BUSINESS WITH PERSONALITY

CAROLYN MCCALL TO TAKE RELIEF FOR

BOE’S KING
THE HELM AT EASYJET INFLATION FALLS
BACK TO THREE
GUARDIAN CHIEF FLIES OFF P2 PER CENT P14
Issue 1,100 Wednesday 24 March 2010 www.cityam.com FREE

INSIDER DEALING Darling is

told not to
RAIDS ROCK CITY
ENFORCEMENT
raise taxes
▲

BY STEVE DINNEEN AND EMMA SADOWSKI

SIX people were hauled away by
police yesterday in the biggest ever

insider trading sting seen in the UK.
Senior executives at Deutsche Bank
and Exane BNP Paribas and a trader at
hedge fund Moore Capital were
arrested as the Serious Organised
Crime Agency stormed offices across
the City. A further three men arrest-
ed are not thought to be City workers.
Among those arrested were Julian
Rifat, a London-based equity execu-
tion trader at Moore Capital and Clive
Roberts, who is head of European
sales trading at Exane, which is part
owned by BNP Paribas. The Deutsche
executive arrested was Martyn
Dodgson, a managing director in the
corporate broking department.
Dodgson previously worked at
Lehman Brothers.
Deutsche, Exane and Moore con-
firmed their employees were
involved. It is believed that all those
implicated were trading on personal
accounts.
The operation is the result of three
years’ investigation by 143 FSA
enforcement officers, headed up by
Margaret Cole. Documents and com-
puters have been seized from the
homes and offices of the men
involved, including residential
addresses in Oxfordshire.
The amount the insider trading
Margaret Cole of the FSA is in charge of the crackdown. Traders at Deutsche, Exane BNP Paribas and Moore Capital have been arrested.
ring raked in has not been revealed
but is speculated it will total millions
given the scale of the operation –
described by the FSA as “sophisticated
and long-running”.
The FSA alleges those arrested
passed inside information to traders,
either directly or via middleman, to
make “significant profits”.
Rumours have been circling in the
City for weeks about a possible insid-
er trading swoop involving Moore. In
a separate incident, an employee of
the firm was fined £52,000 in 2008
for insider dealing.
A Moore spokesman said:
“Representatives of the FSA were at
our London office to serve a search
warrant for documents relating to an
employee of Moore Europe. The inves-
tigation concerns possible insider
dealing and the investigation of the
employee does not involve any of the
funds managed by Moore Capital.
“The employee has been placed on
administrative leave pending comple-
tion of the investigation.”
Moore is a leading light of the
hedge fund world. It is run by its
founder Louis Bacon and star trader
Greg Coffey. Neither have been impli-
cated in the ring.
The raids come just weeks after for-
mer Cazenove banker Malcolm
Calvert was jailed for 21 months after
an insider trading trial.
▲
BUDGET
BY DAVID CROW
ALISTAIR Darling should not
announce any new tax rises in today’s
Budget, according to our panel of City
and business professionals.
And he should cut spending across
all government departments, instead
of “ring-fencing” areas like education
and health.
Sixty-nine per cent of panelists were
against any new taxation, although 30
per cent thought Darling should raise
taxes.
The City A.M./PHI Panel, which has
been specially recruited in conjunc-
tion with PoliticsHome.com to repre-
sent London’s financial community,
was also asked whether the chancellor
should protect some departments.
The vast majority (75 per cent) said
the axe should fall on all areas, while
25 per cent thought some depart-
ments should escape reductions.
Of those panelists that thought
some areas should be spared cuts, 65
per cent said that spending on health
should be ring-fenced.
Fifty six-per cent said spending on
education should be shielded from
cuts, while 53 per cent said cuts at the
Ministry of Defence should be avoided.
BUDGET CHECKLIST: P6-7

FTSE 100 ▲5,673.63 +29.09 DOW ▲10,888.83 +102.94 NASDAQ ▲2,415.24 +19.84 £/$ 1.50 t-0.01 £/¤ 1.11 unc ¤/$ 1.35 unc Certified Distribution
01/02/10 – 28/02/10 is 94,566
 2 News
Don’t expect miracles from Darling
EDITOR’S LETTER
ALLISTER HEATH
THERE is just one thing going for
Alistair Darling today and that is low
expectations. Nobody is anticipating
any miracles from the Chancellor, for
whom this will probably be the last
Budget, regardless of the outcome of
the general election. His growth fore-
casts will be too optimistic once
again, he won’t be open enough
about the looming tax hikes and
spending cuts – but then we are
already unofficially in the middle of
an election campaign. The bigger
problem for Britain is not so much the
policies to be announced today – it is
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WHAT THE OTHER PAPERS SAY THIS MORNING
POKER PROVES TOUGH GAMBLE FOR
888
888 Holdings took a near 30 per cent
hit on poker revenues last year, but
the online gambling operator said it
was confident of tapping into its well
of social players and predicted a
return to poker growth in the second
half of 2010. Poker was the weak link
in results for the year to December 31
that saw revenues fall 4 per cent to
$246.7m (£164m) and pre-tax profit
decline 31 per cent to $27.6m. Poker
revenues fell from $71.6m to $51.6m.
RANDOM HOUSE FEARS IPAD PRICE
WAR
Random House, the world’s largest
book publisher by sales, could keep
its books from Apple’s iPad when it
goes on sale next month, as the
Bertelsmann unit fears the effects of
the tablet device on the pricing of
electronic books.
what won’t be said and the measures
that have already been agreed that are
proving most dangerous. Take nation-
al insurance contributions (NICs),
which are being hiked substantially. A
paper by Andrew Lilico and Hiba
Sameen of Policy Exchange shows that
NICs are the most damaging possible
tax to increase. The move will substan-
tially reduce growth and employment.
Lilico and Sameen also report that
each percentage point rise in the total
tax rate will cause a fall of between
0.05 and 0.2 percentage points in the
growth rate of the economy, according
to academic studies.
Other tax hikes are just as badly
thought-through. The Centre for
Economics and Business Research has
suggested that the 50p rate will lose
the government £800m a year and cost
140,000 jobs over time. However, a new
book – How to cut public spending
(and still win an election), edited by
Matthew Sinclair and published by
BiteBack – calculates that the effect
may be even more disastrous. The
McCall leaves
the Guardian
MEDIA
▲
BY MARK SHAPLAND
EASYJET last night unveiled Carolyn
McCall as its new chief executive,
replacing Andy Harrison who stands
down in June.
The decision by McCall, currently
head of Guardian Media Group
(GMG), shocked the media world.
Her move comes after GMG posted
pre-tax losses of £90m in the year to
March 2009, compared with a profit
of £306m the previous year. The
paper is the process of cutting 150
jobs in a restructuring overseen by
McCall.
McCall was responsible for the
Guardian moving from a broadsheet
format to the Berliner, as well as sell-
ing a vast chunk of the group’s
regional newspapers.
EasyJet is also struggling having
EU REWRITES INTERNATIONAL
DIVORCE RULES
An overhaul for the rules governing
international divorces withint the
European Union will be unveiled
today in a move to stop couples squab-
bling over which country’s court
should handle their split. The rules,
however, will apply to only 10 of the
EU’s 27 countries, including France,
Italy and Spain, highlighting the
resistance to handing over such a del-
icate dossier to Brussels.
IBM FACES EU ANTITRUST COMPLAINT
OVER “TYING” CLAIMS
Antitrust problems for IBM mounted
on Tuesday when a fresh complaint
about its business practices was filed
with Europe’s top competition regula-
tor. The new complaint comes from
TurboHercules, a French company,
which is accusing the US group of
refusing to allow customers to run
IBM’s mainframe operating systems
on anything other than IBM main-
frame hardware.
Treasury itself says that taxable
income elasticity – the percentage
change in taxable income declared by
individuals for each 1 per cent
decrease in post-tax income – is 0.35
per cent. This means that a £1bn tax
hike would in fact yield just £650m.
Sinclair highlights research by HMRC
which has suggested the negative
effect on reported income may be even
larger than the usual estimates, which
rely on evidence from the 1980s when
capital and high-earning labour were a
lot less mobile – and they imply poten-
tial losses of revenue as high as £4.5bn
in 2010/11. Darling’s decision to phase
out high earners’ personal allowances
and cut their pension relief will mod-
erate this; but it is clear that the new
top rate of tax – which kicks in next
month – will hurt the economy with-
out yielding much, if any, revenue.
In the 2009 Budget, the government
set out plans to increase fuel duty by
2p per litre in September 2009 – from
54.19 pence per litre to 56.19 pence per
litre – and then by another 1p per litre
lost its chairman, finance director
and chief executive last year.
Carolyn McCall said: “I am proud to
become the chief executive of a com-
pany that has achieved so much in
the past 15 years, not least a leading
presence on Europe’s most popular
routes.”
McCall was described by
Management Today as “one of the
toughest operators to have risen
through the Guardian Media Group’s
ranks.” McCall fought off Carl Leaver,
former international director of
Marks and Spencer, to the top job.
Carolyn McCall fought
off Carl Leaver, former
international director
of Marks and Spencer
to get the job
BANKS OPPOSE FINANCIAL SERVICES
AUTHORITY OVER PLAN TO BAN
“LIARS’ LOANS”
The Financial Services Authority is
facing fierce objections from some of
Britain’s biggest lenders over propos-
als to ban self-certified mortgages.
The City watchdog said that large
banks and building societies had
opposed a ban on the so-called liars’
loans that allow borrowers to state
their own income without documen-
tary proof, because it would be unfair
on the self-employed and could lead
to an increase in mortgage fraud.
TIME WARNER LEADS PACK IN RACE
FOR MGM
Time Warner emerged yesterday as
the front-runner in the race to buy
the struggling Metro-Goldwyn-Mayer
film studio — but, in the best tradi-
tion of James Bond, the plot was not
quite as simple as it seemed.
each year from 2010 to 2013. This is
despite the fact that Britain already
has the equal third-highest tax compo-
nent for petrol and the highest tax
component for diesel in the EU.
Motorists are taxed at a far higher rate
than the cost of maintaining the road
network and the greenhouse gas emis-
sions from road transport can justify,
so any further taxes on motorists
announced today would make the tax
system even less fair and unnecessarily
hike the cost of conducting business.
It will be worth bearing all of this in
mind when the Chancellor gets up to
deliver his speech this afternoon. All of
the focus will be on Darling’s headline-
grabbing initiatives, from more bank
accounts for the poor to green invest-
ment funds, and on his dubious esti-
mates for the budget deficit, national
debt and GDP growth. Yet the real
story is the cumulative errors made by
the government over the past 13 years
– today’s announcement is merely the
bitter icing on a very nasty cake.
allister.heath@cityam.com
Greek Prime Minister George Papandreou’s debt crisis has forced new rules Picture: REUTERS
CDS market opening up
FINANCIAL SERVICES
▲
BY MARK SHAPLAND
THE Greek debt crisis and the role
played by Goldman Sachs has forced
legislators internationally to work on
new rules to regulate the $450 tril-
lion (£299 trillion) privately traded
derivatives markets.
Governments want regulators to
have access to trade information in
the markets, including positions held
by large counterparties.
Depository Trust & Clearing (DTCC)
DAI-ICHI MUTUAL UNVEILS BIGGEST
SHARE OFFERS SINCE THE GREAT
RECESSION
Dai-Ichi Mutual Life in Japan is to
launch the world's biggest public
offering since the Great Recession,
raising $11bn (£7.3bn) in the latest
sign of returning confidence in global
markets. It is the largest share offer in
Japan since 1998 and the largest
worldwide since the Visa’s $20bn sale
in March 2008
FRANCE DITCHES CARBON TAX AS
SOCIAL PROTESTS MOUNT
France is facing its own “spring of dis-
content” as strikes shut schools,
courts, railways and metro services,
and trade unions vowed mass protests
across the country. President Nicolas
Sarkozy scrapped the country’s pro-
posed carbon tax and reshuffled his
cabinet in populist tilt after suffering
a crushing electoral defeat.
CITYA.M. 24 MARCH 2010
NEWS | IN BRIEF
Eat chewing over sale
Eat sandwich chain owner Penta Capital
is in early stage talks with a single party
to sell at least part of the business,
which provides a popular eating spot for
City workers. The chain, which was set
up 14 years ago by Niall and Faith
MacArthur then sold to Penta, now has
more than 100 outlets.
Daimler charged with bribery
Daimler was charged yesterday by US
prosecutors with bribing foreign officials
in order to win business deals.
ELECTION2010
Tory lead increases by 1 point
The Conservative lead in the upcoming
election remains at four points,
according to the YouGov/Sun daily
poll. The Tories are on 37 per cent (up
one per cent), Labour is on 33 per
cent (up one per cent) and the Liberal
Democrats are on 18 per cent (down
two per cent). There has been little
impact from the fake lobbying sting.
will lead the way, announcing yester-
day that it plans to give regulators
direct access to credit default swap
information held in its warehouse,
including data specific to a trade
counterparty’s positions.
The DTCC holds data on around
2.3m credit default swap contracts
from trade counterparties located in
52 countries, it said in a release.
“It is a bedrock principle of the
Warehouse that all interested regula-
tors should have unfettered access to
Warehouse information,” it said.
GM PICTURE BRIGHTENS AS SALES
RISE
General Motors appears to be making
progress in the first quarter, benefit-
ing from savings won in bankruptcy
court, an improving economy and
firmer pricing. At the same time, the
US’s largest car maker has seen sales
rise and is on track to produce 75 per
cent more vehicles in the first quarter
in North America than a year ago.
Some analysts believe GM could come
close to breaking even in the first
three months of the year – a mile-
stone after years of major losses.
DIAGEO PULLS OUT RÖKK IN VODKA
WARS
Diageo PLC plans to unveil a Swedish
vodka in the US this summer in a
direct assault on Constellation
Brand’s Svedka, a fast-growing “cheap
chic” brand that has stolen market
share from Diageo’s Smirnoff.
CITYA.M. 24 MARCH 2010
Network Rail,
British Gas
set to strike
▲
INDUSTRIAL ACTION
BY EMMA SADOWSKI
NETWORK Rail and British Gas
joined the ranks of British Airways
(BA) yesterday after staff at the two
companies voted in favour of a strike
action.
Network Rail sat down with the
Rail, Maritime & Transport (RMT)
union yesterday to come to an agree-
ment over a proposal by the rail oper-
ator to cut 1,500 maintenance jobs.
Maintenance and signal staff voted
to launch an industrial action should
Network Rail follow through with its
proposed cuts, deeming it unsafe.
“There is already a shortage of staff
and to be axing maintenance posts
and lumping extra work onto sig-
nallers under these circumstances is
a reckless gamble with rail safety,”
said Bob Crow, RMT general secretary.
Similarly, British Gas engineers
yesterday voted 82 per cent in favor of
strike action over “macho manage-
ment bullying” according to trade
union, GMB.
GMB has given management a
week to respond to the threatened
walk out, while a spokesperson from
British Gas said: “We have robust con-
tingency plans in place to make sure
our service to customers is unaffect-
ed, and we remain committed to
talking with the GMB.”
The news comes days after BA
cabin crew concluded the first of two
walkout periods on Monday, with the
second to start 27 March.
The airline said it plans to operate
70 per cent of its long haul and 55
per cent of its short haul flights from
Heathrow during the four day strike.
BA and Unite, the union represent-
ing the striking cabin crew, have yet
to come to an agreement.
FAST FACTS | STRIKE ACTIONS
● 3,700 British Gas engineers voted on strike.
● 20,000 Network Rail staff voted on strike.
● 12,000 BA staff voted on a strike.
News 3
Boots refuses
EX-GOLDMAN CHAIR TO HEAD MF GLOBAL
to back Hewitt
after lobbygate
▲
POLITICS
BY DAVID CROW
ALLIANCE Boots is refusing to back
special consultant Patricia Hewitt,
after she was sensationally suspended
from the Labour Party over the cash
for lobbying scandal.
A spokesperson for the leading
pharmacy chain said her contract was
“still in place” and that it was being
“reviewed regularly”, but she would
not confirm that the former health
secretary’s job was safe.
She added: “Hewitt has not under-
taken lobbying activities on behalf of
the business and it was never intend-
ed for her to create a direct access
point to governments.”
But Hewitt’s job at BT, where she
earns £75,000 a year as a non-execu-
tive director, is not under threat.
Sources at BT said that the lobbying
scandal was a matter for Hewitt and
the Labour Party, and that she would
remain on the telecom firm’s board.
“The company is happy with her
performance as a non-executive direc-
tor,” a BT spokesman said.
Private equity firm Cinven, which
specialises in buying healthcare com-
panies, also employs Hewitt as an
JON Corzine, a one-time Goldman Sachs chair and former New Jersey governor, was yes- adviser. It refused to comment.
terday named as the new chief executive officer of MF Global Holdings, a futures and Hewitt was suspended from the
options broker that has lost money for the last four quarters. MF Global shares soared Labour Party after being secretly
nine per cent on the news that Corzine, 63, would replace Bernard Dan. Corzine will filmed apparently offering access to
start the new role immediately. Picture: REUTERS ministers in exchange for cash.
CITYA.M. 24 MARCH 2010 Focus on L&G 5

L&G looks to
Chief executive Tim
Breedon has ruled
out any large
acquisitions. He
says L&G prefers
start-ups overseas,

new climes as
which are not
dependent on other
people’s legacies.
Although L&G has
seen a sales dip, it
boosted profits by

profit returns
slashing £69m of
annual expenses.
▲

INSURANCE L&G’s existing tie-ups with local

BY OLIVER SHAH lenders in India and the Gulf.
But in a thinly-veiled dig at rival
LEGAL & General is casting its eyes to Prudential, which is planning a

