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LLOYDS new head Antonio Horta-Osrio blindsided other bank chiefs yesterday by tak-ing a unilateral decision not to participate inan industry appeal against a high court rul-ing that could cost the banks billions.

A board member at a rival bank said thatthe Lloyds boss had angered his counterparts

by going it alone and showing that he wasnot in the club on the issue. Banks have todecide by next Tuesday whether to collective-ly appeal a ruling that they must pay compen-sation retrospectively to customers who weremis-sold payment protection insurance (PPI).

Lloyds also shocked the market by estimat-ing its costs from the case at 3.2bn, far aboveexpectations and out of kilter with the FSAsestimate last year that the PPI issue wouldcost the industry as a whole 4.5bn.

Other banks had so far refused to guess attheir costs, although Lloyds is understood tohave cleared its figure with the FSA beforepublication. RBS, which reports interimresults this morning, was said to feelambushed by the Lloyds move: it is likely toface pressure to match its rivals disclosure.

Horta-Osrios move marks the secondtime he has unilaterally pulled out of theindustry-wide PPI case: last October, when hestill led Santander UK, the bank decided not

to participate in the case.It is understood that he sees the latest deci-

sion as a matter of picking battles: Lloyds isfighting fiercely to avoid forced branch sales

beyond the 600 it must sell already after the Vickers Commission said it would push formore. Rather than fight on two issues, Horta-Osrio has decided to focus on the branches.

Lloyds high estimate of its costs sent itsstock plummeting, with eight per cent wipedoff its shares by the end of the day. Overall,the UKs four biggest banks lost 1.2bn fromtheir market cap yesterday. FULL STORY: P5

BUSINESS WITH PERSONALITYwww.cityam.comIssue 1,376 Friday 6 May 2011 FREE

FTSE 100 5,919.98 -64.09 DOW 12,584.17 -139.41 NASDAQ 2,814.72 -13.51 /$ 1.64 -0.01 / 1.13 +0.02 /$ 1.45 -0.03

LLOYDS BOSS SNUBS RIVALSBY J ULIET SAMUEL

BANKING

WATCHSPECIALWHAT TOWEAR ONYOUR WRISTTHIS SPRINGP19-29

Certified Distribution28/02/11 - 03/04/11 is 105,180

COMMODITY prices suffered a dramaticslump yesterday as oil fell below the psy-chologically important $100 a barrel mark in the US last night.

The accelerating crash brought intosharp focus a commodity sell-off that hasnow spanned four days and has seen silverlose almost a quarter of its value. Investorsscrabbled for other safe-haven assets dur-ing the biggest exodus from the sector fortwo years, amid speculation the commodi-ties boom has come to an abrupt end.

US crude plummeted 8.64 per cent to$99.80 a barrel, the biggest one-day fall inoil prices since the height of the financialcrisis. Brent crude lost 9.78 per cent, hit-ting $109.02 last night, after climbing to$126 last week.

The slump followed a report showingproductivity growth in the US slowed inthe first-quarter, while jobless claims

jumped to an eight-month high. Tradersare also worried about excessive monetary tightening in China, the worlds top con-sumer of raw materials.

US households have been squeezed by petrol prices approaching $4 a gallon, lead-ing to higher than expected oil inventoriesof 3.4m barrels as people shied away fromlong car trips over the Easter break.

In a roll-call of despair for commodity holders, silver fell 10 per cent to $35.34, tindropped more than seven per cent, nickel

by over six per cent and copper by a shadeabove three per cent. Even safe-haven goldfell two per cent yesterday.

Soft commodities fared little better, withcoffee declining 3.3 per cent, sugar down2.5 per cent and cotton falling by 4.6 percent. Gas also fell, losing 5.7 per cent.

US Treasury bills were among the big winners, with yields falling 3.16 per cent.

The Dow and the S&P 500 both fell morethan one per cent as energy shares

slumped with the oil price. The euro wasdown two per cent against the greenback

The sell-off came a day after commodi-ties giant Glencore priced its 36bn flota-tion at the bottom of its range. Analysts say the float could serve as a marker for thehigh point of the commodity boom.

Last month long-term bull GoldmanSachs advised clients to close their longpositions on a basket of commoditiesincluding copper, platinum, soy beans andcrude oil.

ALLISTER HEATH: P2; UK SERVICES: P3;GLENCORE: P7; OTHER ECONOMICS: P13

BY STEVE DINNEENCOMMODITIES

LME tin down

9.8%

Palladium down

10.4%

Gold down

4.5% Silver down23.3%

Brent crudedown

9.1%

US crudedown

9.5%

*all percentageprice changessince 29 April 2011

COMMODITIESHIT BY CRASH

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News2 CITYA.M.6 MAY 2011

Hammondslams strikes

TRANSPORT secretary PhilipHammond has branded the latestround of Tube strikes highly irrespon-sible and said the unions behaviour

will lead to tougher industrial laws. The RMT union, headed up by Bob

Crow, has announced six strike days. They will down tools for between nineand 24 hours between 16 and 20 May and again from 13 to 17 June.

Hammond told parliament: Noone in this government is spoiling fora fight with the unions but the unionsappear to be spoiling for a fight withLondon.

I say to the RMT and other unionsthat this kind of irresponsible strikeaction, where an alternative, properremedy is available, is only strengthen-ing the hand of those including the

mayor who are calling for tougherindustrial relations laws.

Boris Johnson has slammed theaction, calling on the government to

bring in tough laws to stamp out fur-ther strikes.

He said: There is a great deal of sense in reform of the union law andthe government needs to get a moveon.. London Underground is one of the indispensable networks for one of the greatest cities in the world. I dontthink it should be held to ransom by asmall minority of union hotheads.

CITY VIEWS: PAGE 13

BY S TEVE D INNEENTRANSPORT

Commodities crash was predictable

SO Goldman Sachs was right after all. The bank everybody loves to hatecalled the top of the commodities mar-ket three weeks ago; yesterday, its pre-diction came true, with the declines inkey commodities seen in recent dayssuddenly turning into an almighty crash. The price of oil plunged especial-ly dramatically, with Brent crude los-ing $12 yesterday, or 10 per cent, totrade at around $109 a barrel.

The most shocking slump has beensuffered by silver: just a few days ago, it

was trading at around $50; it is now back down to $35, having suffered its

steepest crash since the 1980s. Since 29 April, silver has crashed 23.3 per cent,LME tin is down 9.8 per cent, palladi-um has lost 10.4 per cent, gold 4.5 percent and brent crude 9.1 per cent. In

the US last night, the price of a barrelof oil was back below $100. Its dramat-ic and highly significant stuff.

It is excellent news for consumersand companies that use raw materials;relentless and increasingly unbearablepressures on costs and prices will now

be reduced, at least if commoditiesremain weaker. But few economistsare celebrating. The main driver of thecorrection was weaker economic data.Markets were especially rattled by

weekly US jobless claims that jumpedto an eight-month high and the newsthat the countrys productivity growthslowed in the first-quarter. Other badfigures included all three main UK activity surveys: the purchasing man-agers indices for manufacturing, con-struction and services all showed

weaker (but still positive) growth in April. Another reason for the sharp fall

is mounting fears that Chinas mone-tary tightening will hit demand fromthe worlds top buyer of commodities;a growing number of other countriesare starting to hike interest rates

(though the Bank of England onceagain declined to do so yesterday); andmany investors are beginning torealise that many commodity pricesare completely out of line with reality.

Jeffrey Currie, Goldmans influen-tial 45-year-old head of commodity research, announced that he would beclosing his erstwhile ultra-profitablelong commodities trade made up of a

basket of crude oil, copper, cotton, soy- bean and platinum. He also quit hislong copper and platinum positions,arguing that the risk was now toohigh. His move was revealed on 12

April; many shrugged it off as non-sense. Barely two weeks later, thesepundits have egg on their face.Presumably we will now hear all sortsof demented conspiracy theories abouthow Goldman controls the world butthe simple truth is that Currie called

the market right. The primary drivers of commodity

price bubbles are excessive liquidity:too much money chasing too few raw materials. Central banks are always

the main creators of liquidity: either via excessively low interest rates orquantitative easing or through themanipulation of exchange rates andthe accumulation of cash piles thatput downwards pressure on yields.

There is still plenty of liquidity in theglobal economy but prices of key commodities such as oil had becomeso elevated that they had started tochoke off demand. With global growthstarting to slow after its astonishingpost-recession rebound, investors haveat last realised that they allowed them-selves to get carried away. It is ironic, of course, that speculators are always

blamed when commodity prices soar,even when other, larger forces are real-ly responsible yet they are neverthanked when prices collapse.

[email protected] Follow me on twitter: @allisterheath

THE future of the coalition govern-ment is hanging in the balance asNick Clegg prepares himself for a cer-tain defeat in the referendum on thealternative vote due to be announcedtonight.

Voters are expected to rejectchange in favour of the traditionalfirst-past-the-post system, a crushingdisappointment for Clegg who hadpledged electoral reform as a key

plank of the coalition accord.Former Liberal Democrat leader

Lord Ashdown warned that PrimeMinister David Camerons refusal todisassociate himself from a regi-ment of lies poured out by the no-to-

AV campaign would have long-termconsequences for the coalition,including the terms on which it even-tually ends.

So far the coalition has been lubri-cated by a large element of goodwilland trust. It is not any longer, he toldthe Guardian.

BY H ARRY B ANKSPOLITICS

Cleggs AV hopes vani Nick Clegg faces almost certain referendum defeat once votes are counted tonight

NEWS | IN BRIEF

AIG loses $1bn in first quarterBailed-out insurer AmericanInternational Group (AIG) lost more than$1bn (609m) from its ongoing opera-tions in the first-quarter, as the companytook a huge charge for the terminationof its credit facility with the FederalReserve. AIG reported a loss from con-

tinuing operations of $1.18bn comparedwith a profit on the same basis a yearearlier of $2.09bn. Its Chartis unit alsoracked up $864m in catastrophe lossesrelated to the 11 March earthquake inJapan. The company, one of the top for-eign insurers in Japan, had previouslywarned of substantial quake charges.

