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Friday newspaper round-up; Tesco, Vodafone, HSBC

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Date: Friday 27 Jun 2008

LONDON (ShareCast) - Tesco and Asda are to cut the cost of thousands of everyday groceries in a move that threatens to start an all-out supermarket price war.

Tesco, the country’s biggest retailer, will reduce the price of 3,000 items by up to 50% from Monday in an attempt to win back customers struggling to cope with record petrol prices and energy bills.

Asda has promised to sell ten staple items, including bread, eggs and butter, for only 50p from today as part of a campaign that it claims will win over thousands of shoppers from rivals, writes the Times.

Meanwhile, Tesco is considering launching an unprecedented appeal following the Competition Commission's two-year investigation into the UK grocery sector. The retailer has until Monday to lodge an appeal against the Commission's findings, which were published in May. Although no final decision had been made it is understood that the supermarket is seriously considering an appeal. A spokeswoman for Tesco refused to comment. Other parties are also said to be considering an appeal, reports the Telegraph.

Dow Jones Industrial Average fell more than 358 points to close at 11453.42 - its lowest level since September 2006 - on fears of further writedowns at major banks and the continuing impact of the high oil price. The Dow has slumped 9.4pc this month, its worst June since an 18pc tumble in 1930 during the Great Depression, reports the Telegraph.

Verizon Communications has stepped up the pressure on Vodafone to sell out of Verizon Wireless, their mobile joint venture, saying that the second largest US telecommunications company intends to be "the hunter" in future industry consolidation. Ivan Seidenberg, chief executive of Verizon Communications, owner of 55 per cent of Verizon Wireless, told the Financial Times he would like full ownership of the US mobile operator.

HSBC, the bank that offered a “rescue” mortgage deal to help homeowners facing surging repayments, is hitting the same borrowers who take up the deal with arrangement fees of up to £9,999, reports the Times.

Angry shareholders on Thursday bombarded Bradford & Bingley with calls to express their concern that the bank had refused to open the books to Clive Cowdery, the financial entrepreneur who wants to carry out due diligence for a deal. Resolution, the company owned by Mr Cowdery, on Thursday claimed that 40% of all institutional investors on B&B’s register were demanding that the bank’s board open its books to Resolution, reports the FT.

Unite, Britain’s biggest union, has written to the chief executive of British Airways to demand a meeting after the airline began a far-reaching review of its costs. Rumours of severe cost-cutting at BA has caused concern among the airline’s 14,000 cabin crew and wild rumours have surfaced including the possible outsourcing of the entire inflight workforce to a third party, reports the Times.

The chairman of HBOS yesterday criticised the failure of Britain's financial regulators to punish insider trading, as he asked shareholders to back the bank's £4 billion rights issue despite its share price sliding below the subscription price for the fourth time. “I've thought for a long time that there's a strong case for believing that the UK is exceptionally bad at dealing with upmarket white- collar crime,” he told the mostly sympathetic crowd. “We appear not to tackle white-collar crime committed by rich people with access to legal advisers,” reports the Times.

TCI, Chris Hohn's activist hedge fund, has been soundly beaten in its showdown with the management of Japanese utility company J-Power. TCI, which owns 9.9pc of J-Power, asked shareholders to vote to double the company's dividend and block the re-appointment of president of the board Yoshihiko Nakagaki. But shareholders, by a significant margin, refused to back Mr Hohn for a second time, writes the Telegraph.

Falling demand from the financial sector has led to the volume of vacant office space in the City of London nearly doubling over the past 12 months. Figures for the second quarter of this year from commercial property agent NB Real Estate show the vacancy rate in the City increased 90% to 10.2% in the second quarter compared with the same period last year. A combination of increasing supply through development and falling demand as the financial sector sheds jobs is putting pressure on landlords and rents, writes the Telegraph.

Air France-KLM has agreed to pay a $350m (€222m) fine in the US for its role in a criminal conspiracy to fix air cargo rates, officials said yesterday. The fine is the second biggest penalty ever obtained by the US Department of Justice's antitrust division.The airline is one of four groups the department said had agreed to pay fines totalling $504m. The others are SAS Scandinavian Airlines; Martinair, and Cathay Pacific, writes the FT.

Private equity deals have continued to dry up in the wake of the credit crunch, with the value of buyouts worldwide tumbling to a four-year low during the last quarter. Global buyouts plunged to $62.1bn between April and June, down 83 per cent on the corresponding period in 2007, according to data provider Thomson Reuters. The decline marks the end of six years of growth, reports the Independent.

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