Good news, but uncertainties persist

emerging markets for more joint ven-
tures after a forecast-smashing set of
final results saw the insurer swing
back into the black.
The group delighted investors with
a surprise 33 per cent boost to its final
dividend, which brought the total
payout to 3.84p. Higher mortality
rates and a pick-up in performance at
L&G’s fund management division
helped produce a £1.2bn pre-tax prof-
it under IFRS accounting, an improve-
ment on last year’s £2.2bn loss.
Chief executive Tim Breedon told
reporters the boom in the company’s
cash generation, which more than
doubled to £699m, would help fund
more bancassurance joint ventures
overseas. Breedon said there was no
focus on a specific region but “we’re
looking for bancassurance in any
market we can make money in”.
He hopes to repeat the success of
$35.5bn (£23.6bn) merger with
American International Assurance in
the Far East, Breedon ruled out any
large acquisitions.
“What we don’t need to do is trans-
formational M&A. We like start-ups
overseas because you know what
you’re getting, and we don’t like
other people’s legacies,” he said.
L&G saw sales fall seven per cent in
2009, but cut annual expenses by
£69m. Breedon said the company
would continue its transformation
into a lower-cost, capital-light model.
FAST FACTS | LEGAL & GENERAL
● L&G’s investment management arm is the
biggest institutional shareholder in the UK, with
£175bn of assets in index tracking funds.
● The company slashed its dividend by 50 per
cent during the financial crisis in 2008.
LEGAL & GENERAL was in a bullish
mood yesterday, charging back into
the black with a £1.2bn pre-tax profit
under IFRS standards thanks to a
barnstorming performance at its UK
risk business.
Worries over capital levels were
also eased, after net cash generation
rose 118 per cent to £699m, ahead of
the £450m target announced at the
start of 2009. The insurance giant
also managed to bring in £69m of
annualised cost savings, compared to
expectations of £50m.
Having finished the year with a
£3.1bn capital surplus, investors are
now hoping for much faster hikes in
the dividend. Unfortunately, those ANALYSIS l Legal & General
hopes are likely to remain just that. 90 p 85.10
L&G will hoard capital as long as 23 Mar
uncertainty over the new Solvency II 85
standards remains.
And new business figures for 80
2009, which were released last
month, were weak, with sales falling 75
seven per cent to £1.4bn on an annu-
al premium equivalent basis. 70
Yesterday’s better-than-expected
65
figures are welcome. But with all the 13 Jan 2 Feb 22 Feb 12 Mar
uncertainties, it is unclear that the
insurer can keep busting expecta-
tions. Investors would be wise to use
any meaningful strength in the
share price as a selling opportunity.
BOTTOMLINE
Analysis by David Crow
 6 Focus on the Budget CITYA.M. 24 MARCH 2010

Darling prepares for

last throw of the dice
David Crow identifies
the things to look out
for in today’s Budget
PUBLIC
FINANCES/ECONOMICS
l Darling is expected to stand by his
growth forecasts of between 1 and 1.5
per cent this for year. In 2011, he
expects the economy to grow between
3.25 and 3.75 per cent.
l Public sector net borrowing will come
in around £10bn lower than the chancel-
lor’s £178bn forecast, although it is still
expected to be at a post-war high of
around 12 per cent of GDP.
l The chancellor is likely to forecast a
1.75 per cent rise in CPI inflation in
2010, falling to 1.6 per cent in 2011.
PUBLIC SPENDING
fall, but there is unlikely to be any detail
on cuts in today’s Budget. Instead,
Darling will try to reassure the markets
by announcing which departments will
bear the brunt of initial cuts.
l There are unlikely to be any pre-elec-
tion “giveaways”, although the chancel-
lor will announce a handful of measures
to stem unemployment and boost green
investment.
l Darling will confirm plans to freeze
public sector pay for the highest earners.
BANKS
l In the pre-Budget report, the chan-
cellor lowered his estimate of the total
taxpayer loss from the bank bailout
from £50bn to £10bn. He will confirm
this, as well as backing for a global
bank levy to help repair public finances.
INCOME TAX
l All income tax bands expected to be
frozen meaning a higher-rate taxpayer
per cent levy on individual bank bonuses
above £25,000. The measure is likely to
end on 5 April 2010.
l Dividends potentially liable to the
higher rate of tax will be taxed at 42.5
per cent. The dividend trust rate will be
increased to 42.5 per cent, and the gen-
eral trust rate of tax will be increased
from 40 per cent to 50 per cent.
l Personal allowances will be with-
drawn for those with adjusted net
income above £100,000, reducing by £1
for every £2 of income above £100,000.
l From April 2012, the starting point
for the 40 per cent income tax rate is
likely to be frozen for one year at
£43,000.
NATIONAL
INSURANCE
l All employer, employee and self-
employed rates of national insurance
(NI) to rise by a further 0.5 per cent
cellor has said he is unlikely to announce
further rises in the Budget.
reduced rate of corporation tax of 10 per
cent for income derived from patents.
from April 2011. Starting point from l The chancellor is unlikely to announce
which NI is payable to be raised. any changes in the headline rate of cor-

l As set out in December’s pre-Budget

report, total public spending will rise by
£31bn this year, a 2.2 per cent rise in
real terms.
l From 2011, total public spending will
earning more than £43,875 will pay an
additional £489 in tax.
l A new additional rate of income tax
at 50 per cent will be announced for
those on incomes over £150,000.
l There are no plans to extend the 50
BUSINESS
l VAT returned to 17.5 per cent on 1
January from 15 per cent, and the chan-
poration tax.
l He is expected to reaffirm plans to
PENSIONS AND
reform the controlled foreign company
rules.
INHERITANCE TAX
l A “patent box” for UK companies is l In the pre-Budget report, Darling said
likely to be announced, applying a the basic state pension would rise by 2.5

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CITYA.M. 24 MARCH 2010 Focus on the Budget 7

Alistair Darling is unlikely to give much

detail on spending cuts
BUDGET2010
Picture: PA

l Darling is likely to restrict tax relief on

pensions savings from April 2011 for
PICK UP
people with gross incomes of over
£150,000. THURSDAY’S

@
l Government contributions to public
service pensions will be capped.
l Individual inheritance tax allowance is
likely to be frozen at £325,000 for the
CITY A.M.
next year.
FOR FULL
ALCOHOL AND
TOBACCO DUTY COVERAGE OF
l Alcohol duty is expected to rise by
five per cent, under the existing duty
THE BUDGET MORE NEWS
ONLINE AT
escalator system that imposes rises of www.cityam.com
two per cent above inflation.
l Darling is likely to hike duty on ciga-
rettes, cigars and tobacco, citing the
cost to the health service.

per cent, but earnings-based top-ups
and a reward for delaying drawing the
state pension will be frozen. Some
expect Darling to announce a pension
tax credit to compensate those who
have lost out.
l For those earning over £130,000,
employer pension contributions are like-
ly to be included in definition of tax
income relating to pensions tax relief.
ANTI-AVOIDANCE TAX
MEASURES
l Darling is expected to announce a
crackdown on offshore tax evasion that
would see the maximum penalty double
to 200 per cent of total tax owed.
l He will also outline new measures to
reduce tax avoidance schemes.
GREEN MEASURES
l The government will unveil a new
£2bn investment fund to finance green
projects such as wind farms and high-
speed railways.

CITY VIEWS: WHAT ARE YOU EXPECTING FROM THE

BUDGET TODAY? Interviews by Ally Bacon

DAVID TROWBRIDGE | LIQUID CAPITAL

“The Budget will be predictable. I’m expect-
ing no surprises, no headlines will be made
of it. It is, after all, two months until the
general election.”

ANDREW TARRY | NYRAS CAPITAL

“Alistair Darling will be safe and pre-
dictable so that Labour will be re-elected. I
don’t expect the market to react at all to
what he has to say.”

ANDY CULLEN | SEC FINEX

“I’ve given up worrying! Our man in Number
11 will look for election votes, giving the
public sector the votes without a doubt. He
needs to cut public spending and I can’t
see him kicking back civil servants.”

PAUL HAYWARD | FINANCIAL SERVICES CONSULTANT

“It will be very safe, but the government
needs to find the money somewhere. I doubt
it will be through the tax route, more likely it
will be VAT possibly, or through a curtail-
ment of allowances.”
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CITYA.M. 24 MARCH 2010
Volkswagen set to raise £4bn
AUTOMOTIVE
▲
BY DAVID HELLIER
GERMAN car giant Volkswagen (VW)
is issuing 65m new preferred shares,
or roughly half of its authorised capi-
tal, in a stock offering worth around
£4.04bn.
Europe’s largest carmaker said yes-
terday that the pre-placement of the
non-voting stock had already begun
for institutional investors.
Subscriptions for the new shares are
expected to run from 31 March to 13
April.
Sky worried
despite likely
revenue boost
MEDIA
▲
BY STEVE DINNEEN
BSKYB could generate additional rev-
enue of more than £700m if it is
allowed to sell Premier League foot-
ball through Freeview.
In a move described by Sky as a
“sop”, Ofcom is likely to allow the
broadcaster to go ahead with a proj-
ect dreamed up in 2007 codenamed
“Picnic”. This would involve setting
up a subscription channel for
Premier League football that viewers
can access through a set-top box with-
out subscribing to a cable or satellite
provider.
The move will coincide with an
expected announcement tomorrow
that Ofcom will slash the amount Sky
can charge its rivals to screen its pre-
mium content by up to a third.
Sky has previously said it could
attract an additional 4m viewers if it
is allowed to go ahead with Picnic. If
it charges £15 a month for the serv-
ice – the minimum price it is likely to
cost BT and Virgin screen Premier
Shares in VW dropped fast, trading
4.7 per cent lower at €69.50 on the
back of the news, although VW had
flagged as early as December its plans
for a placement in the first half of
this year.
Finance chief Hans Dieter Poetsch
said this month he expected to raise
about £4bn in fresh equity in order to
protect its credit ratings and replace
funds used to buy half of Porsche’s
sports car business at the end of last
year.
“There’s been some sizeable inter-
est in this deal,” said a source close to
League games – it would generate a
staggering £720m a year in revenue.
This would more than absorb any
dip in revenue caused by a decrease
in the wholesale price it could charge
its rivals. This is actually likely to
increase as more Virgin subscribers
and new BT customers take advan-
tage of the lower prices.
One industry source told City A.M.
Sky is not worried about short term
revenue, but is concerned about
rivals chipping away at its subscrip-
tion base. He said firms such as Virgin
and BT could conceivably be in a posi-
tion to make a joint bid for rights to
screen Premier League matches if
they are able to ramp up their sub-
scriber bases over the next five years.
A Sky spokesman said: “We would
have loved to offer Sky Sports on digi-
tal terrestrial TV three years ago. It’s
disappointing that viewers have
missed out because of Ofcom’s
bureaucratic logjam. If it was decided
that Picnic could go ahead, we would
need to consider whether it still made
sense as a business opportunity.”
News 9
CRAIG COBEN
BOA MERRILL
LYNCH
for Nordea, Aegon, AP Møller
Maersk, Swedbank, Infineon, Alpha
Bank and PKO BP in 2009 alone.
He has worked on jumbo privatisa-
tions for France Telecom, Brisa Auto-
estradas de Portugal, EADS, Petrol
the transaction. Offisi, Hellenic Telecom, GALP and
The offer is open to European and Israeli Oil Refineries Limited, as well
US investors. It is not being mixed as significant IPOs and convertible
with a bond issue, as some expected. THE Merrill team on the VW issue is and exchangeable bond offerings in
Major shareholders including headed by Craig Coben, who joined over a dozen jurisdictions.
Porsche SE, VW’s home state of Lower the bank in 2005 and is now head of Coben graduated from Yale
Saxony and Qatar’s sovereign wealth equity capital markets for Europe, University and Harvard Law School in
fund have all agreed to assign and Middle East and Africa (EMEA). the US before practising law until
transfer their subscription rights to Coben, who is joined on this deal by 1997.
the syndicate banks, VW said. Stefan Albrecht and Oliver Holborn, Coben is active in a wide range of
Global coordinators on the deal are has led some of the most important public service activities and serves on
BoA Merrill Lynch, which is joint and innovative equity and equity- the board of govenors of Tower
global coordinator and joint linked offerings in EMEA in recent Hamlets College.
bookrunner, JP Morgan, Citigroup, years, including jumbo capital-raisings David Hellier
Deutsche Bank and HSBC.
Pru seeking
shareholder
liaison boss
▲
EXCLUSIVE
BY OLIVER SHAH
PRUDENTIAL is hunting for a new
director of investor relations (IR) at
time when a series of tumultuous
exchanges have strained the rapport
between shareholders and company
management, City A.M. has learned.
Headhunter Taylor Bennett has
been hired to find a replacement for
BSkyB chief executive Jeremy Darroch is worried Picture: Micha Theiner/CITY A.M. Matt Lilley, who will move over to
focus on business strategy. Although
ANALYSIS l How Ofcom’s ruling tomorrow could affect Sky the search began six months ago, pre-
dating Prudential’s $35.5bn (£23.6bn)
Revenue bid for American International
Assurance, the incoming IR boss will
it could have to guide investors through a
earn if record-breaking rights issue and the
Annual it hits Increased ambitious Asian deal.
revenue its 2007 annual With its IR operation in flux,
earned by target revenue Prudential has temporarily merged
Sky from of 4m investor work with its communica-
wholesaling Amount Sky Picnic tions team. The makeshift arrange-
Sky Sports could lose subscribers ment is understood to be the reason
several shareholder meetings were
to Virgin if forced botched when the AIA deal was first
to drop announced, irritating fund managers
its prices who complained about rushed ses-
by a sions and late scheduling.
third The Holborn-based insurer is said
£200m £66m £720m £534m
to have interviewed around six candi-
dates for the job, which comes with a
pay package of up to £250,000.
 The Capitalist
10
CITY TAKES
AN OUTSIDE
PUNT ON
THE BUBBLY
AMUSED ripples radiated from the City
yesterday following this column’s specula-
tion as to what tipple George Osborne –
likely to be the country’s next chancellor if
the Tories win the election – might drink
if he ends up presenting the next Budget.
It seems most readers agreed with The
Capitalist’s prediction that Osborne would
stick to boring old H2O, despite his tradi-
tional entitlement to something stronger
while he presents his speech. (The current
run of austerity started with Gordon
Brown as chancellor, who drank Highland
spring water in comparison to his
Conservative predecessor Ken Clarke’s
preference for a tot of Scotch whisky.)
“I’ve only ever seen George drink water
at events,” mused one reader, racking his
brains. “But if he were to drink, my money
would be on him being a G&T man…”
“Definitely gin and tonic when he’s off
duty, but I can hardly see him harking
back to the old school by knocking back
an alcoholic drink in the chamber,”
another scribbled in.
The Tories themselves are keeping very
quiet on the matter, though yet another
interested party suggests a new tipple
entirely – champagne.
Photo Credit: Nova Scotia Tourism
Our money’s on water for Osborne’s tipple – though the City’s gunning for champers Pictures: REX
“Given Osborne’s well-documented lik-
ing for hanging out with Rothschilds and
kicking back on billionaires’ yachts – not
to mention his Bullingdon Club history –
the smart money’s got to be on the bub-
bly,” he chuckles.
Only time will tell.
HELL FIRE
Speaking of the Budget this morning, the
spread betters – as usual – are having a
field day by putting out markets on
incumbent chancellor Alistair Darling’s
every miniscule tic.
For those punters looking for truly long
odds, Extrabet is offering 100/1 on Darling
trotting out the phrase “the forces of
The holiday for whale watchers
and price watchers alike.
EDITED BY
VICTORIA BATES
GOT A STORY? EMAIL
thecapitalist@cityam.com
hell”, which he recently used to describe a
drubbing he received from Number 10.
Nothing like reopening old wounds, eh?
FLYING HIGH BABY LOVE
Musical chairs over at financial PR agency To a glitzy do last night at the
Buchanan, part of the WPP group, where
Bobby Morse has replaced the long-serving
Richard Oldworth as senior partner.
You’d have thought Oldworth, now
executive chairman, would relish the
chance to put his feet up a bit, but he
insists he’ll still be as hands-on as ever
with his big-name clients, including inter-
dealer broker BGC Partners.
“No, I won’t be spending any more time
on the golf course,” he laughs, ruefully.
CITYA.M. 24 MARCH 2010
“Osborne’s
only been
seen to drink
water at
events –
though the
City hopes
he’ll choose
HARD SPIRITS champagne”
Flying the flag for Blighty this week has
been William Chase (above), the founder
of posh snack brand Tyrrells – who netted
an award at San Francisco’s World Spirits
Competition for producing the world’s
best vodka. Chase tells me his aim is now
to make the finest gin in the world, too,
out of his farm’s organic apples. Now
that’s the kind of ambition The Capitalist
would be happy to drink to…
Institute of Contemporary Arts, where
Veuve Clicquot champagne unveiled its
2010 business woman of the year.
Wresting the crown from last year’s
winner, Random House chief Gail Rebuck,
was Laura Tenison (right), founder of preg-
nancy and baby retail group JoJo Maman
Bébé – also commended by the judges for
her innovative social responsibility pro-
grammes, including working with a
Mozambique infant mortality charity.
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CITYA.M. 24 MARCH 2010
Stroud & Swindon chief executive John Sutherland is positive on the future outlook
F&C tables
 !*,(
!(,(
!%,(
C-Quadrat
'' &( *! "!&% (&$ "*/ %.
€55m offer
▲
FINANCIAL SERVICES
BY MARK SHAPLAND
F&C Asset Management, the London
fund manager, has officially made an
offer for Austria’s C-Quadrat.
The offer, submitted to the
Austrian Takeover Commission,
stands at €12.50 (£11.20) per share –
valuing C-Quadrat at €54.5m overall.
It is understood C-Quadrat
founders Alexander Schultz and
Thomas Reiss intend to keep a stake
in the fund business.
The takeover would give F&C Asset
Management a greater presence in
Central Europe and it said the deal
was part of the company’s strategy to
“buy specialist businesses to do things
we currently don’t.”
F&C plans to expand via acquisi-
tions and said it would look at further
deals on top of its takeover of C-
Quadrat.
If the deal goes through, F&C’s
ownership will enable C-Quadrat to
develop into the British markets or
the US. Leo Willert, head of trading at
C-Quadrat subsidiary ARTS said: “We
are really looking forward to this. The
fantasy is that we could get into new
markets and trade new universes.”
Under current legislation EU-regu-
lated funds cannot invest in the UK’s
open-ended investment companies
and unit trusts and US funds.
“We could start with a UK open-
ended investment company and deal
with these … or go to America and
build a trust there and trade the ‘no-
load, no-transaction fee’ funds there. I
think we have 1,500 of these no trans-
action fee funds in our database,"
Willert added.
Coventry and Stroud join
▲
FINANCIAL SERVICES
BY CAITLIN NOLAN
BRITAIN’S third-largest building soci-
ety Coventry Building yesterday
announced a merger deal with
Stroud & Swindon Building Society, a
move that will create a combined
business with an overall asset size of
£21bn. Total combined membership
will reach approximately 1.5m.