Sir David Michels to quit M&SMarks & Spencer is undergoing a board-room reshuffle, with deputy chairmanSir David Michels and non-executivedirector Lady Patten both steppingdown. Michels, who has served fiveyears on the board, will leave after histerm ends in February while Patten, whohas been with M&S since 2006, will goafter the firms annual meeting in thesummer. M&S said it has appointed asenior executive from Mars and a direc-tor from John Lewis.

EDITORS LETTER

ALLISTER HEATH

7thFloor, Centurion House,24 Monument Street, London, EC3R 8AJTel: 020 7015 1200 Fax: 020 7283 5334Email: [email protected] www.cityam.comEditorialEditor Allister HeathDeputy Editor David HellierNews Editor David CrowNight Editor Katie HopeBusiness Features EditorMarc SidwellLifestyle Editor Zoe StrimpelSports Editor Frank DalleresArt Director Craig GaymerPictures Alice HeppleCommercialSales Director Jeremy SlatteryCommercial Director Harry Owen

Head of Distribution Nick Owen

Editorial StatementThis newspaper adheres to the system of

self-regulation overseen by the Press ComplaintsCommission. The PCC takes complaints about theeditorial content of publications under the EditorsCode of Practice, a copy of which can be found at www.pcc.org.uk

Printed by Newsfax International,Beam Reach 5 Business Park,Marsh Way, Rainham, Essex, RM13 8RS

Distribution helplineIf you have any comments about the distributionof City A.M. Please ring 0207 015 1230, or [email protected]

Transport secretaryPhilip Hammond saysBob Crows strikes willeventually lead totougher union laws

JAGUAR TO INVEST 5BN Jaguar Land Rover is investing 5bnover the next five years to catch up onquality with BMW, Mercedes-Benzand Audi the three German compa-nies that dominate the luxury end of the automotive business globally. Themoney will be spent mainly on prod-uct development and new equipmentat JLRs three UK plants with some of it likely to cover new investments at aplanned factory in China.

CARREFOUR CHIEF STRUGGLES When Lars Olofsson, Carrefour chief executive, unveiled plans to overhaulthe groups financial structure inearly March, he spoke of providingCarrefour with more momentumand creating value for shareholders.In the nine weeks since theannouncement it has fallen 13 per

cent amid increasingly publicinvestor dissent.

CARLYLE FACES CHINA QUESTIONSCarlyle, the US private equity group,

is facing questions over its invest-ments in two Chinese companiesthat have been accused of fraud andsuspended from trading on stock exchanges in Hong Kong and New

York. The scrutiny comes at anunwelcome time for Carlyle, as themanager of some $106bn in fundsseeks to burnish its reputationahead of a planned initial publicoffering.

INTEL WANTS MOBILE GRIP The revolution in chip designannounced by Intel this week is

being seen as an attempt to see off athreat from Arm Holdings, the UK chip designer, which challenges itsdominance in microprocessors. The

worlds biggest chipmaker by saleson Wednesday unveiled a break-through 3D structure for its next-generation processors that the US

company estimated could give it athree-year lead over competitors.

PROSECUTOR RAILS AT DISASTROUSPLANS TO DISMANTLE THE SFOMinisters plans to break up theSerious Fraud Office have beenattacked by a top prosecutor as adangerous move that will under-mine Britains ability to fight fraud.

Vivian Robinson, QC, the SFOs gener-al counsel who resigned last week,

warns today that the disastrousplans would disrupt more than 100fraud cases currently on the books.

NUCLEAR WORKERS VENTURE INTOREACTOR NO 1 AT FUKUSHIMA

Two nuclear workers, cocooned inprotective suits and breathing fromair packs, have become the firsthumans to venture into the still dan-gerously radioactive No 1 reactor atFukushima Dai-ichi since the March11 earthquake and tsunami in Japan.

The team was restricted to just 40minutes exposure time.

VIRGIN TEAMS UP WITH SPOTIFY Virgin Media has teamed up withSpotify and will finally launch itsmuch-delayed digital subscription-

based music service imminently. According to a senior music industry executive, Spotify and Virgin Mediahave finalised a deal to launch a sub-scription music service and it will golive soon.

HAGUE EXPELS LIBYAN DIPLOMATS William Hague, the Foreign Secretary,ordered the explusion of two Libyandiplomats from its London embassy ashe travelled to Rome to demand heav-ier military bombardment of ColMuammar Gaddafis regime. Haguecalled for the beginning of a finalpush to topple the beleagured regimein Tripoli, more than seven weeksafter a UN Security Council resolution

authorised military action to protectcivilians.

ADIDAS BOOSTS SALES OUTLOTHE FULL YEARGerman sportswear and equipmentmaker Adidas said it will continue toraise prices to offset higher raw mate-rial costs and sees a potentially signif-icant knock to its profit from thecatastrophe in Japan, as it reported a25 per cent jump in first quarter netprofit and raised its sales guidance.Japan is eating into our profit, chief executive Herbert Hainer said.

YEN SURGE RAISES INTERVESPECULATION

The Japanese yen surged yesterday toits strongest level against the dollarsince the worlds biggest economiesintervened to stop its rise two monthsago.The move in early trading inEurope and the US, which sent thedollar below 80, stoked speculation

that Japan could act again to tame itscurrency.

WHAT THE OTHER PAPERS SAY THIS MORNING

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VISAS quarterly profit rose morethan expected as increasingly confi-dent consumers spent more, butdoubts remain about the paymentnetworks ability to grow under loom-ing regulation.

Revenues rose 15 per cent to $2.25bn(1.37bn), slightly above expectations.Its net income of $881m for its fiscalsecond-quarter compared to $713m a

year ago. Shares fell in after-hours trad-ing yesterday, as Visa failed to beatexpectations by the wide marginsinvestors were once used to. The com-

pany also said its board had authoriseda $1bn share buyback programme.

GROWTH in the UKs service sectoreased last month, after printing a tear-away rate in March.

Services expanded at an index scoreof 54.3, according to the latest purchas-ing managers index (PMI), down fromMarchs 13-month high of 57.1.

The slowdown in the economyslargest sector will concern chancellorGeorge Osborne, with this weeks PMIsurveys pointing to quarterly growthof just 0.4 per cent for the quarter.

The news saw sterling drop to a 13-month low against the euro, asinvestors judged that weaker econom-ic performance would rule out increas-es in the UKs Bank rate.

The pound touched a six-month low versus a currency basket, but clawed back some losses in afternoon tradingafter the European Central Bank appeared to rule out an interest ratehike next month.

Even though growth slowed in theBritish service industry, its progressremains above the six-month average(53.5). All PMI scores above the no-change rate of 50 indicate economicexpansion.

Despite the slowdown, growth of the service sector nonethelessremained solid, supported by anothermonth of marked new business wins,the report said.

New business grew at its fastest ratefor a year, amid reports of greaterclient activity both at home andabroad.

The spike in Marchs PMI was partly attributed to government depart-ments rushing to spend their budgets

before the end of the tax year more sothan usual perhaps due to theimpending closures of governmentdepartments and projects.

Nonetheless, this weeks surveys areclearly a disappointment for both theBank of England and the govern-ment, said Chris Williamson of Markit, which compiles the data.

Aprils surveys indicated the largestloss of growth momentum seen since

just after the collapse of Lehmans inlate-2008, Williamson said.

Sluggish growth in the UK willcause the chancellor to miss his targetof eliminating the annual deficit by the end of the parliamentary term,the National Institute of Economicand Social Research said yesterday.

ECONOMICS: P13

Pound slumps

as UK servicesector slows

EMBATTLED electronics retailerDixons has the most shorted stock amongst its blue chip counterparts,according to research by DataExplorers.

The firm has 18.69 per cent of itsshares out on loan, which representsalmost 70 per cent of the supply of shares available to be borrowed.

Dixons has issued two profit warn-ings so far this year, leading sellers tocover their positions.

The chain led the list of FTSE 100firms with shares out on loan as of 2May.

Will Duff Gordon, research direc-tor at DataExplorers said: Investorscontinue to express negative senti-ment towards retailers, which now account for six of the top ten mostshorted FTSE All Share stocks.

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Dixons leads list of top shorted stocks

Visa sees itsprofits jump

BY J ULIAN HARRISUK ECONOMY

FINANCIAL SERVICES

BY R ICHARD PARTINGTONRETAIL

News 3CITYA.M. 6 MAY 2011

TOP TEN FTSE STOCKS ON LOANCompany % of shares out on loan

Dixons Retail 18.69%

Yell Group 18.65

HMV 18.42%

Mothercare 12.33%

Thomas Cook 10.41%

Homeserve 9.40%

Kesa Electricals 8.96%

Debenhams 8.59%

Carpetright 8.45%

Mitie Group 8.0%Source: DataExplorersSlowing growth in UK services will concern George Osborne Picture: Micha Theiner / City A.M.

HAS BEENNOMINATED

FOR A PRESTIGIOUSMEDIA AWARD

THE LONDON PRESS CLUB HASSHORTLISTED EDITOR

ALLISTER HEATHFOR ITSBUSINESS JOURNALIST OF THE

YEAR AWARD

lll

THE WINNERS WILL BE ANNOUNCED ATAN AWARDS CEREMONY ON 11 MAY

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NEW Lloyds chief executive AntonioHorta-Osrio was yesterday accused of kitchen-sinking his first results atthe helm of the bank, bringing for-

ward some charges and potentially overestimating others to give himself alow base from which to improve.

