independent.

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