"*/ ("% 
*! )* '( **"% %  ("%
as clients
'$ "# (" -"*! %(/
The merger will be effective as of 1
September and no branches or agen-
cies of either company will close as a
result. No redundancies are expected
because of the merger.
On the merger, Coventry chief
executive David Stewart said: “I
believe that the merger with Stroud
& Swindon Building Society will help
us build on recent successes and
bring the benefits of our prudent and
News 11
member-focused approach to a wider
membership.”
Stroud & Swindon chief executive
John Sutherland said: “In considering
a number of options, we believe that
Coventry Building Society’s commit-
ment to long term member value,
fairness, strategic prudence and local
communities, provides Stroud &
Swindon members with the best pos-
sible future.”
RAB bullish
come back
▲
HEDGE FUNDS
BY HARRY BANKS
HEDGE fund firm RAB Capital yester-
day confirmed clients are returning
to its funds that were battered by the
credit crisis, after it swung to a loss in
2009 and cut its dividend.
RAB, which specialises in energy
and commodities funds and is also
well-known for its failed bet on bank
Northern Rock, yesterday reported a
loss before tax and exceptional items
of £6.9m, compared with a profit of
£3.8m in 2008.
Assets under management recov-
ered to $1.35bn at the end of 2009
from a low of $1.26bn at mid-year as
clients returned to its funds in the
second half. But that was still far
below the more than $7bn assets
under management in December
2007.
RAB’s inflows come as investors
slowly return to the $1.6 trillion
hedge fund industry, which suffered
big losses in 2008 but recouped much
of that last year. According to Hedge
Fund Research, clients reinvested a
net $13.8bn into hedge funds in the
fourth quarter.
“We’re seeing generally a lot more
interest from investors,” RAB chief
executive Stephen Couttie said. He
added that assets had changed little
since December, as client inflows bal-
anced out previously demanded out-
flows.
ANALYSIS l RAB Capital
21 p
16.25
20 23 Mar
  
C-Quadrat is principally focused on
investors in Austria and Germany,
with some funds registered in
Hungary, Slovakia, Poland and the
Czech Republic, the latter countries
mostly with savings plans than lump
sums.
315p is too low, says Gulfsands Petroleum Pearl nearing bond deal
▲
ENERGY
BY HARRY BANKS
GULFSANDS Petroleum said yester-
day that a rebuffed preliminary bid
approach received on 18 March was
at 315p per share.
The board said it was unanimous-
ly of the view that the proposal is
wholly inadequate, highly condition-
al and materially undervalues the
company.
 
---"*/"%.&+#"'!&%''
Shares in the group closed down
3.5p yesterday at 326.5p.
In a separate statement, Oil India
and Indian Oil Corporation con-
firmed that they had made a joint
approach for the company.
However the statement did not pro-
vide any details beyond saying that
the approach was for an all-cash offer.
There have been suggestions that a
take-out price of 400p might be neces-
sary to get a board recommendation.
19
In a note to investors, analyst house
Fox-Davies Capital called the 315p
offer very well pitched as a first offer
saying it may eventually lead to nego-
tiations.
However Fox questioned the likeli-
hood of an offer as high as 400p.
There have been suggestions that
the Chinese oil and gas giant
Sinochem has already approached
Gulfsands but has also been rebuffed
by the board.
INSURANCE
PHOENIX Group, the fund manager
and insurer formerly known as Pearl,
said yesterday it had moved closer to a
deal with bondholders who have been
holding out against the company’s
efforts to negotiate a cut in its debt.
Phoenix is seeking the approval of
its banks and of the Financial Services
Authority for a fresh proposal, under
which the face value of a £500m bond
18
17
16
15
13 Jan 2 Feb 22 Feb 12 Mar
it issued would be reduced by 15 per
cent – lower than the 25 per cent orig-
inally envisaged.
Phoenix, founded by Pizza Express
entrepreneur Hugh Osmond, said the
new proposal was drawn up in “sub-
stantive and positive” discussions
with a group of investors holding
about two thirds of the bonds.
The proposal would also need to
win a majority vote of all bondholders
before gaining final approval.
 12 Retail News CITYA.M. 24 MARCH 2010

NEWS | IN BRIEF
Imperial sees volumes fall
PORTMEIRION BOOSTED BY ACQUISITIONS
Carpetright profit
slump blamed on
Imperial Tobacco, the world’s fourth-
biggest cigarette maker, said yesterday
its half-year cigarette volumes will be
down around four per cent as it report-
ed trading in line with its expectations.

pre-election jitters
Imperial, with cigarette brands including
Lambert & Butler, West and Gauloises,
said the half-year dip was due to a sup-
ply chain disruption in the Middle East
and also market weakness in some east-
ern european countries, the United
States and Spain. Despite the downturn,
Imperial has been able to raise cigarette RETAIL clearly impacted sales we would nor-

prices in a number of markets since last
September to help offset the impact of
increasing leaf costs, it said. Imperial is
the number two cigarette maker in
Europe after Philip Morris International.
Nintendo develops 3-D console
Nintendo is planning a 3D version of its
popular DS handheld games console.
The 3DS would hit shops sometime
before next March. Players will not need
to wear special 3D glasses to enjoy the
games, the company said. More details
about the console will be given at E3,
the annual video games expo which
takes place in June. The Japanese
games giant is planning to cash in on the
popularity of 3-D technology and con-
tent, like that used in the blockbuster
Avatar. Rival Sony plans to launch 3-D
games and TVs later this year as it also
harnesses the technology.
▲
BY JOHN DUNNE mally expect to recover these once con-
ditions returned to normal.
CARPETRIGHT has blamed uncertain- “The fact that this has not happened
ty caused by the general election and is a reflection of the consumer envi-
fears over tax rises for its profit warn- ronment, characterised by caution
ing yesterday. over the forthcoming general election,
The company, which is regarded as a confirmed prospective increases in
bellwether of UK high street trade, said taxation and the continued uncertain-
its profits for the year to 1 May would ty over the economic outlook.”
be below forecasts. Prior to the update
analysts were forecasting a consensus ANALYSIS l Carpetright
pre-tax profit of £36.3m up from 1,000 p
825.00
£17.2m the previous year. 23 Mar
Carpetright said sales at UK and
950
Ireland stores open over a year
increased 1.4 per cent in the seven
weeks to 20 March. But the company’s 900
share price tumbled after its bleak
POTTERY manufacturer Portmeirion’s acquisition of brands Spode and Royal Worcester trading update, closing 10.9 per cent 850
from administrators last year helped the company to increase its full year profit more lower at 825p.
than threefold to £3.7m. Portmeirion chairman, Dick Steele, said: “This has transformed Finance director Neil Page said: 800
the group.” “While the bad weather in January 13 Jan 2 Feb 22 Feb 12 Mar

A great rate Halfords beefs up

guaranteed its profit forecasts
RETAIL car parts and bicycles – said it had proposition and provides a further
▲

2 year BY JOHN DUNNE “sufficient headroom” in its

HALFORDS expects to beat full-
Fixed Rate Bond year profit forecasts after a surge
in demand for car parts during
finances to make another acquisi-
tion this year if the right opportu-
nity arose.
Dubbing the company’s per-
opportunity for future growth.”
However, the company’s seven
stores in Poland and the Czech
Republic have been struggling and
will close.

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You can access your money early but will need
to close your account, subject to a closure
charge equivalent to 120 days’ interest.
%
recent bad weather and its acquisi-
tion of Nationwide Autocentres.
The company said its pre-tax
profit for the year ending in
Gross p.a./ AER March would be around £116m –
fixed until above analysts forecasts of
01/05/12 £112.7m.
Sales at shops in the UK and
Ireland were up 0.8 per cent in the
11 weeks to 19 March, with a 13
per cent rise in sales of car mainte-
nance products, mainly caused by
the impact of the prolonged win-
ter on vehicles.
Halfords – which specialises in
formance as “terrific” chief execu- Meanwhile like-for-like cycle
tive officer David Wild said the sales also disappointed, increasing
Nationwide Autocentres car serv- by just 1.9 per cent.
icing business would be re-brand-
ed as Halfords and its current 224 ANALYSIS l Halfords 476.60
23 Mar
outlets eventually doubled. 500 p
The expansion will kick-off with 480
the 80 new outlets already 460
planned over the next three years.
440
He added: “Our car mainte-
nance category has performed 420
particularly well. The acquisition 400
of Nationwide Autocentres, com- 380
pleted during the quarter, logical-
360
ly extends our successful service 13 Jan 2 Feb 22 Feb 12 Mar

Limited ANALYSIS l Halfords

Pre-tax annual profit forecast raised to
offer £114-£116m
Monthly interest option
also available. 224 the number of Nationwide Autocentres
Halfords acquired
Call 0800 068 1780† or visit branch
to book an appointment with a Financial Advisor 80 the number of new Nationwide
Autocentres planned over the next three years
The Santander Group has more than 150 years’ experience in banking,
and more branches worldwide than any other international bank. 13 % the rise in sales of car maintenance
products in the 11 weeks to 19 March

0.8 % - the rise in overall sales in the UK

Gross /AER rates based on funds deposited by 01.05.10. On maturity, we will transfer the balance to another account. The and Ireland in the 11 weeks to 19 March
Fixed Rate Bond is a strictly limited offer and we may withdraw or change products, rates or offers at any time.
AER stands for Annual Equivalent Rate and shows what the interest rate would be if we paid interest and added it to your
account each year. The gross rate is the interest rate we pay before income tax is taken off. Interest paid annually or monthly.
Interest will be paid net of income tax at the rate determined by HM Revenue & Customs, or, subject to the required 7 the number of loss-making stores the
registration, gross. †Representatives can book appointments at the customer’s local branch but do not have access to any
customer details and are unable to provide product information. Calls are recorded and may be monitored for security,
company is closing in central Europe
quality control and training purposes. Alliance & Leicester plc. Registered office: Carlton Park, Narborough, Leicester
LE19 0AL. Company number 3263713. Registered in England. Alliance & Leicester plc is authorised and regulated by the Chief executive David
Financial Services Authority except for its consumer credit products for which Alliance & Leicester plc is licensed and Wild said Nationwide
regulated by the Office of Fair Trading. Our FSA register number is 189099. Details correct as at 18/03/10. Santander and
the flame logo are registered trademarks. SA0258.2/JW 03/10 Autocentres will be
re-branded as Halfords
 14 News CITYA.M. 24 MARCH 2010

Babcock seals VT Group deal Shell and China National

735p per share, Lester gave a personal the nuclear space, the company will
Petroleum sign gas deal
▲

ENGINEERING
pledge that VT employees leaving the be a challenge to the likes of Serco.
BY OLIVER SHAH company would be given help with It is understood approval from the
VT GROUP, the engineering services their CVs and introduced to other UK authorities is imminent as the tie- company has clinched in China.

company, is bracing itself for job cuts
at its Southampton headquarters
after being acquired by Babcock
International for £1.3bn yesterday.
Chief executive Paul Lester told City
A.M. there would be inevitable “casu-
alties” among VT’s head office staff,
but redundancies would affect a frac-
tion of the merged group’s 27,000-
strong workforce. Job losses are
expected to be in the low hundreds.
On a bittersweet day after recom-
mending Babcock’s raised offer of
local companies.
“I spoke to them, explained it like it
is and said the deal won’t go through
until the summer,” Lester said.
The chief, who will himself leave
with a shares and pay package worth
£5m, has also promised Babcock boss
Peter Rogers he will stay on and work
“flat out” to integrate the businesses
before moving on.
The fused entity will almost cer-
tainly enter the FTSE 100. With sales
of £3bn and a stronger presence in
up already has the backing of the
Ministry of Defence. The merger will
also need the green light from
Brussels and the US, although VT is
au fait with the process after offload-
ing its shipbuilding arm last year. The
deal is expected to complete in July.
Babcock has lined up £1bn financ-
ing to pay for the takeover, it emerged
last night. The sum is made up of a
bridge loan of £400m and a backstop
facility of £600m. The loan is under-
written by Lloyds and JPMorgan.
▲
ENERGY
ROYAL Dutch Shell and China
National Petroleum Corp have signed
a 30-year deal to develop natural gas
in China, a day after launching a joint
takeover bid for Australian gas pro-
ducer Arrow Energy
The two firms will jointly develop
tight gas deposits in the 4,000 square
kilometre Jinqiu block in central
Sichuan province, Shell said yester-
day. It is the second major gas produc-
tion contract the Anglo-Dutch
An industry official familiar with
the project said the block would like-
ly produce 2-3bn cubic metres (bcm)
of gas a year, with Shell taking a larg-
er share in the contract for undertak-
ing all the exploration risks.
The deal to tap tight gas, contained
in rock that must be broken before it
can flow easily to production wells, is
the latest example of an oil major
seeking out previously uneconomic
deposits. Analysts said the deal was
part of a broader CNPC/ Shell alliance.

ANALYSIS l Consumer Price Inflation (%y/y)

Inflation dips
Source: Capital Economics
6
CPI
5 Core CPI

for first time

4

in five months 0
1

-1

ly believe it will fall back sharply later

▲

ECONOMY
this year. -2
BY RHIAN NICHOLSON 02 03 04 05 06 07 08 09 10 11
Jonathan Loynes, chief European
INTERACTIVE INVESTOR economist at Capital Economics, says
THE headline rate of inflation slowed
in February for the first time since
there is nothing in the figures to sug-
gest that the Monetary Policy
ANALYST VIEWS: DO YOU THINK INFLATION WILL FALL BACK TO
September, raising hopes that infla-
tion has now peaked.
Committee needs to think about
tightening policy.
BELOW TARGET THIS YEAR? INTERVIEWS BY JESSICA MEAD
Utility price cuts and a slower rise “Looking ahead, inflation may stay
in food prices helped to send the
Consumer Prices Index (CPI) back
close to current levels over the next
few months, perhaps triggering
SIMON WARD | HENDERSON ALAN CLARKE | BNP PARIBAS

down to three per cent in February,
official data published yesterday
revealed.
In January, it soared to a 14-month
high of 3.5 per cent – well above the
Bank of England’s two per cent medi-
um-term target.
Economists said last month’s larg-
another letter from Mervyn King to
the chancellor. But it should fall back
sharply later this year and in 2011 as
the vast amount of spare capacity in
the economy keeps core price pres-
sures subdued,” he said.
Howard Archer, chief UK and
European economist at IHS Global
“ “
Assuming no significant “We expect inflation to be sta-
impact from Budget decisions, CPI ble in the coming months, not least
inflation is projected to fluctuate in a due to the the rising impact of petrol
3.0-3.25 per cent range until mid-year prices. We expect the downward tra-
before declining modestly during the jectory to continue so inflation ends

er-than-expected fall confirms that
underlying prices in the UK economy
remain fairly subdued.
Opinion is divided over whether
inflation will stay steady or rise in the
short term, but economists universal-
” ”
Insight, believes CPI could rise fur-
ther in the short term although it second half, remaining well 2010 above target, before falling
may be back under the Bank’s two above the two per cent target. below two per cent in 2011.
per cent target by the end of the year.
“Given that oil prices bottomed out
early in 2009 and then firmed, base HETAL MEHTA | E&Y ITEM CLUB

“
effects will become more favourable.
Governor of the Bank Meanwhile, underlying price pres-
of England Mervyn sures should be contained by substan- As the year progresses, and the pace of recovery remains slow, the margin of spare capacity in
tial excess capacity, likely bumpy and
King will be saved gradual recovery, wage moderation the economy will remain significant. This will drag CPI inflation back down towards the two per cent tar-

”
more letter writing by amid high unemployment and job get by the end of the year. With this in mind, there is no reason for the Bank of England to alter its
slowing inflation. insecurity, and the need for retailers
to price competitively,” he said. monetary policy stance and we expect interest rates to stay on hold until the end of the year.