The bank plunged back into the red,reporting pre-tax losses of 3.47bn forthe first-quarter of 2011 on the back of a 1.14bn one-off impairment chargefrom its Irish loan book and a 426mloss on sales of non-core assets.

But asked if he had employed thecommon kitchen-sinking trick,Horta-Osrio retorted: I really do notsee any kitchen-sinking in theseresults.

Analysts were dubious. Its got

kitchen sink written all over it, saidone. Evolution Securities Arturo deFrias said it was expected.

The new CEO is unlikely to havetaken any risks, he said. Many dis-agreed, however, with the stock clos-ing down eight per cent at 53.38p.

Horta-Osrios first-quarter leadingthe part-nationalised lender has seen adramatic acceleration in the restruc-turing of its funding. The bank unloaded 21bn worth of non-coreassets, repaid 26bn of governmentcash and issued 13.5bn of debt. Thatis twice the rate at which it pursuedthe same actions last year.

Impairmentssend Lloydsinto the redBY J ULIET S AMUEL

BANKING

Focus on Lloyds 5CITYA.M. 6 MAY 2011

Horta-Osrio denied that he was dampening expectations Picture: GETTY

Horta-Osrio does a spot of kitchen sin WAS Antonio Horta-Osrio beingentirely honest yesterday when hedenied kitchen sinking at his first setof results? Not quite: what he did wasgut the Lloyds kitchen entirely,clogged dishwasher and all. Then,not content with clearing out his

own house, he broke into the homesof RBS, HSBC and Barclays, and stoletheir kitchen sinks too while they

were sleeping.By admitting responsibility in the

Payment Protection Insurance (PPI)mis-selling scandal, Horta-Osrio haseffectively dashed his rivals chancesof escaping unscathed. Yesterday, theother PPI banks were publicly insist-ing they havent yet given up hope of

overturning the High Courts deci-sion at the Court of Appeal orSupreme Court, as they did with the

bank charges case. Privately, they know the game is up.

If one assumes that Lloyds whichhas around a third of the market

isnt overestimating the 3.2bn costof recompensing affected customers,it is easy to guess what other banksmight have to put aside. RBS, whichhas an 18 per cent share, is on thehook for around 580m while HSBCand Barclays, who have 14 per centeach, could have to set aside about450m.

The nasties didnt stop with PPIprovision. Impairments were 500m

higher than expected, due to impair-ments in Ireland, while the bank waseven lighter on detail than usual

when it came to outlook. Net interestmargin fell from 2.12 per cent in thefinal quarter of last year to 2.07 percent. The bank blamed higher whole-

sale funding, even though one wouldexpect wholesale funding costs to bedeclining. Perhaps most galling of all,Daniels received a 1.45m bonus forhis stewardship of the bank. Funnily enough, Horta-Osrio was tightlipped on whether he deserved it.

BOTTOMLINEAnalysis by David Crow

ANALYSISlShareofPPIMarket

ANALYSIS l Share of PPI Market

HS CLloydsStherarcl ays

3321

S

%

181414

HSBC

Lloyds

RBS

Other

Barclays

33%21%

%

18%14%

14%

Source: Citi

AALYSISlLloydsp

7Feb25Feb17ar6 pr2 8pr

706662585450

53. 385ay

ANALYSIS l Lloydsp

7 Feb 25 Feb 17 Mar 6 Apr 28 Apr

70

66

62

58

54

50

53.385 May

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FUELECONOMY

mpg61.4 0

ROAD TAXSAT NAV BLU ETOOTH ALLOYWHEELS

PRIVACYGLASS

+

AYGO Go! fro m 8,995. It all adds u p.

toyota.co.uk

Model shown AYGO Go! 1.0 VVT-i 3 door manual 8,995. Metallic paint 420 extra. Price is calcul ated by deducting 555 customer saving and 200 Cent re contribut ion from the manufacturer s list price of 9,750 and is correct at t ime of going to press.

2

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+

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HIGH street fashion retailer All Saintshas been rescued by a private equity led consortium, following months of talks to secure a new backer.

British investment firm LionCapital, which also owns the La Senzalingerie brand, has teamed up withUS private equity house GoodePartners to buy the retailer.

The deal, which values All Saints at105m, comes after sever-al other bidders failed topen an agreement.

Its been a longprocess but we finally got there in the end,chief executiveStephen Craig said.

Weve been very impressed with the[Lion Capital] guys

weve met andengaged with in ashort space of time.

That speaks volumesfor how they see us as a

brand and where weregoing, he added

Lion Capital emerged as the front-runner in the deal at the eleventh

hour, afterG o o d ePar tnersh a dlooked themore likely to lead a

buyout (as revealed in City A.M.on 27 April, above).

The US firm is said to have lackedthe financial firepower to securemajority ownership of the firm,according to sources close to the deal.

The British outfit will own 65 percent of the firm, whileGoode will hold 11 percent (see chart, left).

All Saints founderKevin Stanford will

own 15 per cent, with the firms

m a n a g e m e n t(mgmt), includingits two key fashiondesigners, owningthe remainingnine per cent. All Saints was put

on the block aftermajority shareholders

Kaupthing and Glitnir,the Icelandic banks that col-

lapsed during the financial crisis,looked to sell their holding.

REGIONAL airline group FlyBe yester-day saw its shares fall more than 20per cent after scaling back guidancefor its 2012 profits.

The airline, which raised 60m atthe end of last year for Europeanexpansion as part of its London flota-tion, said it had been hit by anextremely challenging macro-eco-

nomic backdrop in its core UK mar-ket.House broker Investec reduced its

estimate for profits in 2012 from37m to 22m, the same as this year,and shares in the company fell to170p, 125p lower than the float price.

The turbulence in the FlyBe shareprice will come as a blow to those try-ing to bring UK companies to marketin the City.

Recently a couple of UK floats,

Skrill and Edwards, have had to becancelled, with investors complain-ing about a lack of faith in new issues.

Market participants partly blamethe poor share price performances of a group of recently floated compa-nies, although FlyBe says it has beenrocked by economic headwinds.

FlyBes advisers said yesterday they remained chipper about thegroups prospects.

FlyBe becomes latest victof curse of the London flo

BY R ICHARD P ARTINGTONRETAIL

BY DAVID H ELLIERCAPITAL MARKETS


%

9 %

65% 1 5 %

1 1 %

M g m

t

S t a n f o

r d

G o o d e

Lion Capital

Lion Capitalbuys retailerAll Saints

NEWLY-FLOATED GROUPS HIT TURBULENCE

Company Float Price Float Yesterday'sDate Price

Promethean 200p March 2011 69.25p

FFlyBe FlyBe 295p Dec 2010 170.5p

CPP 235p March 2010 130.8p

Perform 260p April 2011 228p

Investors scrambling tosnap up Glencore sharesINVESTORS have snapped up thechance to buy a piece of Glencore,

with the commodities giant report-edly seeing the book for its $60bn(36.6bn) float fully covered on thefirst day yesterday.

All $11bn worth of the tradersshares on sale are said to be account-ed for already, just a day after its1,600-page prospectus was made

public.

That would make Glencore one of a few initial public offerings (IPO) inLondon to get off smoothly this year,

with the market having been unusu-ally difficult so far (see top left).

Bankers announced a wide 480pto 580p price range, considerably

below previous estimates that val-ued the company at up to $78bn.Investors are said to have reacted

well to the cautious valuation.

Trading is due to start 19 May.

COMMODITIES

New All Saints ownership

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FRENCH bank Socit Gnrale hasreported its best quarter in two

years, with profits up 9.2 per centin its investment banking arm.

But shares in the group fell asthe numbers missed analyst fore-casts, with its retail arms expo-sure to North African countriesand banking taxes in the UK andFrance weighing heavily on an oth-erwise strong performance.

Net profits at Socit Gnralesinvestment bank rose 9.2 per cent

year-on-year to 591m (524m),accounting for nearly two thirds of group earnings in the quarter, but

overall profits dropped 13.8 percent to 916m. The average esti-mate in an analyst poll was 1.06bn.

Chief executive Frederic Oudeasaid that the bank expected toimprove profits in coming quar-ters, highlighting growth in theinvestment banking arm and thereduction of its loan-loss provi-sions as contributing to futureincreases.

He also said that the bank wason track to meet its full-year targetof 6n in net profits. Revenues roseslightly to 6.62bn but were also

below expectations of 6.73bn. The banks international retail

arm has branches in much of the

French-speaking Arab worldincluding Egypt and Tunisia, and

was also hit by unrest on the Ivory Coast.

Socit Gnrales shares fell4.98 per cent yesterday to 43.26.

SocGen disappointsas misses forecastsBY E LIZABETH FOURNIER

BANKING

News8 CITYA.M. 6 MAY 2011

ANALYSIS l Societe Generale


54

50

46

42

43.265 May

GENERAL Motors (GM) added fur-ther weight to the automotiveindustry bounce-back after morethan tripling its quarterly profits.

However, the stronger-than-expected results, driven by a recov-ery in the US market and strongsales in Asia, were not enough toplease bearish investors, who pickedup on its vehicle prices being weak-er than rival Ford, with GM stock

falling three per cent. The firms total sales rose 15 per

cent to $36.2bn (22bn) against ana-lyst expectations of $35.6bn.

GMs results follow those of rivalFord, which last week posted its bestfirst-quarter profit in 13 years ashigher prices for redesigned vehi-cles offset pressure from spikingcommodity and oil prices.It was the first full quarter sinceGMs Initial Public Offering (IPO)last November. The company filedfor bankruptcy in 2009.

BY S TEVE D INNEENAUTOMOTIVE

GM triples its profitsShares in GM, led by chief Dan Akerson (above), fell three per cent Picture: REUTERS

DUTCH bancassurer ING yesterday beat first-quarter profit forecasts,improving the prospects for listingits US and European-Asian insur-ance units and for other asset salesto repay state aid.

