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Tuesday newspaper round-up: Alliance & Leicester, Kazakhmys, Shell

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Date: Tuesday 15 Jul 2008

LONDON (ShareCast) - Rival suitors for Alliance & Leicester yesterday ruled themselves out of a bid for Britain's ninth-largest mortgage lender after it recommended a £1.26bn offer from Santander, the Spanish owner of high street bank Abbey, reports the Telegraph.

Sources close to Clive Cowdery, who plans to consolidate the UK's financial services industry, and private equity firm JC Flowers made it clear neither was likely to enter the fray. Lloyds TSB is expected to review its options but bankers said it was almost certain to be precluded on competition grounds.

Mervyn King, the Governor of the Bank of England, has turned down a pay rise of around £110,000 because he did not feel it was appropriate in the current economic climate. Mr King rejected the near-40% pay rise to £400,000 when he was reappointed as Bank of England Governor this summer, according to the Bank’s annual report, writes the Telegraph.

The owners of investment company Dawnay Day were forced into further asset sales at the end of last week, selling stakes of over £3m in two Aim-listed property companies it manages. Dawnay Day announced yesterday it had closed positions in Dawnay Day Treveria and Dawnay Day Sirius, reports the Telegraph.

Shell has agreed to pay almost C$6bn (£3bn) for a small Canadian gas company heavily involved in the production of difficult-to- exploit gas reserves. The price for Calgary- based Duvernay Oil, founded just seven years ago, surprised the market but Shell is anxious to build up assets of what the industry calls “tight gas” in western Canada, reports the Telegraph.

Alisher Usmanov, the Russian oligarch who owns a stake in Arsenal Football Club, has entered merger talks with Kazakhmys in a deal that could create a $50bn (£25 billion) London-listed mining giant. Kazakhmys, the Kazakhstan-based copper miner, confirmed yesterday that it was in talks with Usmanov's Metalloinvest, but that discussions were at an early stage, reports the Times.

Confidence in some of the largest regional US banks buckled on Monday as the government’s rescue plan for mortgage giants Fannie Mae and Freddie Mac failed to allay equity markets’ fears over the stability of the broader financial sector. Stocks in banks including Washington Mutual, the seventh-largest US bank by assets, and Cleveland’s National City, plunged as investors reacted to Friday’s collapse of IndyMac, a smaller lender, reports the FT.

Home sales fell to their lowest level in 30 years last month as the seizure in the mortgage market continued to drag house prices down. Estate agents reported that they sold an average of 15 properties in the three months to the end of June, figures from the Royal Institution of Chartered Surveyors show. That is nearly 40% lower than the same period last year and the lowest figure recorded since RICS began its series in 1978, writes the Times.

Consumer confidence hit a record low in June after like-for-like sales on the high street fell for the third time in four months. According to the British Retail Consortium (BRC), sales from stores open a year or more fell by 0.4% in June, the third monthly fall since March. "Consumer confidence has continued to fall, reaching record lows," the BRC said, reports the Telegraph.

Spiralling food prices have pushed the cost of a family's weekly shop up by nearly £1,100 a year, new figures reveal. The price of staple groceries has risen by more than a fifth since July last year as food producers deal with soaring wheat, rice and energy costs, figures from mysupermarket, the shopping comparison site show, writes the Times.

The Children’s Investment Fund, the London hedge fund, lost more than $1bn in its worst month ever in June. TCI, which manages more than $10bn, slumped 12½% in the month, according to investors in the fund, to leave it in the red for the first half of the year, reports the FT

Rents are set to rise by up to 15% over the next two years, reflecting both a shortage of supply and rising demand from buyers struggling to get on to the housing ladder, according to a report commissioned by the letting industry’s trade body.The report, carried out by Reading university’s Professor Michael Ball for the Association of Residential Letting Agents, says the FT.

Factory gate inflation broke into double digits last month, for the first time since current records began more than two decades ago. Manufacturing output prices rose by a record 10% in the year to the end of June, driven by a rise of more than 30% in the price of raw materials and other input costs, writes the Independent.

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