High street shows continuing signs of US home sales dip amid

growth with positive outlook for Easter fragile market recovery
sales volumes in the first half of said: “The prospects for retail sales drop to a 5m-unit pace. Compared to
▲

RETAIL
▲

BY JESSICA MEAD
THE UK high street has been unable
to sustain its strong February sales
growth this month, but the
Confederation of British Industry’s
(CBI) monthly distributive trades sur-
vey showed UK retailers still experi-
enced an increase in sales volumes.
Encouragingly, the CBI also said
that retailers are expecting a similar
pace of growth over the Easter period.
A net 13 per cent of retailers said that
March were higher when compared
against the same period in 2009. And
a net 14 per cent think that sales will
be higher in April than they were a
year ago.
Grocers and durable household
goods retailers reported very strong
annual sales growth while clothing
shops and furniture and carpet
retailers continued to see sales
growth, albeit at a much slower pace
than in February.
Brian Hilliard at Societe Generale
this year are challenging with infla-
tion at a higher average than last year
and GDP growth remaining weak
but, broadly speaking, the consumer
has been resilient.”
He added: “The surprising signs of
a stabilisation in the labour market
might be exaggerating the improve-
ment in underlying conditions but in
the short term they are helping to
support consumer confidence which
will provide a further support for
retail sales.”
WORLD ECONOMY
SALES of previously owned US homes
fell slightly in February, according to
a trade group report yesterday that
underscored the fragile nature of the
housing market’s recovery.
The National Association of
Realtors said sales fell 0.6 per cent
month-on-month to an annual rate of
5.02m units, the third straight month
of declines in sales. January’s sales
were unrevised at 5.05m units.
February sales were expected to
February last year, home sales were
seven per cent higher.
Home sales surged on the back of
an $8,000 (£5,300) tax credit for first-
time buyers, but have faltered in
recent months, raising worries of a
relapse in the sector that largely trig-
gered the recession.
Even though the popular tax credit
has been extended and expanded,
sales have stayed subdued and hopes
of a bounce back before the April
deadline are fading.
CITYA.M. 24 MARCH 2010 News 15

Google’s move in China boosts its popularity

silence over its long-standing dispute
with the Chinese Government over
censorship.
YouGov’s BrandIndex provides a
measure of consumer sentiment for
different brands. The “Buzz” is a
measure of the relative amount of
consumers who have heard some-
BRANDINDEX thing positive or negative about the
fits from issuing strategic decisions,
and software, “in beta”.
The publishing agreement means
that Google will scan up to a million
books from the national libraries in
Florence and Rome, as well as provid-
ing the libraries with digital copies of
the books for their own websites.
Meanwhile, in the days following
its operations from mainland China
to Hong-Kong. As millions of Irish
people around the world prepared to
toast their patron saint, Guinness
recorded a rise of three points for
both its buzz score between the 3 and
ANALYSIS l Google Buzz
27
19 of March, recording a high of +18.
Guinness normally sells one million
pints per week, but this rises to five
million on St Patrick’s Day alone.
Stephan Shakespeare is co-founder and
co-chief executive of YouGov.
ANALYSIS l Google Reputation
54

STEPHAN SHAKESPEARE brand.

After the 10 of March, the day the
Schmidt’s announcement
“something will happen soon”, the
that 26 53
25
publishing agreement was increased speculation that Google 52

G
OOGLE’S BrandIndex “Buzz”
scores have soared this month
following the announcement of
a major publishing deal with
the Italian government and the deci-
sion by Google chief executive Eric
Schmidt to break the company’s
announced, and the same day Eric would close its Google.cn site fed its 24
51
Schmidt announced that “something “Reputation” score, growing from +50 23
will happen soon” with regard to its points on the 16 March to a high of 50
22
dispute with the Chinese govern- +54 on 22 March. The decision to
ment, Google’s Buzz score rose from leave China was eventually con- 21 49
+23 points to a high of +26 points by firmed yesterday, when Schmidt 20 48
17 March. It seems that Google bene- announced that Google was shifting 10 Mar 12 Mar 14 Mar 16 Mar 18 Mar 16 Mar 18 Mar 20 Mar 22 Mar

EU trademark FUEL HIKE HITS CARNIVAL EARNINGS

CARNIVAL Corp,
the world’s largest

ruling to hurt
cruise operator,
yesterday posted
lower quarterly
earnings due to
higher fuel costs
but said prices for

brand owners
its cruises were
rebounding. The
Miami-based firm
posted net income
of $175m (£116m),
or 22 cents per
share, for the fiscal
first quarter, down
a right to advertise counterfeit from $260m, or 33
▲

INTERNET
BY STEVE DINNEEN
JUST hours after its acrimonious exit
from China, Google won a landmark
ruling that allows it to continue sell-
ing search terms such as “fake Louis
Vuitton”.
A number of firms had hoped a
decision from the European Court of
Justice (ECJ) would stop the web
giant from selling its trademarks to
goods. We work collaboratively with cents per share, a
brand owners to better identify and year earlier.
deal with counterfeiters. Some com- Revenue for the
panies want to limit choice for users group, with ships
by... controlling and restricting the like Ecstasy (pic-
amount of information that users tured) rose to
may see.” $3.1bn from
The court confirmed Google has $2.9bn.
not infringed trade mark law by Picture: REUTERS
allowing advertisers to bid for key-
words corresponding to their com-

Ofcom allows competitors access to

firms they say are cashing in on petitors’ trade marks. This is
their brands. important because it is a fundamen-
Google makes a significant pro- tal principle behind the free flow of
portion of its £16bn advertising rev- information over the internet.

BT’s new internet fibre lines and ducts

enue through its AdWords software,
which allows firms to purchase key
search terms. Louis Vuitton, among
others, had argued that boot-leggers
are snapping up search terms to sell
fake goods.
The court said individual adver-
Linklaters partner Marianne
Schaffner, said: “Today’s ruling by
the European Court of Justice is like-
ly to make life more difficult for
brand owners. It means they will
have to sue all the advertisers using
keywords, which is likely to lead to a pose allowing competitors to have their own fibre because the regulator
▲

tisers who buy the terms will be
liable for trademark infringement
and brands will have to sue them
directly.
A Google spokesman welcomed
the verdict, saying it was a victory
multiplication of cases.”
AdWords adverts appear to the
right of a regular Google search and
can generate huge numbers of clicks.
Many brands spend vast amounts
of money buying up “rogue” search
TECHNOLOGY
RIVAL Internet service providers will
have access to BT's new fibre lines via
a so-called virtual network or they
could lay their own fibre in the tele-
com firm’s ducts under new propos-
access to new fibre lines laid by BT, at
a price set by the former state monop-
oly in order to enable a fair rate of
return.
And Internet service providers who
want even more control of the system
believes there is available capacity.
The two proposals are designed to
increase competition within the nas-
cent superfast broadband market,
which requires a fibre network.
“Super-fast broadband is starting to

@
for freedom of information. He said: terms to stop them falling into the als from the regulator. could access BT’s underground ducts be a reality in the UK,” Ofcom chief
“This case is not about us arguing for hands of bootleggers. Ofcom said yesterday it would pro- and overhead telegraph poles to lay executive Ed Richards said.

Freesat joint venture between ITV and NEWS | IN BRIEF

BBC reaches the one million sales mark E&Y defends itself against US court report
Partners at Ernst & Young (E&Y) have criticised the MORE NEWS
US court commissioned report out earlier this month
on their role as auditor of Lehman Brothers. In a let- ONLINE AT
ter to clients, the accounting giant criticised claims www.cityam.com
in the report that E&Y was aware of the “Repo 105”
Jazeera News along with 151 other important distribution platform for transactions that were allegedly used to shift $50bn
▲

TECHNOLOGY
BY ALLY BACON channels and radio stations. ITV, providing our audiences with (£33.2bn) worth of debt off its balance sheet. el
el
CLAS
LA
ASS
SIC av
ve
IC TTrrav
CLASSIC
CL
Emma Scott, managing director of next generation free HD services and Lehman’s bankruptcy was caused by a collapse in its www
www.goclassic.co.uk
.goclassic.co.uk

FREESAT, the joint venture between Freesat commented: “Hitting one mil- the capability for further develop- liquidity......It was not caused by accounting issues or ASIA/FAR AFRICA/
EAST/OZ/NZ WORLDWIDE
ITV and BBC, announced yesterday lion sales is a significant milestone ment. We’re confident Freesat will disclosure issues,” said the letter.
Auckland £440 Cairo £265
that the subscription-free satellite for Freesat and gives us a great foun- continue to go from strength to Bangkok £339 Cape Town £498
service had reached the one million dation for further growth, specifical- strength.” Ambrian Capital swings from loss to profit Beijing £210
Bombay/Delhi £135
Dubai
Harare
£275
£550
sales mark, after just 18 months in ly with the millions of UK homes that Mark Thompson, director-general British investment bank and broker Ambrian Capital CHC/WLG £590 Jo’Burg £209
business. have HD TVs but no HD service.” of the BBC added in a statement yes- swung to a full-year profit yesterday. For the year Manila £260 Los Angeles £419
Malaysia £260 New Yoork £125
The 250,000 additional sales since John Cresswell, interim chief exec- terday: “The development of Freesat ended 31 December, the firm posted pre-tax profit Nepal £269 Sao Paulo £329
November means Freesat now holds utive of ITV said yesterday: “We’re has extended the choices available to before items of £4m, compared with a loss of Perth £330 Toronto £389
Syd/Mel £319 Tokyo £499
30 per cent of the market for all set delighted with Freesat’s success – a viewers in allowing them to receive £16.3m a year ago. Net tangible asset value rose 7.2
SUMMER SPECIAL
top boxes sold in the UK. million sales in less than two years is all of the BBC’s digital channels per cent to 31.18p per share. Revenue rose 82 per JO’BURG £275 020 7586 1234
Freesat is host to BBC HD and Al a terrific achievement. Freesat is an including BBC HD. cent to £17.5m. Baggage allowance: 60kg www.goclassic.co.uk
 16 News
Aberdeen to focus on growth Unrest builds at Delta as
FUND MANAGEMENT cycle where we are very well placed to
▲
enjoy strong organic growth,” finance
BY HARRY BANKS director Bill Rattray said.
ABERDEEN Asset Management, the “We have always felt that there was
acquisitive UK fund manager, has a right time in the cycle to be acquir-
called time on takeovers and will ing – that’s when organic growth was
focus on building through organic weaker. Right at the moment we’ve
growth, its finance director said yes- built the business, added further
terday. diversity so we don’t really need
The fund manager has made 17 acquisitions to keep growth going,”
acquisitions since 2001 – the most he said.
recent being the January purchase of In a trading update yesterday,
RBS’s non core fund assets – to Aberdeen said investors pulled out a
become one of Britain’s largest fund net £3.6bn in the five months to the
managers, with assets under manage- end of February, with fixed income
ment of £161bn. haemorrhaging a net £6.5bn. Equities
“We have got to the stage in the pulled in a net £4.8bn, while property
Dubai World
close to deal
with creditors
FINANCIAL SERVICES over three to five years with the prin-
▲
cipal discounted, and another with
BY HARRY BANKS
repayment over seven to nine years
DEBT-LADEN Dubai World will pres- with no discount.
ent plans to restructure its $26bn The eventual proposal will centre
(£17.3bn)debt pile to creditors this on the extension of maturities with
week, with details emerging as soon low or zero interest, and the option of
as today, sources familiar with the an early exit at a discount or eventual
talks said yesterday. repayment over a longer period of
The conglomerate, which has been time.
locked in talks with its creditors, will A Dubai government spokes-
discuss how it plans to repay its com- woman said yesterday that meetings
mitments with an informal bank with the core creditor committee,
panel, which represents 97 creditors known as CoCom, were part of “an
to the state-owned conglomerate, in ongoing dialogue related to the
Dubai . restructuring process”.
“People will be looking for any- The spokeswoman said Dubai
thing not already priced in (the mar- remains on track to present a formal
ket) such as a government guarantee,” proposal to creditors in March. The
said Robert McKinnon, ASAS Capital’s panel includes Standard Chartered,
chief investment officer. HSBC, Lloyds, Royal Bank of Scotland,
The debt is linked mainly to Dubai Emirates NBD and Abu Dhabi
World’s property units, Nakheel and Commercial Bank, which, combined,
Limitless World. The company are believed to have two-thirds of the
ringfenced other key assets, such as total exposure. Dubai said in
ports operator DP World, from the November it would ask creditors to
restructuring. delay repayment on $26bn in debt
A final proposal on the debt could linked to its flagship conglomerate
involve tranches with different repay- Dubai World, sending shockwaves
ment profiles, one with a repayment through markets.
CITY MOVES | WHO’S SWITCHING JOBS
Ernst & Young
Dawn Aloof has joined EY from rival
PricewaterhouseCoopers, to lead its Europe,
Middle East, India and Africa (EMEIA) finan-
cial services transaction integration practice.
Aloof also previously spent 15 years at
Barclays, where she was responsible for clients’
global operating strategy, planning and M&A
operations. She is joined by four ex-PwC col-
leagues: Ari Constantinou, David Brayley,
Michael Wada and Phil Anderson.
Premier Asset Management Investment Management between
The asset manager has appointed 1996 and 2009, where he managed
Simon King as senior investment man- and co-managed a series of successful
ager for UK equities, tasked with run- multi-cap long/short and long only high
ning its £61m Premier UK Thematic performance portfolios.
Fund and its Premier Smaller Prior to that, he was in the UK small-
Companies Fund. er companies team at NatWest
King formerly worked at Gartmore Investment Management.
To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com
also saw net inflows of £1.5bn.
“We are slightly disappointed that
net redemptions in fixed income
have not trended down, although
management indicated that redemp-
tions in February were lower than in
January,” said Gurjit Kambo, analyst
at Numis Securities, which retained a
“buy” rating on the stock.
Rattray said revenue margins
earned on the inflows were higher
than those lost on outflows, pushing
up fee income by around £18m per
year. “Outflows are beginning to slow
down and inflows are picking up, but
it’s difficult to call a turning point,”
he said.
BEST OF THE BROKERS
ANALYSIS l 3i 292.40
p 23 March
300
280
260
3I
240
13 Jan 2 Feb 22 Feb 12 Mar
Evolution Securities reiterates its “buy” rat-
ing on 3i ahead of today’s pre-close trading
update. It cut its net asset value forecast
from 330p to 320p to account for the fail-
ure of British Seafood Holdings, but says
this is the only cloud on what should have
been a strong year. It expects recovering
company earnings to boost 3i overall.
ANZ poaches Citi’s Asia regional boss
BANKING
▲
MARK Robinson, the chief executive of
Citigroup’s South Asia division, is leav-
ing the bank after serving just over a
year in the role. He has been recruited
by ANZ as chief executive of South and
Southeast Asia which has been ampli-
fying its activity in the region.
ANZ said the appointment of
Robinson, with his previous experi-
ence in Asian markets, would help to
Berwin Leighton Paisner
The law firm has hired Matthew Kellett
as a partner in its structured finance
and tax division.
Kellett was previously a banking
partner at Linklaters, leading the finan-
cial structuring practice before joining
AIG Financial Products.
More recently, he spent four years at
the Royal Bank of Scotland as UK head
of financial structuring, with primary
responsibility for the bank’s capital, tax
efficient investment and fundraising
business.
Treveria Asset Management
The German retail-focused real estate
investment firm has appointed Dr
Bernhard Fuhrmann as its new chief
financial officer.
Fuhrmann, 46, previously worked at
funds slam US takeover
ENGINEERING
▲
DELTA, the engineered steel firm,
faces a growing revolt from its share-
holders after long-only fund man-
agers added to criticism of a takeover
attempt by Valmont of the US.
Several well-known institutions
have told Delta chairman Steven
Marshall they want to force up
Valmont’s offer of 185p per share,
which values the British company at
close to £300m. Delta ended the day
at 191.75p yesterday.
ANALYSIS l Amlin 398.00
p 23 March
430
410
390
370
350
AMLIN
13 Jan 2 Feb 22 Feb 12 Mar
Execution Noble reiterates its “buy” status
on Amlin noting that it has no exposure to
windstorm Xynthia as a key positive. It also
praises its substantial amount of reinsur-
ance cover, no further incremental expo-
sure to the Chilean earthquake and
structure of its retro-reinsurance cover if
further large losses occur during 2010.
To appear in Best of the Brokers email your research to notes@cityam.com
spearhead its focus on the East.
Over the past year, ANZ has marked-
ly increased its business and trade
activity in the Asia-Pacific region,
revamping the company logo to
include a lotus flower reflecting this
shift. The outlook for the Asian region,
where ANZ is currently rolling out its
super-regional strategy and where it
aims to earn 20 per cent of its profits
by 2012, was said to be optimistic.
ANZ Bank chief executive Mike
Commerzbank as chief operating offi-
cer of the commercial real estate divi-
sion.
He was also formerly head of finance,
controlling and tax at Eurohypo and
held a number of positions at Deutsche
Bank.
DTZ
David Schaefer has been appointed as
head of the real estate advisory firm’s
investment management division in the
Asia-Pacific region.
Schaefer, who also takes on the role
of the group’s global head of institution-
al capital, was most recently a manag-
ing director and head of the
Asia-Pacific operations at Citi Property
Investors.
He has also worked as head of Asian
property at Macquarie Bank.
CITYA.M. 24 MARCH 2010
One said Valmont’s offer needed to
be north of 210p, adding: “A takeover
offer should provide a premium – not
be at a discount.”
A second fund manager described
Delta’s early acceptance of the offer
as “a strategic mistake”.
The long-only investors join hedge
fund Crystal Amber, which wrote a
letter of complaint to Delta earlier
this week, in demanding the rein-
statement of the 2009 dividend.
Valmont plans to scrap the 4.8p final
payout as part of its takeover.
ANALYSIS l Babcock
p 560.00
620 22 March
600
560
520
480
BABCOCK
13 Jan 2 Feb 22 Feb 12 Mar
Seymour Pierce says Babcock’s decision to
buy VT group for £1.3bn is a sensible move
which makes strategic sense. It says the
acquisition will cement Babcock’s position
in UK defence outsourcing. It says it will
also help expand its US presence, and
expects cost synergies of £58m. Seymour
reiterates its “buy” recommendation.
Smith, speaking in Perth recently,
warned of lingering volatility in the
markets, and anaemic growth in
advanced economies.
He predicted Asia’s strength would
cause a “fundamental shift in the
world’s economic and political tecton-
ic plates”.
Earlier this month, ANZ was given
in-principle approval for a foreign
banking licence in India, one of its
high priority areas.
Edited by Victoria Bates
Cookson Group
The materials science group has hired
Jeff Harris, the chairman of Filtrona, to
its board as a non-executive director,
effective from April.
Harris will assume the chairmanship
of the firm at the close of its AGM on
13 May. He has also previously held
board positions at Bunzl, Associated
British Foods and Anzag.
Tunstall Heathcare
The telehealthcare group, which
employs over 1,000 people and oper-
ates in 30 countries worldwide, has
appointed Gil Baldwin as its new chief
executive.
Baldwin previously spent four years
at Aviva, as managing director of its
health business. Prior to that, he was
operations director at Norwich Union.
 Markets&Investment 17