ING, which received 10bn(8.9bn) state aid at the height of the 2008 credit crisis, is sellingassets so it can repay the Dutchgovernment and splitting its bank and insurance operations as part of European Commission-imposedconditions attached to its bailout.

The financial services group saidprofit was boosted by higher inter-est rates and investment margins.

ING reiterated it was preparingto list the two insurance business-es, most likely next year.

I think markets have improvedin the US. Whether they are at thismoment ready for an initial publicoffering I cannot say yet. We arenot ready yet, ING chief executive

Jan Hommen said.

ING triumphas races pastpredictions

BANKING

BBVA, Spains second-biggest bank, posted a 7.3 per cent drop infirst-quarter net profit, with mar-gins squeezed by high fundingcosts and a price war for depositsin its sluggish home market.

BBVAs Latin American units,especially Mexico, helped mitigatethe slump in Spain.

Net profit came in at 1.15bn(1.02bn), marginally above fore-casts.

Net interest income in Spain

dropped 11.3 per cent, with profitssinking by a third.

Mexico propsup slump atSpains BBVA

BANKING

YORKSHIRE Building Society, one of Britains biggest mutually ownedfinancial companies, supports put-ting Northern Rock back into thehands of its customers and wants to

work with government on the issue.Re-mutualisation of Northern

Rock provides a real opportunity tocreate a more vibrant and sustain-able financial sector, chief execu-tive Iain Cornish said.

Northern Rock was nationalisedthree years ago after becoming the

first major British bank in morethan 150 years to suffer a bank run.

Yorkshire eyesrole in return of Northern Rock

BANKING

HSBC is planning to start report-ing its earnings quarterly, and hasreleased its first-quarter earningsfor 2010 to aid comparison aheadof next Mondays financials.

Net profit at the bank for thethree months to 31 December was$3.24bn (1.97bn), rising 2.8 percent from the third-quarter.

Loan impairment charges wereup 7.1 per cent from the thirdquarter, to $3.37bn from $3.15bn.

Previously the group only

announced half-year and full-yearearnings.

HSBC plans treveal earningevery quarter

BANKING

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PORTUGAL looked likely to getmore generous terms on its 78bn(69.2bn) bailout than eitherIreland or Greece yesterday, as theIMF and EU unveiled a package thatthey warned would involve sacri-fice from the Portuguese people.

However, the accompanying fis-cal squeeze, which aims to reduceLisbons deficit from 9.1 per cent of GDP last year to three per cent by 2013, will throw Portugal into a two-

year recession, the governmentadmitted.

The EU and IMF said in a joint

statement that the plan was atrade-off between targetinggrowth measures to revivePortugals uncompetitive economy,and the budget cuts necessary toenable Lisbon to restore market con-fidence.

The IMF said that the interest rateon Lisbons loan will be between3.25 and 4.25 per cent. This com-pares to an interest rate of 5.8 percent for Ireland and an original rateof 5.2 per cent for Greece, although

Athens was lowered to 4.2 per centrecently.

The IMF will supply a third of thecash, while the EU will supply therest, with 12bn earmarked for the

countrys banks. Jurgen Kruger, who negotiated

the rescue for the EU, said: I will behonest, this is not an easy program,it is a tough programme, necessary,

but we consider it fair.IMF chief Dominique Strauss-

Kahn said: The first priority is totackle the longstanding and deep-rooted structural problems thathave caused Portugal to have thelowest rate of growth in the euroarea over the last decade.

That would mean scaling downthe size of the public sector as a pro-portion of the economy, he said,amounting to a fiscal devaluationthat would slash benefits costs.

Lisbon to get morelenient bailout rate

UK now paying less thanGermany for borrowing

BY J ULIET S AMUELEUROZONE CRISIS

THE cost of Britains borrowing hassunk below that of Europes safehaven, Germany.

Britain is now paying 68 basispoints less for its two-year debt, 50

basis points less for five-year debtand 28 basis points less for ten-yearnotes.

Most economists attribute thecrossover to the hawkish stance of the European Central Bank versusBank of England governor MervynKings clear commitment to loose

monetary policy.People are getting nervous not

because of any deep-seated concernsabout Germany, but because asinterest rates rise, yields will fall,said Newedges Bill Blain.

However, Capital Economics John Higgins warned against mak-ing assumptions: The idea that term premiums aside the yield ona long-term government bond issimply a function of the expectedpath of short-term interest ratesdoes assume, however, that suchsecurities are risk-free, he said yes-terday. Increasingly, this is a dan-

gerous assumption, underlined inthe case of Germany by the guaran-tees it is providing to bail out weak-er Eurozone member states.

BY J ULIET S AMUELECONOMICS


KENNY ANGLES FOR BETTER TERMS

IRISH Prime Minister Enda Kenny (pictured) yesterday said that he would press for lower interest rates for Dublins EU/IMF bailout but insisted that higher cor- porate taxes would not be part of any such deal. Kenny said an accord had

already been reached in principle to lower the 5.8 per cent interest rate on the 85bn (75.4bn) bailout, but details have yet to be hammered out. Pic: REUTERS

NEWS | IN BRIEF

Vale posts a record $6bn profitVale, the worlds biggest producer of iron ore, yesterday posted a record$6.83bn (4.2bn) profit in the first-quarter, according to a regulatory filing.The company was expected to earn$5.75bn in the quarter, according to theaverage estimate of nine analysts.Revenue more than doubled and thecompany booked a one-off gain after thesale of some aluminium assets.

Kraft beats results forecastsKraft Foods reported a better-than-expected first-quarter profit yesterday,helped by price increases and cost cuts,but it tempered its full-year outlookafter losing the contract to sellStarbucks coffee in US grocery stores.The maker of Cadbury chocolate, Oreocookies and Philadelphia cream cheesesaid net revenue rose 11 per cent to$12.6bn (7.7bn), though net profit fellby more than half to $802m due to anasset sale boosting last years figures.

Dominos US restaurants prosperThe US business of Domino's Pizza post-ed a big quarterly profit yesterday, beat-ing forecasts, as sales at restaurantsopen at least a year were stronger thanexpected and costs for commodities likecheese and meats rose less than feared.Net income for the three months to the

end of March rose 10.6 per cent to$27.1m (16.5m).

AALYSISl K'sdebti snowcheaperthanGermany's%

ecF eb2011a rpra y

32.52

German 5-year yi elds

UK5- year yiel ds

ANALYSIS lUK's debt is now cheaper than Germany's%

Dec Feb2011 Mar Apr May

3

2.5

2

German 5-year yields

UK5-year yields

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The Capitalist10 CITYA.M. 6 MAY 2011EDITED BY

HARRIET DENNYSGot A Story? [email protected] The Capitaliston Twitter: @citycapitalist

SIR TOM HUNTER TAKESTOP SCOTTISH HONOUR

Great Scot Awardwinner Sir Tom

Hunter and Boisdale owner

Ranald Macdonald

Above: Songwriter Bill Martin and

singer Annie Lennox

Right: Racing driver Jackie

Stewart and golfer Sam Torrance

Above left: Chief secretary to theTreasury Danny Alexander with a piper

Above: Entrepreneur Angus MacDonaldand Ben Walker of Walker Selection

Pictures: Micha Theiner

A VERY unusual thing happened ear-lier this week, according to motor rac-ing legend Jackie Stewart: A

Scotsman did quite well.Stewart was referring to the emo-tional moment when the Wizard of

Wishaw John Higgins lifted theSnooker World Championship tro-phy for the fourth time on Monday night after narrowly beating new-comer Judd Trump.

But he could just have well as beentalking about the winners of theGreat Scot Awards, held at Boisdalerestaurant in Canary Wharf in asso-ciation with Boisdale Restaurants,the Spectator and City A.M .

This years overall winner of theGreat Scot Award, following in thefootsteps of painter Jack Vettriano,

was Scotlands first home-grown bil-lionaire, the businessman, entre-preneur and philanthropist Sir TomHunter, who received the Johnnie

Walker Blue Label Great Scot Awardfor pledging to give 1bn to good

causes over his lifetime through The Hunter Foundation.

Andy Gray, the disgracedGlaswegian Sky Sports presenter,

was a no-show at the awards dinner,

but fellow Scots Danny Alexander,chief secretary to the Treasury, andMiss Scotland 2009 KatharineBrown applauded as singer AnnieLennox OBE accepted the Great Scot

Award for Charity and GMTV pre-senter Lorraine Kelly won the GreatScot Award for Entertainment.

The Lifetime Achievement Award went to songwriter Bill Martin, who wrote hit tunes includingCongratulations for Cliff Richardand My Boy for Elvis Presley thelast song Elvis performed live

while Stewart, the first-ever winnerof the Great Scot Award, presentedgolfer Sam Torrance OBE with theGreat Scot Award for Sport.

A special thanks to this eveningssponsor Johnnie Walker, joked

Torrance as Boisdales waiters dis-pensed generous measures of Scottish whisky to the tartan-clad

guests, for helping me throughthese last forty years.

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SHARES in British fund managementpowerhouse Schroders slumped overnine per cent yesterday, after it revealed

weaker-than-anticipated profits. The blue-chip investment firm post-

ed an 11 per cent increase in profitsover the first three months of this

year, after an unexpected loss oninvestments and a slowdown in retailfund flows.

Pre-tax profit for the firm for thethree months to the end of March was104m, compared with forecasts of upto 117m. Net inflows hit 3.1bn forthe firm over the first-quarter, givingthe firm funds under management of 201.4bn in total.

While the core businesses of assetmanagement and private bankingposted higher profits than last year,the group segment which comprisesreturns on the companys invest-ments, saw a loss of 0.2m during theperiod.

We had some private equity gainsin the first quarter of last year which

we didnt have in the first quarter of this year. These are unpredictable andcan be lumpy, said chief executiveMichael Dobson.

