Date: Tuesday 12 Jun 2012
LONDON (ShareCast) - Global markets suffered on Monday as early optimism over Spains 100bn euros (80bn pounds) bail-out proved short-lived, amid fears over the strings attached to the international effort to save its banks and concerns about its mushrooming sovereign debt. Stocks initially climbed and Spanish borrowing costs fell on the first day of trading after the Eurozones fourth biggest economy asked for aid. The Ibex-35 in Madrid index rose 5.9 per cent, while shares in Bankia, the ailing bank, climbed 15 per cent. But fears over how the money would be funnelled to banks soon hit sentiment, as questions surrounded the terms of the deal, which will add to Spains debt burden. Having dropped below the 6 per cent mark, Spanish yields - or implied interest rates - on its 10-year debt later moved back above 6.5 per cent. "The government bond market has quickly recognised that the bail-out is adding to pressure on sovereign risk, said Dominic Rossi at Fidelity Worldwide Investment, The Telegraph writes.
House sales have plunged by almost 40% since the peak of the housing market as the lack of available mortgage finance prevents potential buyers from stepping on to the property ladder. In its latest health check of the housing market, the Royal Institution of Chartered Surveyors said that in May the average number of completed sales per surveyor was 15.6. This represents a significant drop from May 2007s figure of 25.4, The institution said that with transactions down and affordable mortgage finance harder to come by, homes were taking much longer to sell. In the three months to May, surveyors sold 23.1% of the homes on their books, a huge fall from the same period in 2007, when they disposed of 40.9%, The Times reports.
Bank of England policy maker Adam Posen has urged the UK central bank to buy assets other than Government bonds. Mr Posen, who will step down from his role in August, added that he was too optimistic when he abandoned a push for more stimulus in April. Further asset purchases by central banks can improve the economic situation we are now in, Mr Posen said in a speech in London. He also said it is time for the major central banks, including the Bank of England, to engage in purchases of assets other than government bonds, The Telegraph says.
Royal Bank of Scotland has risked sparking anger amongst employees after increasing contributions for its final salary pension scheme from zero to 5% of salaries. Over 40,000 employees were told on Monday they would need to make contributions if they wanted to retire with their full entitlement at the age of 60. Staff will be able to retire with full pensions whilst paying no contributions if they continue to work until 65. The change was branded unaffordable by Unite national office David Fleming. He said: With 28,000 workers receiving no pay rise this year, these changes will make access to the pension scheme unaffordable for many. The bank is attempting to push through these changes without any proper negotiations with the union, according to The Telegraph.
The economic payback from the offshore wind industry could see it wipe out most of the UKs current trade gap by 2030, a report today claims. The Centre for Economics & Business Research (CEBR) argues that a more-aggressive approach to investing in the sector could reap rewards of an annual 1 per cent uplift to gross domestic product (GDP), the creation of up to 215,000 jobs and an increase in net exports of some £22.5bn. The report comes as Ian Marchant, chief executive of Perth-based utility group SSE, prepared to warn MPs today that consumers will be forced to pay higher energy bills for many years ahead to fund subsidies to French energy giant EDF, which wants to build a fleet of nuclear power stations, The Scotsman reports.
More than £8bn of firepower is waiting to be invested in rescuing bombed-out companies across Europe as fund managers and rich individuals inject cash into the turnaround industry. The increase in funding earmarked for collapsing businesses, such as yacht-maker Fairline and retailers Bonmarché and Jaeger, has increased eight fold from last year and is set to climb even higher in the face of further stress in Europe. KPMG, which compiled the research into the sudden boon for business rescue, said that the inward flight of capital had jumped from £1bn in 2010-2011 to £8bn this year with 75 UK investors compared with 60 last year. As companies falter under the economic strain, the turnaround investor community has become a prominent source of rescue cash, said Will Wright, restructuring director at KPMG, The Telegraph reports.
Apple has stepped up the cold war against Google by removing the internet companys maps from its phones and computers while striking a deal to integrate Facebooks network into its devices more closely. Tim Cook, Apples chief executive, unveiled a slimmed-down range of Mac computers aimed at stealing a larger slice of the personal computer market. Apple also revealed software upgrades that will ensure that the iPhone and iPad are closely integrated with Facebook, as the two Silicon Valley companies signalled the beginnings of a loose alliance against Google, The Times says.