LONDON’S TOP 250 Trade these shares from £1.50 with Interactive Investor - www.iii.co.uk
Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low
(p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p)
3i . . . . . . . . . . . . . . . . . . . . . . . .292.40 +1.00 314.80 152.41 Daily Mail ‘A’ . . . . . . . . . . . . . . . .483.10 +3.10 492.00 219.00 Kazakhmys . . . . . . . . . . . . . . . .1505.00 +29.00 1563.00 325.50 Schroders N/V. . . . . . . . . . . . . . 1132.00* +7.00 1178.00 633.50
3i Infrastructure . . . . . . . . . . . . .106.40 +1.40 109.70 80.00 Dana Petroleum . . . . . . . . . . . .1212.00 +24.00 1549.00 968.50 Kesa Electricals . . . . . . . . . . . . .124.30* –2.10 162.00 87.50 Scot. & Sthrn Energy. . . . . . . . .1090.00* –5.00 1206.00 357.50
A.B. Foods . . . . . . . . . . . . . . . . .966.50 +3.00 976.50 614.00 Davis Service . . . . . . . . . . . . . . .409.40 +1.90 438.00 248.00 .LQJÀVKHU . . . . . . . . . . . . . . . . . .227.00 –6.00 249.10 134.20 Scottish Inv Tst . . . . . . . . . . . . . .469.70 +1.20 475.50 341.00
Aberdeen Asset Man . . . . . . . . . .126.70 –2.30 155.60 111.00 De La Rue . . . . . . . . . . . . . . . . . .944.50 +4.50 1041.00 808.50 Ladbrokes . . . . . . . . . . . . . . . . .147.00 –2.60 213.49 114.60 Scottish Mortgage. . . . . . . . . . . .598.00 +5.50 599.50 330.00
Admiral. . . . . . . . . . . . . . . . . . .1327.00* +42.00 1336.00 825.00 Debenhams . . . . . . . . . . . . . . . . .72.65 –0.10 99.50 40.75 Lancashire Hldgs . . . . . . . . . . . .458.30* –1.70 540.00 416.70 SEGRO . . . . . . . . . . . . . . . . . . . .317.00 — 403.10 250.00
Aegis . . . . . . . . . . . . . . . . . . . . .125.00 –0.80 128.80 75.25 Derwent London . . . . . . . . . . . .1310.00 –12.00 1418.00 631.00 Land Securities . . . . . . . . . . . . . .674.50* +2.50 743.50 401.75
Afren . . . . . . . . . . . . . . . . . . . . . .96.20 +0.70 111.00 24.75 Dexion Absolute . . . . . . . . . . . . .144.10 –0.90 148.00 82.00 Legal & General . . . . . . . . . . . . . .85.10 +3.80 94.40 36.10 Serco . . . . . . . . . . . . . . . . . . . . .602.50* +10.00 606.00 341.50
Aggreko . . . . . . . . . . . . . . . . . . 1196.00 +26.00 1203.00 467.25 Diageo . . . . . . . . . . . . . . . . . . . 1102.00* +2.00 1106.00 735.50 Liberty International . . . . . . . . . .489.30 +6.80 580.00 330.25 Severn Trent . . . . . . . . . . . . . . . 1188.00 –10.00 1223.00 921.00
Alliance Trust . . . . . . . . . . . . . . .341.50* +1.90 342.20 252.50 Dimension Data . . . . . . . . . . . . . .94.35 +0.50 98.80 38.75 Lloyds Banking Gp . . . . . . . . . . . .63.00 +1.90 83.23 37.16 Shaftesbury . . . . . . . . . . . . . . . .371.70 –1.10 426.50 219.00
AMEC . . . . . . . . . . . . . . . . . . . . .763.00 +2.50 879.50 511.00 Drax . . . . . . . . . . . . . . . . . . . . . .358.80 –1.10 559.50 357.60 Logica . . . . . . . . . . . . . . . . . . . .126.90 +1.10 136.80 61.50 Shire. . . . . . . . . . . . . . . . . . . . .1478.00* –3.00 1487.00 778.00
Amlin . . . . . . . . . . . . . . . . . . . . .398.00* –9.50 428.50 291.00 DSG Intl . . . . . . . . . . . . . . . . . . . .33.97 –1.21 39.75 13.47 London Stock Exchange . . . . . . .734.50 –1.00 949.50 500.00 SIG . . . . . . . . . . . . . . . . . . . . . . . 119.90 +0.90 173.00 82.25
Anglo American . . . . . . . . . . . .2717.50 +33.50 2962.00 1078.00 Dunelm . . . . . . . . . . . . . . . . . . . .363.00* –2.00 438.40 202.00 Lonmin . . . . . . . . . . . . . . . . . . .2032.00 +50.00 2198.00 950.00 Smith & Nephew . . . . . . . . . . . . .672.00 –6.00 700.00 412.00
Antofagasta . . . . . . . . . . . . . . .1012.00 +12.00 1054.00 474.00 Easyjet . . . . . . . . . . . . . . . . . . . .453.50 +4.70 454.90 260.00 Man . . . . . . . . . . . . . . . . . . . . . .242.70 –0.10 373.60 195.60 Smiths . . . . . . . . . . . . . . . . . . . 1139.00 +12.00 1156.00 646.50
Aquarius Platinum . . . . . . . . . . .419.60* +11.10 458.40 156.62 Edinburgh Inv Tst . . . . . . . . . . . .395.10* +1.30 412.40 283.75 Marks & Spencer. . . . . . . . . . . . .356.20 +1.20 412.70 258.00 SOCO Intl . . . . . . . . . . . . . . . . .1655.00 +5.00 1716.00 1068.00
ARM Holdings . . . . . . . . . . . . . . .231.50 +5.00 235.00 99.00 Electrocomponents . . . . . . . . . . .213.00 –1.30 217.40 118.50 Meggitt . . . . . . . . . . . . . . . . . . . .313.50* +3.60 314.40 122.50 Spectris . . . . . . . . . . . . . . . . . . .817.50 –2.00 845.00 376.75
Arriva . . . . . . . . . . . . . . . . . . . . .716.50 +0.50 726.50 361.00 Enterprise Inns . . . . . . . . . . . . . .124.90 +2.40 192.75 54.50 Melrose . . . . . . . . . . . . . . . . . . .220.50* +3.50 221.50 78.00 Spirax-Sarco Eng . . . . . . . . . . .1363.00 –18.00 1410.00 749.50
Ashmore . . . . . . . . . . . . . . . . . . .262.80* +5.70 311.20 142.25 Eurasian Nat Res . . . . . . . . . . . 1194.00 +44.00 1200.00 403.00 Mercantile IT . . . . . . . . . . . . . . . .945.00 +13.00 964.00 586.00 Spirent Comms . . . . . . . . . . . . . .121.40* +1.30 126.30 46.00
Astrazeneca . . . . . . . . . . . . . . .2969.00 –1.00 3136.00 2237.00 Experian . . . . . . . . . . . . . . . . . . .650.00 +3.50 656.00 421.25 Michael Page Intl. . . . . . . . . . . . .408.40 +6.50 434.80 171.25
Atkins(Ws) . . . . . . . . . . . . . . . . .623.00 –1.00 679.00 480.00 F&C Comm Prop . . . . . . . . . . . . . .89.25* –1.75 96.80 73.50 Micro Focus . . . . . . . . . . . . . . . .498.50 –4.00 539.00 280.00 Sports Direct Intl . . . . . . . . . . . . .107.10 +1.20 134.00 55.25
Autonomy Corp . . . . . . . . . . . .1810.00 –3.00 1841.00 1121.00 Ferrexpo . . . . . . . . . . . . . . . . . . .340.60 +30.20 342.50 53.00 Millen & Copthorne . . . . . . . . . . .447.50* +3.90 466.00 165.50 SSL Intl . . . . . . . . . . . . . . . . . . . .788.00 –10.50 808.50 422.75
Aveva . . . . . . . . . . . . . . . . . . . . 1189.00 +7.00 1211.00 510.00 FirstGroup . . . . . . . . . . . . . . . . .375.90 –0.10 448.80 248.75 Misys . . . . . . . . . . . . . . . . . . . . .245.50 +1.90 250.30 113.25 St James’s Place . . . . . . . . . . . . .250.00* +1.10 296.90 142.75
Aviva . . . . . . . . . . . . . . . . . . . . .401.60 +2.30 474.00 202.50 Foreign & Col Inv Tst. . . . . . . . . .288.30* +1.00 292.50 208.50 Mitchells & Butlers . . . . . . . . . . .291.10 –1.00 310.60 219.25 Stagecoach. . . . . . . . . . . . . . . . .187.00* +0.10 196.10 114.75
Babcock International . . . . . . . . .560.00 +27.50 660.50 381.25 Forth Ports . . . . . . . . . . . . . . . .1374.00 –23.00 1413.00 870.00 MITIE . . . . . . . . . . . . . . . . . . . . .224.30 +0.80 281.70 170.50 Standard Chartered . . . . . . . . . .1785.50* +29.50 1799.00 798.00
BAE Systems . . . . . . . . . . . . . . .380.20 –8.60 400.00 294.20 Fresnillo . . . . . . . . . . . . . . . . . . .839.50 +9.50 935.00 403.00 Mondi . . . . . . . . . . . . . . . . . . . . .476.00 +4.00 488.00 143.50 Standard Life . . . . . . . . . . . . . . .205.90* –0.10 237.00 155.90
Balfour Beatty . . . . . . . . . . . . . . .285.00 +2.80 330.94 243.40 G4S . . . . . . . . . . . . . . . . . . . . . .263.20 +1.30 285.70 184.50 Monks Inv Tst . . . . . . . . . . . . . . .307.10* +1.80 308.30 209.00 Talvivaara Mining . . . . . . . . . . . .431.10 –2.10 453.30 191.00
Barclays . . . . . . . . . . . . . . . . . . .357.90 +4.30 390.00 109.00 Gartmore Gp . . . . . . . . . . . . . . . .196.70 –1.30 230.00 181.00 Morrison Wm . . . . . . . . . . . . . . .294.70 –0.10 306.30 233.50 Tate & Lyle . . . . . . . . . . . . . . . . .452.70 +3.90 481.40 239.75
Barratt Development . . . . . . . . . .124.60 +0.30 193.31 54.26 Genesis Emerging Mkts Fd . . . . .462.00 –3.70 472.00 370.00 Murray Intl Tst . . . . . . . . . . . . . . .864.00 +0.50 873.00 555.50 Taylor Wimpey . . . . . . . . . . . . . . .38.29 –0.57 54.90 19.50
BBA Aviation . . . . . . . . . . . . . . .195.10* +3.10 196.90 78.25 GKN . . . . . . . . . . . . . . . . . . . . . .135.50 +4.50 138.40 43.20 National Express. . . . . . . . . . . . .220.00 — 254.52 78.45 Telecity . . . . . . . . . . . . . . . . . . . .415.50 +0.50 444.50 191.25
Beazley. . . . . . . . . . . . . . . . . . . .108.00* –0.80 122.00 86.00 GlaxoSmithKline . . . . . . . . . . . .1284.50* –9.50 1347.00 982.00 National Grid . . . . . . . . . . . . . . .641.00 +2.00 685.50 511.00 Templeton Emrg Mkts . . . . . . . . .571.50 +7.00 575.00 271.75
Bellway. . . . . . . . . . . . . . . . . . . .719.50 –16.50 927.50 591.50 Go-Ahead . . . . . . . . . . . . . . . . .1408.00* –23.00 1577.00 1014.00 Next . . . . . . . . . . . . . . . . . . . . .2078.00 +1.00 2139.00 1230.00 Tesco . . . . . . . . . . . . . . . . . . . . .434.50 –2.20 442.00 311.80
Berkeley . . . . . . . . . . . . . . . . . . .824.50 –6.50 1071.00 716.50 Great Portland Estates . . . . . . . .300.00* +4.00 307.40 172.47 Northumbrian Water . . . . . . . . . .272.00 –1.00 295.70 203.00
BG . . . . . . . . . . . . . . . . . . . . . . 1175.50 –5.00 1248.00 969.00 Greene King . . . . . . . . . . . . . . . .436.10 +2.80 547.45 349.69 Old Mutual . . . . . . . . . . . . . . . . .125.40 –0.30 127.20 45.10 Thomas Cook . . . . . . . . . . . . . . .255.80* +5.90 303.50 191.90
BHP Billiton . . . . . . . . . . . . . . .2236.50* +35.00 2254.00 1274.50 Halfords . . . . . . . . . . . . . . . . . . .476.60 –7.30 497.00 280.00 Partygaming . . . . . . . . . . . . . . . .318.40 +3.40 339.70 213.30 Tomkins . . . . . . . . . . . . . . . . . . .232.00 +4.90 233.40 113.50
BlackRock Mining . . . . . . . . . . . .600.50* +4.50 604.00 312.75 Halma . . . . . . . . . . . . . . . . . . . . .259.40 –1.40 266.70 149.00 Pearson . . . . . . . . . . . . . . . . . .1006.00 +10.00 1009.00 574.00 Travis Perkins . . . . . . . . . . . . . . .795.50 +4.50 888.00 319.82
BlueBay . . . . . . . . . . . . . . . . . . .366.90* +0.70 393.00 115.00 Hammerson . . . . . . . . . . . . . . . .380.70* –2.70 460.30 237.75 Pennon . . . . . . . . . . . . . . . . . . . .526.00* +5.50 558.00 390.75 TUI Travel . . . . . . . . . . . . . . . . . .304.20* +9.50 306.10 215.50
Booker . . . . . . . . . . . . . . . . . . . . .44.00 — 49.50 22.50 Hansen Trans . . . . . . . . . . . . . . . .92.15 –2.85 172.50 78.00 Persimmon . . . . . . . . . . . . . . . . .446.00 –10.70 534.50 325.25 Tullett Prebon . . . . . . . . . . . . . . .357.10 +0.30 436.20 190.25
BP . . . . . . . . . . . . . . . . . . . . . . .634.60 +4.80 640.10 426.50 Hargreaves Lansdown . . . . . . . .340.20* –8.90 354.90 193.00 Petrofac . . . . . . . . . . . . . . . . . .1228.00 +42.00 1244.00 514.00 Tullow Oil . . . . . . . . . . . . . . . . .1256.00 +17.00 1375.00 714.00
Brit Insurance . . . . . . . . . . . . . . .759.50 –5.00 831.60 709.00 Hays . . . . . . . . . . . . . . . . . . . . . .105.90* –0.10 115.10 69.25 Petropavlovsk . . . . . . . . . . . . . . 1155.00* +39.00 1343.00 406.75 UK Commercial Prop. . . . . . . . . . .84.25* +0.85 84.60 55.25
British Airways . . . . . . . . . . . . . .247.50 +6.50 249.00 117.30 Henderson . . . . . . . . . . . . . . . . .144.60 +1.90 146.90 74.50 Premier Farnell . . . . . . . . . . . . . .215.10 –1.10 224.90 115.50 Ultra Electronics . . . . . . . . . . . .1541.00 +6.00 1546.00 1058.00
British Amer. Tob . . . . . . . . . . .2256.00* –11.50 2335.50 1481.00 Heritage Oil. . . . . . . . . . . . . . . . .540.00 +4.00 630.00 295.00 Premier Foods . . . . . . . . . . . . . . .33.00 +0.09 47.00 27.25 Unilever . . . . . . . . . . . . . . . . . .1909.00 –31.00 2024.00 1229.00
British Empire Tst . . . . . . . . . . . .438.40 –0.10 451.80 338.25 Hikma Pharma . . . . . . . . . . . . . .613.00 +13.50 626.50 341.25 Premier Oil . . . . . . . . . . . . . . . . 1175.00 +6.00 1431.00 771.01 United Utilities . . . . . . . . . . . . . .545.50 –7.50 566.50 429.00
British Land . . . . . . . . . . . . . . . .462.30 –0.80 532.00 342.75 Hiscox . . . . . . . . . . . . . . . . . . . .338.80* –1.70 369.30 279.50 Provident Financial . . . . . . . . . . .869.50 –1.00 986.00 763.00 Utd Business Media . . . . . . . . . .536.50 +0.50 541.50 364.75
Britvic. . . . . . . . . . . . . . . . . . . . .434.90 –3.10 453.40 216.00 Hochschild Mining . . . . . . . . . . .283.00 +9.00 370.60 168.25 Prudential . . . . . . . . . . . . . . . . . .522.00 –4.50 665.00 302.00 Vedanta Resources . . . . . . . . . .2704.00 +72.00 2967.00 628.50
Brown(N.) . . . . . . . . . . . . . . . . . .219.30 –5.20 275.80 185.00 Home Retail . . . . . . . . . . . . . . . .275.00 –6.90 336.50 211.00 PZ Cussons . . . . . . . . . . . . . . . .268.80* +8.70 294.00 148.25
BSkyB . . . . . . . . . . . . . . . . . . . .589.50 +1.00 605.50 409.25 Homeserve . . . . . . . . . . . . . . . .1757.00* +3.00 1801.00 960.50 Qinetiq . . . . . . . . . . . . . . . . . . . .141.50 +0.80 179.10 121.30 Victrex . . . . . . . . . . . . . . . . . . . .876.00 –3.00 902.50 475.50
BT . . . . . . . . . . . . . . . . . . . . . . .124.10 +1.50 151.00 72.50 HSBC Hldgs . . . . . . . . . . . . . . . .675.80* –2.30 766.80 364.25 Randgold Resources. . . . . . . . .4912.00 +58.00 5450.00 2760.00 Vodafone . . . . . . . . . . . . . . . . . .148.50 +0.60 152.70 111.20
Bunzl . . . . . . . . . . . . . . . . . . . . .735.00 +0.50 738.00 473.00 Hunting . . . . . . . . . . . . . . . . . . .636.00* –0.50 659.50 374.50 Reckitt Benckiser . . . . . . . . . . .3590.00* +12.00 3620.00 2453.00 VT . . . . . . . . . . . . . . . . . . . . . . .721.50 +31.50 731.00 412.75
Burberry . . . . . . . . . . . . . . . . . . .713.50 +3.50 718.00 263.00 ICAP . . . . . . . . . . . . . . . . . . . . . .378.50 –2.90 478.30 272.25 Reed Elsevier . . . . . . . . . . . . . . .505.00 +3.50 547.00 403.75 Weir . . . . . . . . . . . . . . . . . . . . . .946.50 +3.00 956.00 399.50
Cairn Energy. . . . . . . . . . . . . . . .408.90 +30.10 425.10 306.80 IG . . . . . . . . . . . . . . . . . . . . . . . .413.10 +1.70 433.10 165.25 Regus . . . . . . . . . . . . . . . . . . . . .108.10 +7.60 120.50 58.75 Wellstream Hldgs . . . . . . . . . . . .601.50 +18.50 702.00 419.75
Caledonia Invs . . . . . . . . . . . . .1631.00* +1.00 1759.00 1257.00 IMI . . . . . . . . . . . . . . . . . . . . . . .666.00 +18.50 669.50 245.00 Rentokil Initial . . . . . . . . . . . . . . .129.20 +0.30 135.00 42.75 Wetherspoon(J.D.) . . . . . . . . . . .502.00* –2.50 551.00 348.00
Capita . . . . . . . . . . . . . . . . . . . . .769.50 +13.00 791.00 608.00 Imperial Tobacco. . . . . . . . . . . .2041.00 –9.00 2159.00 1412.00 Resolution . . . . . . . . . . . . . . . . . .77.40 +3.35 112.00 67.90 WH Smith . . . . . . . . . . . . . . . . . .461.30 –4.10 551.00 340.00
Carillion . . . . . . . . . . . . . . . . . . .320.30 –2.50 326.50 230.50 Inchcape. . . . . . . . . . . . . . . . . . . .30.00 +0.33 36.74 11.08 Rexam . . . . . . . . . . . . . . . . . . . .293.80 –0.20 306.10 222.50 Whitbread . . . . . . . . . . . . . . . . .1528.00 — 1560.00 757.00
Carnival . . . . . . . . . . . . . . . . . .2700.00 +57.00 2757.00 1431.00 Informa . . . . . . . . . . . . . . . . . . . .375.10 +1.80 389.40 216.00 Rightmove . . . . . . . . . . . . . . . . .645.00 –2.50 692.50 245.00 William Hill . . . . . . . . . . . . . . . . .202.50* +2.90 243.25 160.50
Carphone Warehouse . . . . . . . . .190.50* +0.10 216.10 114.00 Inmarsat . . . . . . . . . . . . . . . . . . .778.00* +6.00 793.00 452.50 Rio Tinto . . . . . . . . . . . . . . . . . .3823.00* +93.00 3849.50 1727.38 Witan Inv Tst . . . . . . . . . . . . . . . .475.40* +5.00 480.90 310.50
Catlin . . . . . . . . . . . . . . . . . . . . .359.80* +2.80 374.80 284.75 Intercontl Hotels . . . . . . . . . . . .1040.00 +21.00 1043.00 497.00 RIT Capital Partners . . . . . . . . .1064.00* –4.00 1119.00 812.50 Wolseley . . . . . . . . . . . . . . . . . .1594.00 +8.00 1691.00 907.03
Centrica . . . . . . . . . . . . . . . . . . .291.10 +2.10 300.00 212.50 Intermediate Capital . . . . . . . . . .272.40 –1.10 332.00 113.67 Rolls Royce . . . . . . . . . . . . . . . .612.00 +13.50 614.50 279.00
Charter Intl . . . . . . . . . . . . . . . . .753.00 +5.00 797.00 395.25 Intertek . . . . . . . . . . . . . . . . . . .1464.00 +9.00 1482.00 870.00 Rotork . . . . . . . . . . . . . . . . . . .1433.00 +2.00 1465.00 764.50 Wood Group (John). . . . . . . . . . .377.70* +4.50 391.50 215.75
Chemring . . . . . . . . . . . . . . . . .3344.00* +8.00 3489.00 1794.00 Intl Personal Fin . . . . . . . . . . . . .233.00 +1.50 242.40 58.25 Royal Bank Of Scot . . . . . . . . . . . .44.06 +0.28 58.25 23.00 WPP . . . . . . . . . . . . . . . . . . . . . .644.00* +4.00 671.00 371.75
Close Bros . . . . . . . . . . . . . . . . .782.00 –0.50 806.50 535.00 Intl Power . . . . . . . . . . . . . . . . . .325.70 +2.10 353.60 198.10 Royal Dutch Shell A . . . . . . . . .1939.50 +9.50 1973.00 1403.00 Xstrata . . . . . . . . . . . . . . . . . . . 1161.50 +20.50 1302.50 424.25
Cobham . . . . . . . . . . . . . . . . . . .261.90 +3.70 263.00 163.90 Invensys . . . . . . . . . . . . . . . . . . .346.30 +3.90 347.30 158.00 Royal Dutch Shell B . . . . . . . . .1850.00 +6.00 1897.00 1368.00 Yell Group. . . . . . . . . . . . . . . . . . .39.41 +1.70 86.00 12.00
COLT Telecom . . . . . . . . . . . . . .133.00 –0.50 144.20 83.00 Investec . . . . . . . . . . . . . . . . . . .558.50 +6.50 562.50 250.00 RSA Insurance . . . . . . . . . . . . . .127.50* +0.80 142.00 113.10 LONDON TOP 250 BY MARKET CAPITALISATION
Compass . . . . . . . . . . . . . . . . . .518.00 +11.00 521.50 282.50 ITV . . . . . . . . . . . . . . . . . . . . . . . .54.20 +0.50 59.65 19.00 SABMiller . . . . . . . . . . . . . . . . .1942.00 –9.00 1963.00 985.50
Cookson . . . . . . . . . . . . . . . . . . .555.00 +16.00 558.00 202.75 Jardine Lloyd Thompson. . . . . . .555.50 +9.00 558.00 391.25 Sage . . . . . . . . . . . . . . . . . . . . . .246.30 –0.80 250.40 164.30 * Ex-Dividend † Suspended
Croda Intl . . . . . . . . . . . . . . . . . .919.50 –12.50 948.00 498.50 Johnson Matthey . . . . . . . . . . .1748.00 +3.00 1780.00 1015.00 Sainsbury(J) . . . . . . . . . . . . . . . .328.10 –1.10 373.00 298.75
CSR . . . . . . . . . . . . . . . . . . . . . .463.00 +4.00 524.00 223.75 JPMorgan Emerg Mkts . . . . . . . .521.00 +4.00 527.00 307.75 Schroders . . . . . . . . . . . . . . . . .1400.00* +2.00 1418.00 727.50 www.interactivedata.com