Oriel Securities analyst Keith Bairdsaid the market selloff was an overre-action. I think the markets gone risk averse and anything with any flaws is

being kicked. To that extent I think it'san overreaction, he said.

Schroders shares closed 9.2 percent lower at 1,700p.

Weak resultshit Schrodersshare price

ANGLO-AUSTRALIAN funds houseHenderson has promoted its chief investment officer (CIO) David Jacob

to its executive team, as part of a boardroom shake up.Managing director James Darkins

was also promoted to become an exec-utive director on the fund managers

board.Meanwhile, asset management vet-

eran Kevin Dolan will sit on the firms board as a non-executive director.

The appointments sweHendersons board to ten members.

Promotion forHenderson CI

BY R ICHARD P ARTINGTONFUND MANAGEMENT

ASSET MANAGEMENT

NewsCITYA.M. 6 MAY 2011 11

JAPANESE hedge funds have postedsteady gains over the first threemonths of this year, despite the tur-moil suffered in the country follow-ing its massive earthquake andtsunami in March.

The volatile quarter for Asian finan-cial markets failed to dent Japan-focused hedge funds, which posted acapital increase of more than $4.6bn(2.8bn) to approximately $88.1bn,according to Hedge Fund Research.

The figure is the highest level sincea 2008 peak for the funds.

Japan funds updespite quake

HEDGE FUNDS

AALYSISl Schroder sp

7Feb25Feb17ar6pr28pr

1,9501,850

1,7501,650

1,7 00.005ay

ANALYSIS l Schroders

p


1,950

1,850

1,750

1,650

1,700.005 May

CHARLES Gregson (pictured), thechairman of money broker ICAP, isto succeed St Jamess Place founderMike Wilson when hesteps down later this

year.City grandee

Wilson will relin-quish his post aschairman almost20 years after hefounded the fundmanager along-side LordRothschild and SirMark Weinberg.

He will become alife president of the firm and take amore central role in St

Jamess places chari-table founda-tion.

Gregson has more than 30 years

of experience in the financial servic-es sector, having been responsiblefor the Garban businesses thatmerged with Sir Michael SpencersIntercapital in 1999 to form ICAP.

He is also chairman of CPPGroup, the credit card insurer

currently being probed by the Financial Services Authority (FSA).

Gregsons appoint-ment came as St JamessPlace revealed a bumper

first-quarter perform-ance. Sales over the

first three months of this year leapt 18 per

cent to 157m, beatinganalysts expectations.

Funds under manage-ment were also up at

28bn.

The man to take the placeof St Jamess founderBY R ICHARD P ARTINGTON

FUND MANAGEMENT

CHARLES GREGSON

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SWISS RE has posted a first-quarterloss due to big claims from naturaldisasters in Japan, New Zealand and

Australia, saying 2011 was likely to beone of the highest ever natural catas-trophe claims.

But the high disaster payouts, combined with low interest rates andother factors, meant prices for rein-suring property and casualty losses

would likely firm sooner than expect-ed, Swiss Re said. Reinsurance priceshad been falling.

We expect the market hardening,

that we previously forecast for 2012-2013, to take place much sooner,

finance chief George Quinn said.Swiss Re posted a net loss in the

first-quarter of $665m (405.8m), bet-ter than a $999m loss forecasted.

Swiss Res asset management unitsaw a four per cent annualised returnon investment, thanks to changes inasset allocation and portfolio gains.

The worlds second-biggest reinsur-er was already facing a high 2011 dis-aster bill when the tsunami andearthquake struck Japan, saddling it

with a further $1.2bn in claims.Swiss Re already had charges of

around $800m from the earthquakethat struck New Zealand in February.

Yet said it could handle them and stillmaintain significant excess capital.

INSURER Zurich Financial Serviceshas posted a 32 per cent drop infirst-quarter profit from a year ear-lier, a bigger fall than analysts hadexpected, on big payouts fromcatastrophes in New Zealand and

Japan. The disaster in Japan is one of the

costliest natural catastrophes inthe history of global insurers, hav-ing caused insured losses of $12bn(7.3bn) to $25bn, according to risk modelling firm Eqecat.

Results were impacted by thesignificant catastrophe events inthe Asia-Pacific region during thefirst three months of the year,Zurich said.

The slow economic recovery inthe US and much of Europe alsoimpacted results.

The Swiss-listed insurer said ithad aggregate losses of $517m inthe first-quarter from Japans dev-astating earthquake and otherregional disasters, compared to aninitial estimate for $500m.

Zurich posted a first-quarter net

profit of $637m, compared with ananalyst estimate of $766m.

Profit in general insurance, its biggest segment, was driven down56 per cent in dollar terms due tothe high catastrophe payouts.

This led to a deterioration of thecombined ratio a measure of prof-itability to 103.6 per cent from 99per cent a year earlier.

Zurich also said it had extended adistribution agreement withDeutsche Bank for life and generalinsurance policies in Germany for afurther 10 years.

Shares in Zurich fell 3.5 per cent yesterday on the Swiss Exchange toclose at SwFr235.10.

Zurich hit byJapan and NZquake claims

6 m i l l i o n

s e a t s

Price one way inc. taxes, availability and prices correct as at 26 April 2011. Available to book now while stocks last .For travel from 18 May to 30 September 2011 inclusive. Variable charges for hold baggage apply and some payment

methods attract a handling fee. S ee website for details.

2 3. 9 9

f r o m

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i n c . t a x e s

Hurry, book early,save big!

Scrummy

Sunshine Savers

Disasters take toll on Swissas it posts first quarter losse

BY H ARRY B ANKS

INSURANCE

INSURANCE

PROPERTY firm Capital & Counties(CapCo) has announced a 100m shareplacing, which it plans to spend onrevamping and adding to its CoventGarden portfolio.

The company, formed last year when Liberty International was bro-ken up, is planning to sell 62.1m new shares, worth almost 10 per cent of itsoutstanding stock.

CapCos buildings at Covent Gardenare valued at 640m, and include the25,000 square foot flagship Apple storein Bedford Chambers, opened last year.

The new money raised from theplacing will accelerate our progress atCovent Garden and we expect acquisi-tions and projects at Covent Gardenfunded by the placing to be accretiveto both estimated rental value and netasset value per share over time, saidchief executive Ian Hawksworth.

CapCo to spruce upCovent Garden site

PROPERTY


ROTHSCHILD acted as CapCos financial

adviser on the share placing, led by headof real estate Alex Midgen. Midgenrecently advised Telereal on its acquisi-tion of Trillium.

He has also advised on several othercapital raisings in real estate, includingGrainger, Songbird Estates andShaftesbury.

In 2004 he advised Glenmorangie onits sale to LVMH. He was involved in sell-ing MEPC to Hermes and GE Capital for

2bn in 2000, and Bryant Homes toTaylor Woodrow for 400m in 2001.

The Queens Park Rangers fanadvised Elliott Bernerd in his acquisitionof Chelsfield for 2bn in 2003, and GuyHandss Permira in its 4.75bn acquisi-tion of Viterra. He acquired CanaryWharf for US diamond and property

magnate Simon Glick for 5.5bn.Midgen was hired by Rothschild in1994. He was promoted to head of UKreal estate in 2004 and made a manag-ing director. Later the same year he wasmade a partner at the firm.

He was previously a chartered sur-veyor at DTZ. He won the 2008Rainmaker award for most successfulconsumer and leisure deal originator inthe UK private equity mid-market.

MEET THE ADVISERS

ROTHSCHILD

ALEX MIDGEN

ANALYSIS l Zurich

CHF


215

225

235

205

195

185

175

235.105 May

PR FIRMS saw an astonishing rise infee income last year.

The top 150 UK PR agencies brought in a total of 839m in feeincome, up from 814m in 2009,according to a survey by PRWeek.

Bell Pottinger retained its positionas the UKs largest PR agency by feeincome, with 68m, an addition of nearly 8m from the previous year.

City PR firm Brunswick was in sec-ond place with 53.2m. Edelman wasthe top independent agency, with afee income of 29m.

Rise in incomat top PR firm

PROPERTY

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CREDIT card interest rates have soaredthis year, it was revealed yesterday.

Since the start of the year, 18 creditcards have hiked the rates they chargecustomers, compared to just four inthe same period last year.

The average interest rate on plastichas hit a 13-year high of 19.1 per cent,the website Moneyfacts calculated.

The hikes have coincided with fresh

Office of Fair Trading regulations andthe payment protection insurance rul-ing, both of which have dented rev-enue levels.

It is unlikely we have seen the lastof the increases and we expect moreproviders to follow suit, said MichelleSlade of Moneyfacts. At the same,time, customers are now being offeredthe longest ever zero per cent balancetransfer and introductory purchasedeals ever seen, she added.

Credit cards charging thighest rates for 13 yea

UK ECONOMY

Credit card rates have shot up far more than at the same time last year Picture: REX

ARCH hawk Andrew Sentance endedhis term at the Bank of England yes-terday unable to convince his col-leagues to normalise interest rates.

Historically low interest rates werekept on hold at 0.5 per cent for May,the monetary policy committee(MPC) announced.

Today, coincidentally, marks 14 years since the Bank of Englandsindependence was announced by Gordon Brown, chancellor at thetime sparking the creation of theMPC.

Rates have been held low since

March 2009 by the MPC, despiteSentance voting for a steady rise every month from June of last year.

Three members of the nine-mancommittee have voted for increasedrates since February.

Yet the minutes of Aprils meetingrevealed that the other two hawks --Spencer Dale and Martin Weale

were less convinced than Sentance onthe need for tightening.

And Weales recent comments sug-gest that he may be harbouring sec-ond thoughts. First quarter GDP islikely to be weaker than many people,including myself, would haveassumed, Weale had said.

Its a big deal, commented

Richard Barwell, economist at RBS.Weale sounds like a man backingoff.

From next month Sentance will bereplaced on the committee by Goldman Sachs economist BenBroadbent.

Broadbent is expected to be hawk-ish, yet analysts say it is notoriously difficult to predict how new mem-

bers of the committee will vote.Most forecasters now think that

the tightening cycle will simply startlater this year, said Deloittes RogerBootle yesterday, but I am sticking

with my view that interest rates willstay at one per cent or below until2014.

Rates held at 0.5pcby Bank of EnglandBYJ ULIAN HARRIS

UK ECONOMY

Economics 13CITYA.M. 6 MAY 2011

NEWS | IN BRIEFMalaysia hikes its interest ratesMalaysias central bank ended its rate-hike pause yesterday, raising its key poli-cy rate by 0.25 per cent to three percent, and ordered banks to set asidemore money in reserves to fight inflationstoked by rising oil and food prices. TheBank raised the Statutory ReserveRequirement the amount of cashreserves banks must keep with the cen-tral bank to three per cent.

Price pressures felt in PhilippinesMeanwhile, inflation in neighbouringPhilippines came in slightly above expec-tations at 4.5 per cent in April, with coreinflation measuring 3.8 per cent.

Malaysia Airlines seat giveawayMalaysia Airlines has today launched aglobal cut price flight giveaway for busi-ness and consumer customers. As manyas 10,000 seats are on offer from 305return to Malaysia from Heathrow.

Drop in German factory ordersFactory orders in Germany unexpectedlydropped in March, official data showedyesterday. Orders were down four percent compared to February.

EUROZONE interest rates were kept at1.25 per cent yesterday with central bank president Jean-Claude Trichetsuggesting that fewer hikes are onthe horizon than many analysts wereexpecting.

Trichet declined to use the termvigilance in his statement, the code-

word understood to indicate immi-nent monetary tightening.

We will continue to monitor very closely all developments with respectto upside risks to price stability,

Trichet said instead.This implies, on the basis of prece-

dent, that there will not be a rate hikein June, contrary to the increase inspeculation, and the shift in market

pricing, in recent days. commentedKen Wattret of BNP Paribas.

Euro government bond and inter-est rate futures rallied on the back of the statement, which was less hawk-ish than expected.

Bund futures reversed earlier loss-es, while Euribor futures, a market

barometer of Eurozone interest rateexpectations, also rebounded.

Eurozone rates stuck at 1.25pc as Trichet refuto signal another hike at next months ECB m

EUROZONE ECONOMY

THE number of Americans filing for jobless benefits rose to an eight-monthhigh last week and productivity growth slowed in the first-quarter,clouding the outlook for an economy that is struggling to gain speed.

Initial claims for state unemploy-ment benefits rose 43,000 to a season-ally adjusted 474,000, the highest sincemid-August, the Labor Departmentsaid yesterday,

Claims were pushed up by factorsranging from spring break layoffs tothe introduction of an emergency ben-efits program.

Economists had expected claims tofall to 410,000.

A second report from the depart-ment showed non-farm productivity increased at a 1.6 per cent annual rate,

braking from a 2.9 per cent pace in thefourth-quarter. The growth pace wasnonetheless above economists expec-tations for one per cent.

US rocked as claims unemployment leap u

US ECONOMY

FINANCIAL services are driving updemand for Londons offices, a survey revealed today.

The market for office space in thecapital continued to outperform allother regions in the UK and all othercommercial property sectors, theRoyal Institution of Chartered

Surveyors (RICS) said.Overall commercial tenant

demand grew in the first threemonths of the year, with 10 per centmore surveyors seeing a rise indemand rather than a fall.

The results signal a broad recovery in firms appetite to increase their

businesses, RICS said, with a positive balance in demand across the UK.

Demand for Londons office spaceboosted by growing finance sector

PROPERTY

CITY VIEWS: SHOULD THERE BE A CHANGE IN THELAW TO STOP TUBE STRIKES?Interviews by Richard Partington

Yes. I find it a bit annoying when they go onstrike. It causes a lot of hassle for people. BobCrow is not exactly a popular figure and thestrikes are not worth what they are arguing for.

MICHAEL ALBONE |VTB CAPITAL

Yes. Every time they strike they seem toask for more demands. It reflects badly onthe unions. They should look at other serv-ices, like the police, that dont act this way.

MARK BROWN |HIGH FINANCE GROUP

Yes. I dont know why the existing law doesnt stopthem already. I would support a change to makesure they had a significantly higher turnout beforethey could go on strike.

TIM TUCKER |LFR SEARCH

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THE worlds biggest spirits makersDiageo and Pernod Ricard beat fore-casts yesterday with strong salesgrowth in the first three months of 2011 as buoyant emerging marketgrowth offset a weak Europe.

Diageo, the maker of Smirnoff vodka and Johnnie Walker whisky,reported its third-quarter January toMarch underlying sales rose sevenper cent.

Meanwhile, French rival and worldnumber two Pernod, which makes

Absolut vodka, said quarterly under-lying sales rose five per cent.

Analysts had pencilled in a 2.5 percent increase. The figures mark a con-

tinued improvement in trade, whichpicked up in 2010 after sufferingthroughout most of 2009 when theglobal downturn prompted con-sumers to move to cheaper drinksand wholesalers to use up stocksrather than make new orders.

Diageo toastssales growthBY J OHN DUNNE

CONSUMER

Consumer News14 CITYA.M. 6 MAY 2011

ANALYST VIEWS: CAN DIAGEO SUSTTREND OF RISING SALES? Interviews by John Dun

IAN SHACKLETON |NOMURA

We believe growth of five per cent in 2011 is achievable, and couldaccelerate in 2012. This combined with a more aggressive attitude to building inemerging markets and in M&A continues to make Diageo shares lookattractive. There was further improvement in price/mix in markets.

KEITH BOWMAN |HARGREAVES LANSDOWN

Diageo continues to reflect trends in the global economy, with a focus onbrand strength doing its part to appeal to the increasing ranks of the middle class-es across the developing economies. As such, market consensus opinion currentlydenotes a buy.

MARTIN DEBOO |INVESTEC

The information regarding performance in the UK would suggest thatDiageo is trading off a loss of volume against improved prices. In the longer termthat might prejudice a companys share against its competitors in themarket.

PROMOTIONS and a surge in spend-ing on bunting and picnics for theroyal wedding helped Morrisons beatquarterly sales forecasts yesterday.

But Britains fourth biggest super-market chain said it was wary of thetough road ahead as customer spend-ing come under more pressure.

Sales at stores open over a year rose2.5 per cent, excluding petrol and

VAT sales tax, in the 13 weeks to 1

May. Chief executive Dalton Philipssaid: A late Easter, having a royal

wedding and good weather werethree nice tailwinds.

Sales were boosted by promotions,such as Morrisons Fuel Britanniacampaign that offered customers 6poff the price of a litre of petrol if they spent 40 in the store. It sold over 100miles of bunting in the run up to theroyal wedding, including that used todecorate the party outside the resi-dence of the Prime Minister inDowning Street.

BY J OHN DUNNERETAIL

Morrisons in royal booThe chain provided the bunting for the Downing Street wedding party Picture: GETTY

CARPHONE Warehouse yesterday raised its profit guidance for the thirdtime in six months, boosted by demand for smartphones and its USgrowth.

Europes largest independentmobile phone retailer raised its fore-cast for earnings per share in the yearto 31 March to a range of 14.5p to 15pfrom its previous guidance of 13.5p to14p.

That was despite big losses antici-pated at new UK megastores, which

have been opened in partnership with US electricals giant Best Buy.

Like-for-like sales at CPW Europe,part of the Best Buy Europe joint ven-ture, fell 1.7 per cent during thefourth-quarter compared with a yearearlier.

But chief executive Roger Taylorsaid: We are well positioned to con-tinue to capitalise on the rapid devel-opment and proliferation of smartphones and the ever-expandingrange of tablets coming to the marketdespite the uncertainty around theeconomic environment.

Carphone Warehouse insmartphone sales surge

RETAIL

ANALYSIS l Diageop


1,260

1,220

1,180

1,140

1,100

1,230.005 May

EUROPES largest drinks can makerRexam has reported first-quarter trad-

ing in line with its expectations, butsaid the outlook for its plastic packag-ing division was now more cautious.

Rexam, which makes cans forCarlsberg and Red Bull and packagingfor healthcare and cosmetic products,

yesterday said it had seen weak trad-ing in home and personal care andmake-up in its plastics business.

But the company said its beveragecan division had seen a better-than-anticipated performance over theperiod from 1 January.

Rexam knockedby plastics unit

CONSUMER

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SOUTH African papermaker Mondi yesterday warned rising input costs were putting pressure on its marginsas it posted a rise in first-quarter prof-it, driven by higher prices and sales.

Mondi said cost hikes would bemore moderate than the 12 per centrise seen last year.

I would estimate that it would bearound a seven to eight per centrange this year, chief financial offi-cer Andrew King said on a conferencecall.

Underlying profit in the threemonths to the end of March rose to 187m (166m).

The global paper industry is slowly recovering from a slump triggered by

weak demand and overcapacity that was exacerbated by the economic cri-sis.

Mondis London-listed sharesclosed up 2.55 per cent at 602.5p.

INDUSTRY

Mondi postsprogress butwarns on costs


INVESTMENT firm 3i Infrastructure yesterday posted a 3.6 per cent rise in

total returns yesterday, giving share-holders a 9.2 per cent return on theirequity.

The FTSE 250-listed firm also doubled its portfolio income for the yearto the end of March to 69.3m.

The company invested a total of 187.5m during the year, spending the

bulk of this on the purchase of Eversholt Rail Group.