FTSE 100 peaks at 21-month Caterpillar leads as

high led by banks and energy US stocks move up
after the oil explorer accompanied maker SAB Miller fell 0.5 per cent. S&P 500’s best-performing sector,
THELONDON full-year results with upbeat com-
ments on its operations in India and
Home improvement retailers fell
sharply. Home Retail and Kingfisher THENEW YORK with the S&P materials sector also
lending support. Both indexes ended

REPORT Greenland, prompting BofA Merrill

Lynch to hike its net asset value.
Other energy stocks rallied as
were off 2.5 and 2.6 per cent respec-
tively, with traders citing the profit
warning issued by mid-cap floor cov-
REPORT slightly above 1 per cent.
Semiconductor stocks were also
strong performers, lifting the Nasdaq.
crude prices rose to around $82 a bar- erings retailer Carpetright as a cata- The Philadelphia semiconductor

B U
RITAIN’S top share index rose rel. BP and Royal Dutch Shell firmed lyst. S stocks rallied yesterday, led by index rose 2.3 per cent, while Intel
0.5 per cent yesterday, hitting a 0.8 and 0.5 per cent respectively. Kingfisher reports full-year results the tech, industrial and materi- gained 1.9 per cent to $22.67
fresh 21-month closing high, Banks bounced back from on Thursday. als sectors, driving the Dow and Integrated Silicon Solution surged
led by commodity, enErgy and Monday's losses, when fears resur- BAE Systems was another big faller, the S&P 500 to 18-month highs. 14.6 per cent to $8.58 a day after it
banking stocks as fears over mone- faced over Greece’s and Dubai’s debt. losing 2.2 per cent after broker Signs of improved demand in the raised its second-quarter revenue and
tary tightening effects ebbed. Barclays, Standard Chartered, Royal Bernstein downgraded the defence semiconductor industry and a bro- earnings outlook.
The FTSE 100 index ended 29.09 Bank of Scotland and Lloyds Banking stock, the day after US firm General ker’s positive commentary on According to Stifel Nicolaus, which
points higher at 5,673.63, after hit- Group were up 0.6 to 3.1 per cent. Dynamics beat BAE to a UK tank Caterpillar lifted blue chips, while cited a media report, Taiwan
ting an intra-day high of 5,695.94. It Debt-laden Dubai World will pres- building contract. tech bellwethers Apple and Cisco hit Semiconductor Manufacturing fore-
was the highest close since June 19 ent plans to restructure its $26bn British retail sales growth slowed 52-week highs, indicating increased cast full-year revenue growth of 22
2008. debt pile to creditors this week, more than expected in March, accord- optimism among investors. Kraft, a per cent, compared with a previous
Miners added the most points to sources familiar with the talks said. ing to industry figures, while annual Dow component, also hit a 52-week expectation of 18 per cent. The com-
the index as metal prices rebounded, Life insurer Legal and General was consumer price inflation slowed last high. pany’s US-listed stock rose 0.9 per cent
having been hit by worries that mon- up 4.7 per cent after it posted profits month for the first time since Caterpillar led the Dow industrials to $10.27 on the New York Stock
etary tightening in China and India ahead of analysts’ expectations. September. higher after Wells Fargo raised price Exchange.
could weigh on global demand. As the appetite for risk spread targets on the company's stock on The Dow Jones industrial average
“Investors have shrugged aside the among investors, perceived defensive ANALYSIS l FTSE100 5,673.63 expectations for strong longer-term rose 102.94 points, or 0.95 per cent, to
monetary tightening concerns for stocks were the main drag on the 5,700 23 Mar growth. The stock climbed 4.1 per 10,888.83. The Standard & Poor’s 500
now, buying back in on the previous FTSE 100. Imperial Tobacco, the 5,600 cent to $62.41. Index gained 8.36 points, or 0.72 per
session's dips, while the bullish corpo- world’s fourth-biggest cigarette “Industrials have been among the cent, to 1,174.17. The Nasdaq
5,500
rate data has also given the market a maker, shed 0.4 per cent after it said best performers so far this year, so Composite Index shot up 19.84
lift,” said Jimmy Yates, head of equi- its half-year cigarette volumes will be 5,400 they’re getting a lot of the momen- points, or 0.83 per cent, to 2,415.24.
ties at CMC Markets. down around four per cent. British 5,300 tum money,” said John Massey, portfo- The Nasdaq Composite Index
Eurasian Natural Resources, American Tobacco fell 0.5 per cent. lio manager at SunAmerica Asset ended at its highest level since 18
5,200
Lonmin, Rio Tinto and Vedanta Drugmakers GlaxoSmithKline and Management in Jersey City, New August, 2008, or about a month
Resources gained 2.4 to 3.8 per cent. Shire fell 0.7 and 0.2 per cent respec- 5,100 Jersey. “I think it’s clear we're on an before Lehman Brothers collapsed
Cairn Energy was the top FTSE 100 tively, while consumer goods giant 5,000 upward path.” during the credit crisis. The Dow
gainer, up 8 per cent to a year high Unilever shed 1.6 per cent and drinks 13 Jan 2 Feb 22 Feb 12 Mar The S&P industrials sector was the chalked up its 10th day of gains.
 18 Investment | Foreign Exchange CITYA.M. 24 MARCH 2010

FISCAL POLICY
LIFTS LOONIE Indian rate hike sets the
AND SWISSIE
BORIS SCHLOSSBERG
DIRECTOR OF CURRENCY RESEARCH, GFT
scene for the rest of Asia
A
S THE first quarter of 2010 draws to a
close, some currencies are enjoying a safe-
ty premium due to their superior fiscal
and trade balance position. In Europe, the
Swiss economy is currently running both a fiscal
and trade balance surplus and it stands in sharp
contrast to the much larger Eurozone economy.
The single currency bloc is plagued by fiscal
deficit problems among its southern member
states and a deteriorating current account bal-
ance. Little wonder then, that euro-Swiss franc
is trading near all-time lows in the SFr1.4300s,
well below the SFr1.5000 level that only a few
months ago was considered to be an ironclad
support level.
In North America, the Canadian economy’s
balance sheet position is far superior to that of
its neighbour to the south. Not only has
Canadian trade returned to surplus in 2010
after recording its first deficit in decades in
2009, but the Canadian budget gap is minor
relative to that of the US. In 2010 the
Canadian fiscal deficit is projected to decrease
to Ca$49.2bn, staying below 4 per cent of GDP.
Contrast that with the US budget deficit, which
is expected to exceed $1 trillion – or approxi-
mately 10 per cent of GDP.
Ironically enough, both the Swissie and the
Loonie (Canadian dollar) carry very low yields
of only 25 basis points. Both the Swiss National
Bank (SNB) and the Bank of Canada (BOC)
have tried everything in their power to dilute
the value of their respective currencies as
authorities in both countries are increasingly
concerned about the competitive positions of
their export sectors.
The SNB has intervened in the market on
numerous occasions as it tried to maintain The recent move by India (RBI) was made between meetings
and it delivered an increase in both its
RBI. As a result, the expectation is for
another 25 basis points in April and the
euro-Swissie above SFr1.5000, but has since
given up on its targets and is now simply con- the central bank will benchmark repo rate to 5 per cent and
its reverse repo rate, which now stands
repo rate to hit 6 per cent by the end of
the year.
tent at managing the decline in the pair in an at 3.5 per cent. The Indian rupee has been strengthen-
orderly fashion. support the rupee, While the hike was not scheduled, it ing against the US dollar since early
Meanwhile, the Canadian officials are loathe did not come as much of a surprise to February and the rate hike should be
to see the Loonie reach parity with the dollar, says Jessica Mead the markets, given the emerging infla- supportive of further appreciation. The
but they may have to become resigned to such tion problem that the Indian authorities pair is currently trading at around
a possibility. Last week’s Canadian inflation are trying to tackle. Indeed, the RBI cited R45.49 but the support level of 45.25 –

numbers soared to 0.7 per cent from 0.1 per
cent the month prior, putting strong pressure
on the BOC to begin raising rates in the near
future. If the BOC starts to tighten by the sum-
mertime, then US dollar-Canadian dollar seeing
parity becomes a foregone conclusion.
Boris Schlossberg and Kathy Lien are directors
of currency research at GFT. Read commentary
at www.GFTUK.com/commentary or e-mail
borisandkathy@gftuk.com.
S
O FAR this year, the markets have
been concentrating on the
prospect of monetary policy tight-
ening in China and what that will
mean for global recovery. But while the
Asian powerhouse has been slowly tight-
ening here and there in an effort to cool
its economy down, it was India that bit
the bullet and hiked rates by 25 basis
points late last Friday.
The decision by the Reserve Bank of
in its accompanying statement recent
developments in inflation – an annu-
alised 9.9 per cent in February – as a
source of growing concern and noted
that anchoring inflation expectations
and containing overall inflation have
become imperative.
Further rate hikes are also in the off-
ing, with analysts sceptical that one rate
rise will be enough to bring inflation
down to the 5-6 per cent desired by the
the January low – is currently being eyed
by the market. A break through here
would put the September 2008 low of
45.24 in focus and a potential test of 44.
OVERSEAS INVESTMENT
The rupee is expected to continue to
strengthen and the latest hike should
also attract more foreign inflows into
India, which has already received $3.5bn
in overseas investment since the start of
CITYA.M. 24 MARCH 2010 Investment | Foreign Exchange 19

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Tightening in India this year and is expected to continue
could spread to receiving investment at a similar pace.
the rest of Asia. Prompted by improved government
finances, the rating agency Standard &
Picture: REX Poor recently updated its outlook on
India’s sovereign debt, which is rated at
BBB-, to stable from negative. This should
also encourage further capital inflows
into the country. Foreign exchange
global recovery has stepped up inflation- The Tipster the global economic recovery and since an
ary pressures and led to a repricing of aggressive sell-off in October 2008, the rand
the rates outlook in a number of Asian Sterling under has fought back with conviction. With the
countries. Indeed, BNP Paribas currency World Cup closing in, the rand is likely to con-
strategists reckon that China’s situation pressure ahead tinue to be buoyant in the medium term. But
is not that different to India’s, leaving
markets wondering when China will
of the Budget euro-rand is trading at interesting levels.
Technically, the euro is expected to be sup-
increase its rates. This will have an ported around the R9.70-R9.90 level for a
impact on the G10 currencies. short term retracement. Longer-term traders

traders could therefore look to short dol-
lar-rupee using any rebounds to take out
positions.
CAT AMONG THE PIGEONS
But the Indian rate hike has wider impli-
cations for the currency markets beyond
the rupee. The sense of urgency in India
to raise rates has sparked speculation
that other Asian currencies may also
start to tighten policy in the coming
months. This should ultimately be sup-
portive of emerging market currencies
in the region, which will benefit from
favourable interest rate differentials
attracting speculative hot money into
the region.
Phil McHugh, corporate dealer at
Currencies Direct, says that the Indian
decision has put the cat among the
pigeons and that many Asian indices
dropped across the board in response,
although the rupee has remained largely
stable in the immediate aftermath.
Emerging Asian markets have not
raised interest rates for some time, but
the region’s rapid recovery from the
U
They say: “Asia’s inflation rates have NSURPRISINGLY, it is sterling that will should look to buy rands at higher levels
increased sharply requiring monetary be in focus today with the Budget against the euro. FairFx is offering a spot price
policy responses. The RBI increased rates scheduled to follow Prime Minister’s of R9.9083.
in an emergency move on Friday, causing Questions this afternoon. This will keep The Australian dollar-New Zealand dollar
the Australian dollar to fall back. China the pressure on sterling against the dollar but has struggled to make new ground beyond
is the next on the agenda to hike rates. the pound will remain susceptible to sharp ral- the NZ$1.3000 mark as the clash of the high-
Rate hikes dampen domestic demand lies while it stays above the key Fibonacci tech- rate currencies continues. Historically this
and hence will work against commodi- nical support level of $1.4850. FX traders level has proved too much for the Aussie and
ties.” should look to sell rallies back towards $1.5120 it has fallen back to lower levels on several
However, they highlight that the looking for any moves down to $1.4850. CMC occasions. It looks like history might be
impact of dampened monetary expan- Markets currently offers a spread of three repeating itself. Capital Spreads quotes a
sion in Asia on Asian currency reserve basis points on sterling-US dollar. price of NZ$1.2960-NZ$1.2972.
growth will be more important. “We Commodity currencies have benefited from Jessica Mead
expect currency reserve growth to
decline, which in turn will reduce dollar
liquidity and hence support the dollar,”
they add.
Therefore, foreign exchange traders
could look to go short on the dollar-
rupee pair. If you are concerned about
trading the rupee, you could also take
out bearish positions on commodity cur-
rencies such as the Australian dollar.
These currencies will struggle to make
ground against the US dollar if emerging
markets lose their voracious appetite for
raw materials.

ANALYSIS l Core wholesale prices inflation in India

Source: BNP Paribas

% change quarterly
20
15 six months

10
5
0
-5
annual
-10
95 97 99 01 03 05 07 09

FOREX FLASH Jessica Mead

RATES FORCE JAPANESE TO LOOK ABROAD

Japanese households are choosing to send
their savings overseas at the fastest pace
since 2007 as they seek out higher yielding
assets. With benchmark interest rates only
0.1 per cent in the Asian country, investors
are choosing to buy Chinese stocks and
Brazilian bonds to gain exposure to high-
yielding emerging market assets. Currency
strategists consequently expect the yen to
fall 8 per cent against the greenback by the
end of this year.

FED’S EVANS SAYS NO CHANGE TO STANCE

The president of the Federal Reserve Bank of
Chicago, Charles Evans, yesterday said that
the US central bank is likely to maintain an
accommodative interest rate stance for at
least six months. He said: “I would expect it
will hold for the next three or four meetings,
that’s about six months,” adding that he
would not be surprised if it continued into
2011.
UBS RAISES ITS SWISS FRANC FORECAST
Swiss bank UBS has raised its forecast for
the euro-Swiss franc currency pair, predicting
that one euro will cost SFr 1.40 in three
months time, compared to SFr 1.45. The
change came just hours after Swiss National
Bank president Philipp Hildebrand said the Federal Reserve’s
central bank was ready to act decisively to Charles Evans
counter excessive franc gains after the cur-
rency rose to a 10-year high against the euro. Picture: REUTERS
GREEK WORRIES CAUSE EURO WEAKENING
The euro weakened against the US dollar
yesterday after a Greek report said the coun-
try was not optimistic about receiving aid
from Eurozone members at a European sum-
mit later this week. The publication sparked
renewed concerns about Greece’s sovereign
debt problems.
 20 Investment | ISAs CITYA.M. 24 MARCH 2010

Whatever you fancy

in the long-term,
there’s an ISA for it
If you are looking for But every new year there brings a new
fad investment and investors have lost
Solar power,
looking up?
stable returns, then money buying into trends that proved
off the mark. Picture: GETTY
Advisors recommend buying into a
you’re spoiled for range of sectors in order to avoid the pit-
falls of fad investment
investment choice, Martin Bamford, managing director
of Informed Choice, says: “Longer invest-
writes Karen Attwood ment terms and higher risk profiles
should translate into equity focused ISA
portfolios, although diversification

W
ITH tax hikes on the horizon across the different asset classes But for the long term he says care, financial and leisure sectors,” he
as the general election looms, remains important to manage shorter “investors should pick sector themes says. He also recommends oil and energy.
sheltering more cash in an ISA term risks.” that will stand the test of time”. “As global oil supplies continue to
is a sensible move. The invest- There is still so much uncertainty “Some themes we are considering for dwindle, and demand for oil picks up as
ment choices you make will depend on around that it is unclear which sectors our clients include those that should world economies come out of recession,
how long you wish to invest and how “will be the top performers over the benefit from the demographic changes the oil price has potential to be pushed
much risk you are prepared to take. short term”, he adds. in this country, including the health- even higher,” he says.

An ISA in a fund can see

F&C Investment Trust ISA
Fi
na

Fral Li
nc
i
e fe

Don’t rely on interest rates

eG

you though tough times

ui

to deliver a real return.

de

Peter Chadborn,
Karen Attwood asks the experts director of Essex-
based specialist CBK,
for some timely investment tips recommends first
time investors to look
at the Gartmore

W
ITH an equities ISA you can shel- Cautious Managed
ter more money from the tax- Fund. “A cautious
Release your ISA’s potential with F&C. man than you can with a cash managed fund is ideal for the novice investor
ISA – currently £7,200 a year in because it should have low volatility as it has
With interest rates still at their lowest level ever, most equities compared to a maximum £3,600 mix of investments – equities, bonds, cash and
investments reliant on them for growth and income are in cash (or £10,200 for the over 50s). This property,” he says.
going nowhere in real terms. So now could be the time will increase to £10,200 for everyone from The fund performs consistently in the ranking
to consider potentially higher yielding alternatives such April 6, of which £5,100 can be in cash. tables. It's predominantly an equity fund but
as F&C’s range of investment trusts. Yet investing in stocks and shares carries has healthy fixed interest exposure to reduce
Using your ISA allowance you can make tax-efficient more risk and is therefore more appealing the volatility. A good solid performer which is
investments in our range of investment trusts that aim to long term investors. Putting your what you want from this type of fund.”
for capital growth and some also have the potential to Free Financial Life money into funds rather than individual But for more experienced investors he sug-
generate regular income. Guide with every companies gives greater exposure to differ- gests JPM Natural Resources. “This fund has
brochure request ent companies and sectors, thereby reduc- no direct correlation to mainstream funds or
Past performance is not a guide to future performance. ing risk. With less than two weeks left to sectors so offers real diversification,” he says.
As with all stock market investments the value of your or download it from
use the current ISA allowance, we ask lead- “It is a highly volatile fund which consistently
shares can fall as well as rise, and you may not get back our website. ing experts for their top picks. ranks highly in the Specialist sector but
the full amount invested. Savings in a bank or building beware of buying while the price is high. The
society are more secure and accessible and capital and manager has been at the helm for many years
interest, once earned, is guaranteed. Mark Dampier, which inspires confidence.”
head of research at
We’d like to tell you more. H a r g r e a v e s
Call today for a brochure quoting 10PGEN/37 and we’ll also Lansdown, says that Geoff Penrice,
send a free copy of our Financial Life Guide. If you are in pharmaceutical com- chartered financial
any doubt about the suitability of this investment, please panies like planner at Honister
contact your financial adviser. GlaxoSmithKline and Partners, says with
AstraZeneca and utilities, such as Scottish and interest rates set to
Calls may be recorded. F&C Investments and the F&C Investments logo are trade marks of F&C Management Limited. Southern Energy, offer good value for remain low for the
© F&C Management Limited 2010. Issued and approved by F&C Management Limited which is a member of the F&C
Asset Management Group and is authorised and regulated by the Financial Services Authority (FSA). Registered Office: investors right now. next few years
Exchange House, Primrose Street, London EC2A 2NY. Registered in England No 517895. “These can be bought individually or you can “there should be
buy into Neil Woodford’s Invesco Perpetual more interesting returns from shares and
0800 3698 558 www.fandc.co.uk/growthisa info@fandc.com Investment Fund which is stuffed full of tobac- fixed interest funds; although obviously with
co companies, utilities and had the two biggest higher volatility”.
Please send me further information and my FREE copy of the Financial Life Guide. holdings in Glaxo and Astra,” he says. He recommends investing in some of the
Title First name Surname “Other similar income funds are Artemis multi-manager funds such as Jupiter Merlin
Address Income Fund and JO Hambro UK Equity Growth and Henderson MM Income & Growth
Income Fund. These are good for people look- “which hold a wide mix of assets”.
Postcode
ing for income and growth. These funds give “They can follow a long term strategy for
Daytime telephone Email address you a yield of between 4 and 5 per cent and say income or growth but can also make short
Please return this coupon to F&C, FREEPOST RLRY-LYSR-KYBU, Clandeboye Business Park, these sorts of dividends are likely to increase.” term tactical decisions if things change in the
West Circular Road, Bangor BT19 1AR. Although the prospects for the UK economy market,” he says. “The funds generally have
Data Protection Act: We would like to keep you updated with details of our other products and services. If you
would prefer not to receive information by post, please tick this box . If you would prefer not to receive information 10PGEN/37
are now good for the next two to three years, higher charges than single unit trusts but
by phone, please tick this box . If you would like to receive information by email, please tick this box . the companies in these funds “will weather some have delivered good consistent returns
the storm”, he says. even through very difficult times.”
CITYA.M. 24 MARCH 2010 Investment | ISAs 21

longer term. He tips the IM WHEB ANALYSIS l Performance of JP Morgan’s Natural Resources fund
Sustainability, managed by Clare Brook,
100
who previously managed Jupiter Ecology. %
The fund invests in three themes; cli-
mate, water and demographics. 80
Many investors got their fingers burnt
when the technology bubble burst and
may have been put off the sector for 60
good but given that technology touches
all aspects of our lives, it is still a sector
to keep an eye on. One fund that has had 40
a consistently good record is Axa
Framlington Global Technology Fund for
those wishing to dip their toe in the sec- 20
tor again.
Smaller companies offer an opportuni-
ty for investors to get in early with a firm
that may turn out to be heading for the
FTSE 100 Index. If you wish to stay local,
the Investec UK Smaller Companies Fund -20
is one for consistency of performance
and if you wish to get exposure in
America, take a look at Schroder US -40
0-12 12-24 24-36 36-48 48-60
Smaller Companies Fund. months months months months months

Certainly, natural resources has name funds to consider are JPMorgan

been one of the most lucrative invest- Natural Resources (see right) and
ment areas in the past few years driven BlackRock Gold and General.
by strong performances in oil and met- Bamford says we can also expect to
als such as gold and copper. As there is see growing demand for renewable
a finite supply of such resources, prices and green energy, so companies in this
should be driven up over time. Big sector should also benefit over the

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 22 Investment
Easing central
banks’ inflation
targets would
be a mistake
Changing the primary goal of monetary policy
now risks institutions’ hard-earned credibility
MOORAD CHOUDHRY
S
OVEREIGN debt has replaced the
bank crisis as the biggest worry
for investors. The problems in
Greece have served to focus atten-
tion on the budget deficits of the entire
southern Eurozone.
And last week the head of sovereign
risk at Moody’s, talking about the situa-
tion in the US and UK, said: “We expect
the situation to further deteriorate in
terms of the key ratings metrics before
they start stabilising”. In other words,
these countries may face a downgrade
of their AAA status. As a warning, this
statement is even less than a shot
across the bows, more simply a reitera-
tion of the obvious: that given the cur-
rent state of the economy, it will be
some time before public finances are
back at “healthy” levels.
Resumption of sustained economic
growth would help immensely, because
that would generate higher tax rev-
enues. Bear in mind that the debt-to-
GDP ratio, a number so beloved of the
media, is not the metric that ratings
agencies care about most. What they
consider first and foremost is the level
of annual debt servicing costs as a per-
centage of government revenue. Rising
tax receipts will, everything else being
equal, assuage the rating agencies’ wor-
ries.
There is however another way to
address the problem, and that is to
inflate it away. High inflation erodes
the value of debt (for both governments
as well as individuals) so over time
would reduce its real amount. There is
also evidence that higher inflation
enables economies to regain competi-
tiveness, as it acts in a similar way to a
currency devaluation.
UNDER ATTACK
Might governments be tempted to
adjust policy and allow for a “little”
inflation? Now could be the time,
because the concept of inflation target-
ing has come under attack in some
quarters and the consensus behind it
may be breaking down. A recent high-
profile paper from IMF economists
Olivier Blanchard, Giovanni
Dell’Ariccia and Paulo Mauro has con-
cluded that low inflation does more
harm to an economy than good.
Some level of inflation, let us say 4
per cent instead of the targeted 2 per
cent, would enable central banks to
respond more proactively to economic
crises (read: reduce rates quicker and by
CITYA.M. 24 MARCH 2010
more). It would also result in more
room to make cuts because interest
rates end up higher if there’s a higher
target inflation rate.
Also higher inflation means wage
growth can take place without impact-
ing productivity; workers are happier
accepting a 4 per cent salary rise when
inflation is 5 per cent than a 1 per cent
rise when inflation is 1 per cent.
Again, it looks an easy win: the south-
ern Eurozone could raise productivity
and competitiveness without budget
and wage cuts if inflation was running
at 5 per cent instead of at 1 per cent.
The upside looks great, especially as it
gets governments out of a bind. And
governments ultimately set inflation
targets for their central banks, so it
would be easy to set the target higher.
However if they did that, it would be
a mistake. One can never quote profes-
sor Milton Friedman often enough, and
inflation isn’t a free lunch. There are
costs as well as benefits associated with
it.
In the first place there is no tap that
can be turned on to start inflation
rolling. It isn’t something that can be
engineered with any precision, and
there is no guarantee that a tolerable 4
per cent level won’t turn into a painful
8 per cent shortly after.
Secondly, to have any real benefit for
government deficits, the public debt
needs to be long-dated, thus enabling
inflation to erode its value over time. A
quick look at the chart shows that only
the UK’s debt is sufficiently long to ben-
efit from this.
GENUINE HARDSHIP
There’s more. Public sector liabilities,
including salaries and pensions, are
invariably index-linked. Higher infla-
tion will be a shot in the foot as it will
result in higher public spending. In the
private sector, there is the genuine
hardship of long-term savers (such as
the retired) who would see the value of
their savings eroded, while younger
people, who are more likely to be bor- Once you turn on the But to start allowing for higher infla- tained. Central banks of the world
rowers, will see their interest costs rise. inflation tap, it can be tion would be to open Pandora’s box: unite: you have nothing to lose except
And finally there is possibly the hard to turn off. we simply don’t know where it will end. your credibility.
biggest danger of all: credibility risk. And in the meantime investors every- Professor Moorad Choudhry is a visiting
Central banks build reputations over Picture: GETTY where would get unfairly punished. It is professor at London Metropolitan Business
time, and a reputation for credibility is vital that a low inflation target is main- School.
the hardest-earned. Moving from a 2 per
cent target to a higher one is, at least in
ANALYSIS l Sovereign debt, weighted-average years to maturity
the medium-term, bound to have a neg-
ative impact on the reputation of the United States Source: Bloomberg
central bank. Consequently investors Japan
will demand a higher risk premium for Germany
holding that country’s debt. Again, the
Portugal
end result is higher interest costs.
Investors, and the market as a whole, Spain
need to keep governments on their toes Ireland
and insist that inflation targeting France
remains in place and stays at a low Italy
level. By all means add productivity and Greece
employment targets, and add asset
Britain
prices to the consumer prices index’s
(CPI) basket of “goods”. 0 2 4 6 8 10 12 14 16
CITYA.M. 24 MARCH 2010 Investment 23