Cressida Hogg, managing partner at

3i Investments, which advises theinfrastructure fund, said: The infra-structure market continues to be rela-tively rich in opportunities, with therole of financial investors well estab-lished.

The investment advisers compre-hensive market access, focused invest-ment strategy and solid operationalunderstanding of the asset class will

be key to achieving the companys

return objectives in the years to come.Investment giant 3i Group floatedthe firm in 2007 and remains itsinvestment adviser.

3i Infrastructure shares closed up1.3 per cent at 117.2p.

3i spin-off doubles incomeBY M ARION DAKERS

INVESTMENT

CONSTRUCTION group Costain said yesterday trading has been in line

with forecasts so far this year, with aforward order book of 2.3bn.Costain, which spent five months

unsuccessfully pursuing a takeover of Mouchel earlier in the year, said850m in revenue has been securedfor 2011 so far.

The company also has a cash pilein excess of 100m, and has no sig-nificant borrowings.

Shareholders also passed all resolu-tions at their annual meeting yester-day. Costains shares closed down 0.9per cent at 227p.

Costain tradinin line this yea

BUS and rail group Go-Ahead expectsto beat its previous full-year profitguidance after a strong performanceover the last three months, helped by solid growth at its UK rail business.

The company, which operates com-muter rail franchises through itsmajority-owned joint venture Govia,

yesterday said UK rail revenues grew by more than 10 per cent in the three

months to 2 April and that sales at itsBritish bus business rose 9.8 per cent.

Go-Ahead said its US yellow school bus venture was making progress.

Despite the positive UK perform-ance the company said it continuedto remain cautious about the medi-um term prospects for the widereconomy.

The update was the last one from

chief executive Keith Ludeman, whoretires in July.

Go-Ahead is at full steamTRANSPORT

3i chief executive Michael Queen is upbeat

SHARES in AZ Electronic Materialsrose 3.1 per cent yesterday at 288.9pafter the supplier of specialist chemi-cals for chip makers said trading inthe first-quarter was strong, driven by

buoyant end-user markets.Revenues in the quarter rose 27

per cent to $192.3m (117m), the

firm said, adding that underlyingearnings were in line with expecta-

tions.The forecast-beating recent

results from a number of chip makers and electronics manu-facturers... have clearly driven therobust levels of demand for AZsmaterials, Brewin Dolphin says in anote.

The earthquake-related disruptionin Japan, which accounts for 20 per

cent of AZs sales, has been handled very impressively, added the broker.

Strong update buoys AZ

Chief exec Keith Ludeman retires in July

IRISH airline Aer Lingus may ramp upa controversial cost-cutting plan afterconfirming profit this year will be sig-nificantly below 2010 due to weak demand and higher fuel prices.

Facing constant pressure fromRyanair, Aer Lingus has cut routes,staff and pay to survive and anotherround of cuts could put it on a freshcollision course with employees.

First-quarter revenues fell by fiveper cent but average yield per passen-ger rose by nine per cent due to a cutin poor performing routes and anincreased proportion of business trav-ellers.

Chief executive Christoph Muellersaid the level of profitability will bemuch lower this year.

Aer Lingus inprofit warning

HOUSEBUILDING and constructioncompany Galliford Try yesterday upgraded its profit forecasts for the

year as it saw a rebound in housingdemand and an improvement inmortgage availability, sending itsshares to a 20-month high.

The company said it expectedresults for the year ending June to besignificantly ahead of current marketestimates on a better-than-expectedspring selling season.

Improvement in the mortgage

market and the shortage of supply isgetting worse as we go forward, saidchief executive Greg Fitzgerald.

Shares gained seven per cent toclose at 441p.

Galliford Tryraises forecast

FRENCH oil explorer Maurel & Proms(M&P) shares rose nearly five per cent

yesterday as the f irm said it may seek a separate listing for its Nigerian unitand could distribute shares of thisunit to its shareholders.

Maurel & Prom said in a statementits investment in SEPLAT, a 45 percent owned subsidiary of its wholly-owned Nigerian business, was notfully reflected in the groups shareprice.

But some analysts said the boost to

Maurel & Proms stock may be short-lived as the strategy decision wouldnot add value to the parent company.

The firms shares closed at 14.68in Paris trading yesterday.

Talk of listinglifts up M&P

CONSTRUCTION

TRANSPORT

PROPERTYENERGY

TECHNOLOGY

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INDIA-FOCUSED miner VedantaResources posted a 29 per cent jumpin full-year earnings per share yes-terday, on the back of strong metalprices and a background of robustdemand for commodities.

Vedanta, founded in 1976 by execu-tive chairman Anil Agarwal (pictured),

said yesterday its basic earnings pershare came in at $2.83 (1.72).

The group posted a 28 percent rise in attributable profitto 771m, on the back of a 44per cent rise in revenues.

Vedantas earnings current-ly depend largely on iron ore,copper and zinc, but thegroup has pursued astrategy of diversifi-cation and could

get as much as aquarter of its prof-

its from oil and gas in three years,if it succeeds in its bid to take con-trol of Cairn India. Vedanta gaveno update on its bid to take con-trol of Cairn India. Vedanta has been caught up in

a dispute over royalty pay-ments, and the twosides have been wait-ing for government

approval for almostnine months.

Metal prices boost earnings at Vedanta

ARTIFICIAL knee and hip maker Smith& Nephew (S&N) posted a solid first-

quarter, helped by strong growth in itsUS knees business, after rival Synthes was snapped up by Johnson & Johnson.

The British company reported trad-ing profit of $241m (147m) on rev-

enue four per cent higher at $1.06bn yesterday, resulting in adjusted earn-ings per share just ahead of marketforecasts at 18.4 cents.

S&N saw growth in its US knee unit

of 10 per cent, taking share frommajor competitors, helping itsorthopaedic reconstruction businessgrow two per cent in a flat market.

S&N attracted the attention of Johnson & Johnson, according to a

source, before the US company agreedto buy Switzerlands Synthes for $21bnin April.

The British companys sharesremain well above the 618p they trad-

ed at before news of J&Js approach,indicating investors see an opportuni-ty for further consolidation in the sec-tor as competitors try to catch up witha larger top player. Shares in S&Nclosed up three per cent at 680p.

Smith & Nephew boosted by USBY H ARRY B ANKS

PHARMA

BUS and rail operator National Express yesterday said growing first-quarterprofit showed it did not need the radi-cal change of strategy called for by rebel investor Elliott.

The transport group said growthacross all of its divisions had helpedpre-tax profit grow 30 per cent in thefirst three months of 2011 and soughtto take the sting out of a row with itslargest shareholder Elliott Advisors,

which has called for a boardroomshake-up and a change of strategy atthe company.

No one is picking up arms to fighteach other but Elliott are our largestshareholders with 18 per cent of thecompanys stock and deserve a voice they have put their money where theirmouth is and we are listening tothem, chief executive Dean Finchsaid.

Elliott, a US hedge fund, has recent-ly accused the company of failing tocompete for new opportunities anddamaging shareholder value.

Elliott also wants National Expressinvestors to elect three new independ-ent directors to push for changes at thefirm at its 10 May annual generalmeeting.

Finch said the company was consid-ering appointing a candidate proposed

by Elliott to its board. He said ChrisMuntwyler, a former head of DHLs UK

business, was on a six-strong shortlist.

NatExpressprofits helprebuff Ellio

BRITISH oil services and engineeringgroup AMEC has said the outlook forits nuclear unit was unchangeddespite the nuclear crisis in Japan, as itreported a strong order intake for thefirst four months of 2011.

AMEC said that its pipeline of ordersgrew to 3.25bn on 30 April from3.14bn at the end of 2010, boosted by contract awards in Chile and theNorth Sea.

The company which helps buildnuclear power stations and service oilrigs said trading in the first fourmonths of 2011 was in line with expec-tations and it was confident of main-taining a nine per cent earningsmargin this year.

AMECs outlook for its power divi-sion has not been impacted by eventsat a nuclear station in Japan and subse-quent global focus on nuclear power,the FTSE 100 company said.

Reviews on the safety of nuclearpower around the world were likely tosupport the need for specialist nuclearengineering, AMEC said.

The outlook for AMECs nuclearactivity, which involves reactor sup-port, waste management, decommis-sioning and nuclear new build in theUK, Canada and Central and EasternEurope, remains positive andunchanged, said the company. Sharesin AMEC, whose customers include BPand EDF, closed flat at 11.82.

Japan crisisno threat toAMEC sales

WEST African-focused gold minerRandgold Resources has said its profit

jumped 92 per cent in the first-quar-ter and that it is on track to produceat the upper end of its full-year guid-ance.

Profit rose to $45.9m (27.9m) from$23.9m a year ago as gold production

grew 24 per cent to 139,403 ounces,helped by its recently commissioned

Tongon mine in the Ivory Coast, andon higher gold prices.

The FTSE 100 miner expects to pro-duce between 750,000 and 790,000ounces of gold this year, up 70 to 80per cent on last year. We are certain-ly in the upper half of that guidance,said chief executive Mark Bristow .

Total group cash costs rose 19 percent to $744 an ounce from the year-

earlier quarter, but declined from thefourth-quarter.

Randgold bullish for 2MINING

CEO Olivier Bohuon sees solid growth

BY H ARRY B ANKS

ENGINEERINGBY HARRY B ANKS

TRANSPORT

ANALYSIS l Smith & Nephewp


760

720

680

640

680.005 May

ANALYSIS l National Expressp


265

255

245

235

225

261.805 May

ANALYSIS l AMECp


1,240

1,200

1,160

1,120

1,080

1,182.005 May

MINING

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News18 CITYA.M.6 MAY 2011

McKay SecuritiesGiles Salmon has joined the propertydevelopment and investment group to

succeed Alan Childs as finance director,effective from August. Salmon was for-merly finance director of BAA Lynton,

the commercial property arm of BritishAirports Authority.

Barclays WealthThe wealth management firm hasappointed Carole Cheung as managingdirector, senior client partner, based in

Hong Kong. Cheung, who has been pro-moted from the position of managingdirector, relationship management, willfocus on managing the relationships of ultra high net worth clients in Asia.

Weir GroupThe engineering group has appointedMelanie Gee to the board as a non-executive director. Gee is a managing

director in Lazards UK investmentbanking business and was previously amanaging director at UBS.

BluefinBluefin Wealth Management hasappointed Chris Durnian as a financial

planner, based in the London office.Durnian joins from Lloyds WealthManagement, where he was a wealthmanagement adviser.

Cannacord GenuityThe AIM-listed independent broker hasrecruited Peter Mallin-Jones as directorof mining equity research. Mallin-Jones

joins from Goldman Sachs, where he

was vice president and head of miningand metals research.

Arbuthnot SecuritiesThe investment banking arm of Arbuthnot Banking Group has appoint-ed Michael Loungo as a research direc-

tor, covering financial services. Loungo joins from Liberum Capital, where hewas a research analyst.

Fenchurch Advisory PartnersThe specialist investment bank hasappointed Guy Miller as managingdirector. Previously, Miller was head of European financial institutions M&A atRoyal Bank of Scotland.

CITY MOVES |WHOS SWITCHING JOBS Edited by Harriet Dennys

+ 44 (0) 207 092 0053morganmckinley.com

To appear in CITYMOVES please email your careerupdates and pictures to [email protected] SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT

in association with

Commodity crassends US tumbli

US stocks fell for a fourth day yesterday as a massive sell-off in commodities spilled intoother markets, forcing

investors out of riskier assets and rat-tling the equities market beforetoday's payrolls data.

Oil suffered the biggest one-day price drop ever for the Brent futurescontract, which settled down 8.6 percent at $110.80 per barrel. That droveoil shares lower, making the energy sector the worst performer on theS&P as it fell 2.3 per cent.

The Dow Jones industrial averagedropped 139.41 points, or 1.1 percent, to 12,584.17. The Standard &Poors 500 Index fell 12.22 points, or0.91 per cent, to 1,335.10. The NasdaqComposite Index lost 13.51 points, or0.48 per cent, to 2,814.72.

The S&P 500 fell through its 14-day average but closed above 1,333, alevel that could become an impor-tant market support, limiting futurelosses.

The CBOE volatility index jumpedabove its 50-day average before clos-ing up 6.6 per cent at 18.20, its high-est closing level since 28 March. The

move signals investors are willing topay more for protection for their

equities exposure. Adding to a recent spate of poor

economic data, weekly applicationsfor unemployment insurance rose toan eight-month high, setting off alarms a day before the April unem-ployment report.

It may very well be the case thatthe commodity price bubble has

burst, said Hugh Johnson, chief investment officer of Hugh Johnson

Advisors.Silver prices were set for the deep-

est weekly decline in nearly 30 years. The iShares Silver Trust exchange-

traded fund tumbled 11.9 per cent. The Reuters/Jefferies CRB indexthat tracks commodity prices fell 4.9per cent and was on track for its

biggest weekly fall since late 2008. About 9.2bn shares traded on the

New York Stock Exchange, NYSE Amex and Nasdaq, in a third consec-utive trading volume above the year'saverage.

Declining stocks outnumberedadvancing ones by a ratio of abouteight to five on both the NYSE andNasdaq exchanges.

Consumer-related shares also fell but were the best performers as thedrop in crude was seen lessening thefinancial burden on individuals of high gasoline prices.

US retailers earlier warned of ris-ing costs and cautious consumerseven as a late Easter boosted sales of clothing and other holiday-related

items in April, helping many beatsales expectations.

SLIDING commodity pricesthumped energy stocks andminers while Lloyds BankingGroup led financials down,

pulling Britains top share indexlower yesterday, with technicalspointing to further weakness.

Bearish investors came to the fore

as heavyweight commodity stocksRoyal Dutch Shell and Lonmin fell 1.8and 4.1 per cent respectively on lowercrude and metal prices with the 19-commodity Reuters-Jefferies CRBindex down 3.4 per cent.

Silver miner Fresnillo fell 4.6 percent as the metal was set for its worst

week in 30 years.Confidence that a global recovery

could keep demand for raw materialsgrowing was undermined by US datashowing initial jobless claims rose toan eight-month high last week.

This made investors nervous aheadof todays non-farm payrolls data.

Investors are positioned to thedownside for the data, so even if it

just matches expectations thereslikely to be some recovery in stocks,said Richard Hunter, head of equitiesat Hargreaves Lansdown.

UK data highlighted the fragility of

the domestic recovery as Britainsdominant service sector slowed more

than expected in April. The FTSE 100 closed down 64.09

points, or 1.1 per cent, at 5,919.98,having fallen 1.6 per cent on

Wednesday. Volumes were heavy at more than

twice the average of the last 90 trad-ing days.

Trade was dominated by the movesin commodity prices. Cruise company Carnival was the biggest riser, up 4.2per cent, as Brent crude fell by overfive per cent. However the falling oilprice also lifted InternationalConsolidated Airline Group , which

added 2.8 per cent. Technical indicators pointed toscope for plenty of further weakness

within the current trading range,analysts said.

I can certainly see [the FTSE 100]taking out the recent low around5,858 and it could go as low as 5,600,

but it doesnt necessarily mean thatthe market will melt down, said PhilRoberts, chief European technicalstrategist at Barclays Capital.

He added that on the upside it would be unlikely to push much beyond the 6,000 level.

Banks fell after Lloyds BankingGroup , down eight per cent in heavy trade, took a 3.2bn hit for mis-sellingdebt repayment protection insur-ance.

British blue-chip investment man-ager Schroders tumbled 9.2 per centafter suffering an unexpected loss on

its investments in the f irst quarter. A decision from the Bank of

England to keep rates on hold gaveslight support for a short time to theindex as some investors thoughtthere was a small chance rates may rise.

A more dovish stance than someexpected from Jean Claude Trichet,president of the European CentralBank, at a post decision press confer-ence, after it too kept rates on holdreassured investors that monetary policy would not derail a shaky recov-ery.

While the overall mood of traders was downbeat, some company results

offered a glimmer of optimism.Smith & Nephew rose three percent, after the artificial knee and hipmaker posted solid first-quarterresults, prompting Investec Securitiesto upgrade its rating to buy fromhold.

Drinks maker Diageo and WmMorrison Supermarkets rose 1.5 andone per cent respectively after both

beat forecasts for the first threemonths of 2011.

Lloyds leads slide in bankingstocks as FTSE loses groundTHELONDONREPORT

THENEW YORKREPORT


6,100

5,800

5,700

5,600

5,500

5,900

6,000

ANALYSIS l FTSE 5,919.985 May

BEST OF THE BROKERS To appear in Best of the Brokers email your research [email protected]

ANALYSIS l Easyjet400

380

360

340

320

p

17 Mar7 Feb 25 Feb 28 Apr6 Apr

342.905 May

EASYJETNomura expects the airline to report a half-year pre-tax loss of 162m atits update next Tuesday, hammered by rising fuel prices and disruption inNorth Africa. However, the broker expects the weakening dollar to giveeasyJet a rare tailwind, as it runs on a material short dollar position, andpredicts a full-year profit of 160m as revenues per seat rise. Nomuramaintains its neutral rating with a 470p target price.

ANALYSIS l Next2,300

2,100

1,900

p2,300.00

5 May

7 Mar2011 21 Feb 3 May28 Mar 11 Apr

NEXTJP Morgan Cazenove rates the retailer underweight and has raised itstarget price by 50p to 16.70. The broker was pleasantly surprised by thefirms full-year results earlier in the week, despite falling consumer confi-dence and footfall in the wider market. JP Morgan speculates that thewarm weather has pulled forward revenues from the summer, and addsthat its new target price still reflects substantial downside.

ANALYSIS l Weir1,800

1,400

1,000

p

7 Mar2011 21 Feb 3 May21 Mar 4 Apr 18 Apr

1,850.005 May

WEIR GROUPCredit Suisse rates the engineer outperform and has lifted its targetfrom 18.35 to 21.30. The broker has also raised its 2011 profit foreby eight per cent following a bullish interim management statement ein the week, signaling strong earnings momentum for the rest of the yCredit Suisses pre-tax profit estimate of 381m is six per cent ahead consensus, and its target price now represents 10 per cent upside.

Norton RoseThe law firm has appointed renewable energyfinance specialist Antje Gnther as a partner inthe firms Frankfurt office. Gnther, who joinsfrom DLA Piper, where she has worked since2006, represents financial institutions, corpo-

rates and funds in domestic and cross-bordertransactions. Norton Rose opened a thirdGerman office in Hamburg on 1 May, with sevennewly appointed partners and one additionalpartner joining from the firms London office.

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19

Edited by Timothy Barber

BLUEis the colour

On Time

The best new watches for Spring 2011

page 20GONE DIVINWristewear that workswith a blazer as wellas a wetsuit

page 22GETTING TO KNOW PATEKThe family values of theeminent manufacturer

page 28UNDER THE DIALThe work involved in theart of fine watch making

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Even if they never get wet, divers watchesoffer sophisticated options, says Timothy Barber

Divingfor treasure

20 CITYA.M. 6 MAY 2011| On Time

ROLEX COMES TO ONE HYDE PARKIts got a slew of the most expensive propertiesever sold in the world, and now One Hyde Park,the Candy & Candy development in

Knightsbridge where one flat is said to havegone for 136m, has also recently becomehome to Rolexs biggest London showroom.

Owned and managed by Time2 (the companywhich manages watch sales in the SelfrigesWonder Room), it covers 3,000 square feet of retail space, including a couple of dedicated pri-vate suites behi

cityam 2011-05-06

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