The budget is Darling’s last chance

to convince voters and markets

JANE FOLEY
RESEARCH DIRECTOR, FOREX.COM

M
ORE than one budget is expect-
ed this year, and there is a good
chance that tomorrow’s will be
superseded by another once the
election has been fought and won. But
that doesn’t detract from the fact that
there is still an awful lot riding on chan-
cellor Alistair Darling’s words this week.
Firstly, the budget provides the govern-
ment with a make-or-break opportunity
to set out its stall to the electorate ahead
of the general election. Opinion polls
continue to point to a hung parliament
but there is a chance Labour could
remain in power in a coalition with the
Liberal Democrats – although tomorrow
is likely to be Darling’s last budget as
chancellor.
Second, Darling must try to achieve
voter support while also managing to
convince both the credit rating agencies
and the financial markets that the budg-
et deficit will be cut drastically over the
medium term. The market would cer-
tainly favour a government which leapt
head first into a programme of spending
cuts.
But Labour could still outline an auster-
ity plan for the medium term without
necessarily contradicting its stance that
too much austerity too soon would endan-
ger the recovery. Either way, the market is
demanding firmer detail tomorrow on ling and extra spending would not be ing the deficit and weaken the position Cutting the deficit is chance that a Labour/Lib Dem alliance
exactly how the government intends to welcomed by investors. of the pound. the name of the game. could be leading the country for the next
meet its pledge of halving the huge budg- As budget deficits and debt levels are Recent weeks have been volatile for five years, reassuring words on deficit
et deficit within four years. generally measured as ratios to GDP, the sterling. Weakness in cable is correlated Picture: GETTY reduction tomorrow could bring some
The release of better-than-expected pub- chancellor’s forecasts for growth are a with the fear that the general election near-term support for the pound. That
lic finances data for February will have crucial element of the budget. It is very (expected on 6 May) will provide a hung said, in the absence of clear evidence that
put a spring back in Darling’s step. With likely that the necessary dose of austerity parliament. The optimal outcome from the government is committed to tackling
just one month to go until the end of the will weigh on growth at least over the the election, at least as far as the markets the budget deficit, cable could still shift
fiscal year, they suggest that he will be next couple of years. The Bloomberg sur- are concerned, would be a clear majority significantly lower.
able to announce that public sector bor- vey of market economists points to for the Conservative party because a Email Jane Foley with your comments at
rowing this year is likely to be between £5- growth at a moderate 2.05 per cent in quicker resolution to the deficit is seen as researchemea@forex.com. Read daily market
£10bn less than the forecast £177.6bn. 2011. A downward revision to the govern- more likely. commentary and analysis from Jane Foley and
ment’s 2011 growth projection of 2.50 But if we assume that a hung parlia- the FOREX.com global research team at
SHOCKING CONDITION per cent would protect the chancellor’s ment is largely priced in and there is a www.forex.com/uk.
In essence this is good news, but it credibility even though it would need to
requires qualification. The February be balanced with more austerity meas-
numbers may be better than expected ures to achieve the aim of having the TECHNICAL VIEW | STERLING-US DOLLAR
but they are a far cry from good data. In budget deficit/GDP ratio in four years.
the fiscal year to February, net borrowing Last May, ratings agency Standard & Overall, the technical outlook for sterling continues to ing. A daily close below there would suggest the correc-
hit £131.9bn – compared to £66.5bn at Poor’s warned that it had revised the point lower. However, sterling has likely entered a tion is over. Prices will be adjusting directly lower and
the same stage last year – meaning that UK’s debt rating outlook to negative from fourth wave consolidation phase and may see a choppy, target the $1.4300-$1.4500 area initially. For the
public finances are still in a shocking stable. This threat has been largely counter-trend correction higher over the next several potential rebound, sterling-US dollar should not see
condition. In recent days the government shrugged off by the government as unre- weeks. Wave three finished at nearly exactly 1.618 beyond the 13 October low of $1.5709 if the down
has been keen to stress that it won’t use alistic. However, a failure in this week’s times the distance of wave one, highlighting the pre- move is to continue. Intervening resistance comes in at
the improvement to announce some pre- budget to map out a credible plan to ferred wave count. Also limiting the near-term down- 1.5300 from the Ichimoku Kijun line.
election sweeteners. The huge UK fiscal tackle the deficit would bring a rating side, cable has held the long-term trend line support Brian Dolan, chief currency strategist, Gain Capital-
deficit (around 12.9 per cent of GDP) is downgrade closer. This would inevitably from early 2009, which is currently at $1.4900 and ris- Forex.com
already a nasty thorn in the side of ster- push up gilt yields, raise the cost of fund-

Be quids in when the quid’s out, dot com.

It’s your world. Trade it.

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 Lifestyle
24
Comfort
class
VW’s sports coupe has brought
some much-needed style to the
dull, dependable old Passat
S
OMEHOW the Passat CC had passed
me by, until I overtook one on the
motorway recently and found
myself doing a double take on what
must surely be one of the most surprising-
ly stylish cars for sale in the UK.
Fast forward to this test drive. Firstly,
despite its CC name, a Coupé Convertible it
is not. There is no clever folding tin top
here – in this case CC rather uniquely
stands for Comfort Coupé. It’s a name that,
teamed with the Passat badge, suggests the
The facts:
you can afford a Mercedes
The figures:
mercedes-benz.co.uk/offers
For more information on our tailor-made
packages or to book a test drive, visit us online.
| Motoring
car is going to have rather more in com-
mon with its practical, dependable and
somewhat dull namesake than the slicker,
sports coupé that it actually is.
Up close, the four-door, four-seater CC
really is quite a stunner. One can’t help
thinking there must have been a moment
when VW’s talented if conservative Passat
designers may have taken a look at the
final mock up for their Comfort Coupé
and remarked “blimey, that’s gone well”.
Just to say it’s more stylish than the regu-
lar Passat is doing it a disservice; all the
corners are smoothed out, the roof rakes
low and the car is considerably more mus-
cular, as if the standard Passat had been
going to the gym.
It’s so stylish in fact that, at the week-
end, I spotted two Passat CCs in the high
street in Knutsford, Cheshire – a town that
is the northwest of England’s equivalent of
Monaco in terms of car ownership, albeit
with more black pudding and greater rain-
fall. The Passat CC is classy enough that it
didn’t seem too out of place nestled
between Bentleys and Porsches. It’s an eco-
nomical choice for any motoring stylista
who struggles to get excited about an
everyday saloon but who is, nevertheless,
restricted by some very real world practical
considerations when purchasing a car.
With a nice, wide aggressive stance its
look promises motoring high jinks. It’s
broader and lower than the regular saloon,
but sadly this engine fails to deliver quite
as many thrills as its looks promises – for
WORDS BY
RYAN BORROFF
that you’ll have to get the GT or GT V6.
The CC has a similar side profile to the
Mercedes Benz CLS. That includes the rear
door rake that stoops so low even my
diminutive wife had to crane not to knock
herself out while getting into the back (her
chief complaint about the otherwise much-
admired – by her – CLS). In fact at around
£21,000 you could call the CC a sensible
man’s CLS.
On the roads the car feels far pokier than
one would expect. The 1.8 litre TSI engine
delivers 160ps and achieves 0-62mph in
just 8.6 seconds. The engine sounds meaty
enough, and on the motorway the CC is
satisfyingly comfortable and suitably
quiet. Sadly, in the bends there’s a far soft-
er ride that its sports coupé looks belie.
Our Passat CC came with the addition of
Adaptive Chassis Control (ACC) that allows
you to tweak the suspension and steering
depending on your mood. The ACC system
has three modes – comfort, normal and
sport. I found the comfort setting too soft
even on the motorway, while the sport set-
ting – which reduces body roll and is
undoubtedly useful for short periods on
the twistiest of roads – became uncomfort-
able over time. In the end I chose to drive
on the normal setting almost entirely, sug-
gesting that, for me, the additional £720
for the ACC option would have been
unnecessary, with this engine at least.
Inside the CC, the ambience is one of
conservative luxury, a combination of
nappa leather and brushed aluminium ele-
CITYA.M. 24 MARCH 2010
THE FACTS:
VW PASSAT CC 1.8
LITRE TSI
PRICE: £21,930
0-62MPH: 8.6 secs
TOP SPEED: 140 mph
CO2 G/KM: 172
MPG COMBINED: 38.2mpg
ments which felt well-built and robust,
albeit let down in a couple of places by
some poor metal impersonations, in the
doors in particular. A Park Assist system
that allowed me to reverse using a rear
mounted video camera and sensor alarms
was extremely useful, not least because the
corners are very difficult to see in this car.
Despite the rake of the roof, sitting in
the rear is surprisingly comfortable for
two, if not three for anyone under about
six feet tall. There is no rear bench here.
Instead, two seats, lounge chair-style are
divided by a very useful clutter cubby with
sliding door lid. No doubt, this will be deal
breaker for some. This is no VW Phaeton
and the provision of four seats instead of
five seems a naive mistake.
But the boot is a revelation. Despite its
low Coupé form and a short boot section
VW has managed to increase the amount
of luggage space available compared to
the regular Passat. We managed two large
suitcases and the required assorted baby
paraphernalia with room to spare, con-
firming that the Passat CC is an entertain-
ing, sportier and engaging option, even for
dads, and without compromising on
space. Unless you need five seats of course.
THE VERDICT
DESIGN hhhh
PERFORMANCE hhh
PRACTICALITY hhh
VALUE FOR MONEY hhh
CITYA.M. 24 MARCH 2010 Lifestyle | TV& Games 25

BBC1 BBC2 ITV1 CHANNEL4 FIVE

TERRESTRIAL
6pm BBC News
6.30pm BBC London News
7pm The One Show
7.30pm Life of Riley: BBC News
8pm MasterChef
9pm Chocolate: The Bitter Truth
10pm BBC News
10.25pm Regional News
10.35pm Budget Statement by
the Chancellor
10.40pm The National Lottery
Draws
10.50pm CHOICE Damages:
National Lottery Update
11.30pm FILM The Ghost and the
Darkness 1996: Weatherview 1.15am
Sign Zone: Country Tracks 2.15am
Inside the Perfect Predator 3.15am
MasterChef 4.15am-6am BBC News
6pm Eggheads: Quiz show,
hosted by Dermot Murnaghan.
6.30pm Antiques Road Trip
7pm Live Cycling: The Track
Cycling World Championships
from Denmark.
9pm Inside John Lewis: The
company’s future plans. Last in
the series.
10pm Rhod Gilbert’s Work
Experience: The comedian takes
a job in a hair and beauty salon.
10.30pm Newsnight: Weather
11.20pm Budget Statement by
the Chancellor
11.25pm The Bubble
11.55pm A Band for Britain
12.55am BBC News
4am-6am BBC Learning Zone
6pm London Tonight
6.30pm ITV News
6.55pm Budget Broadcast
7pm Emmerdale
7.30pm CHOICE Live FA Cup
Football: Tottenham Hotspur v
Fulham (Kick-off 8.00pm).
10pm ITV News at Ten
10.30pm London News
10.35pm FILM The Specialist:
Action thriller, starring
Sylvester Stallone. 1994.
12.35am Nightwatch with
Steve Scott: Crime
1.30am Nightwatch with Steve
Scott: Mystery; ITV News
Headlines 2.25am The Jeremy
Kyle Show 3.15am-5.30am ITV
Nightscreen
6pm The Simpsons
6.30pm Hollyoaks
6pm Home and Away
6.25pm Live from Studio Five:
TV PICK
7pm Channel 4 News Topical reports.
8pm Relocation, Relocation 7.30pm Highland Emergency:
9pm Ramsay’s Kitchen Five News Update
Nightmares USA 8pm The Business Inspector:
10pm Desperate Housewives A go-kart business receives
11pm Shameless help; Five News at 9
12am 4Music: The Album 9pm CHOICE NCIS
Chart Show Spotlight 10pm Law & Order: Criminal
12.15am Mercury Prize Sessions Intent: Logan and Barek LIVE FA CUP FOOTBALL
12.35am Wakestock Music investigate the death of a ITV1, 7.30PM
2009 teenage violinist. Tottenham Hotspur v Fulham
1.05am This Week’s 4Music Top 20 11pm Numb3rs (Kick-off 8.00pm). Steve Rider
2.55am Runaway 3.35am St 11.55pm Poker presents coverage of the sixth-round
Elsewhere 4.25am Year Dot 1am SuperCasino 4.05am The FBI replay at White Hart Lane.
Television 4.55am Battlefront Files 4.55am Rough Guide to Short
Television 5.25am-6.10am Breaks 5.10am Neighbours
Countdown 5.35am-6am Home and Away

SKY SPORTS 1 9.20pm Riders Club 9.25pm 1am Canada’s Next Top Model 1.55am Being Erica 2.40am DISCOVERY HOME &
SATELLITE & CABLE

7pm Total Rugby 7.30pm
Soccer Special 10pm Football
First 1am Scottish Cup Football
2am Spanish Football 4am
Time of Our Lives 5am FIFA
Futbol Mundial 5.30am-6am
Football Asia
SKY SPORTS 2
7pm FIFA Futbol Mundial
7.30pm Live Scottish Cup
Football 10pm Test Cricket 12am
European Tour Weekly 12.30am
Inside the PGA Tour 1am Boots
‘n’ All 2am-3am Poker
SKY SPORTS 3
6.55pm Live Spanish Football
9pm Live Spanish Football
11pm Boots ‘n’ All 12am Total
Rugby 12.30am Watersports
World 1.30am Netball
3.30am-4am Total Rugby
BRITISH EUROSPORT
5.30pm Live Figure Skating
9.15pm Wednesday Selection
European Tour Golf 9.55pm
Golf Club 10pm Yacht Club
10.05pm Wednesday Selection
10.10pm Sport Destination
10.30pm Abu Dhabi Challenge
11pm Cycling 12am-12.45am
Eurogoals
ESPN
7pm ESPN Kicks 7.15pm
Live SPL 10pm Serie A
11.45pm ESPN Kicks 12am
World Series of Poker 1am
NBA Fastbreak 1.30am Live
NBA Basketball 4am ESPN
Kicks 4.15am Serie A Weekly
Round-Up 4.45am-5.45am
Ultimate Fighting
Championship
LIVING
7pm Ghost Whisperer 8pm
Celebrity Restaurant in Our
Living Room 9pm Supernatural
10pm Medium 11pm Criminal
Minds 12am CSI: Crime
Scene Investigation
2.05am Rehab 3am Charmed
4.40am Nothing to Declare
5.05am Retail Therapy
5.30am-6am Home Shopping
BBC THREE
7pm Doctor Who 8pm Eddie
Izzard: Marathon Man 9pm
FILM Armageddon 1998.
11.25pm Family Guy 12.10am
The Gemma Factor 12.40am
Snog, Marry, Avoid? 1.40am
Dancing on Wheels 2.40am
Undercover Princesses 3.40am
The Gemma Factor 4.10am
The Real Hustle on Holiday
4.20am-5.20am Dancing on
Wheels
E4
7pm Hollyoaks 7.30pm How I
Met Your Mother 8pm Friends
9pm FILM The Day After
Tomorrow 2004. 11.20pm The
Cleveland Show 11.55pm King
of the Hill 12.25am How I Met
Your Mother 12.55am Scrubs
Roswell 4.05am Crowned
4.45am-6am Switched HEALTH
7pm A Baby Story 8pm Little
HISTORY People, Big World 9pm Medics
7pm Extreme Trains 8pm 9.30pm Chopper Rescue 10pm
Mysteryquest 9pm Warriors: Hospital Sydney 11pm Trauma: NCIS
Attila the Hun: The life of the Life in the ER 12am Medics FIVE, 9.00PM
12.30am Chopper Rescue 1am
notorious warlord. 10pm The The team works overtime to solve a
Real Attila the Hun 11pm Hospital Sydney 2am Trauma: robbery – a case made doubly difficult
Stolen by Hitler 12am Warriors: Life in the ER 3am Little by the fact that their prime suspect
Attila the Hun 1am Extreme People, Big World 4am Baby has supposedly been dead for 17 years.
Trains 2am Lost Worlds 3am Days 5am-6am From Here to
Ancient Discoveries 4am-5am Maternity
UFO Files
SKY1
DISCOVERY 7pm The Simpsons 8pm The
7pm Mythbusters 8pm How World Wild Vet 9pm The Real
Do They Do It? 8.30pm How A&E 10pm A League of Their
It’s Made 9pm Day the Earth Own 10.30pm FILM What
Was Born 10pm Human Lies Beneath 2000. 1am Road
Sacrifice 11pm Bear Grylls: Wars 1.50am Ross Kemp on
Born Survivor 12am FBI Files Gangs 2.40am Don’t Forget DAMAGES
2am Forensic Detectives the Lyrics US 3.30am The BBC1, 10.50PM
3.50am Chris Barrie’s Massive Dresden Files 4.20am Brainiac: The real cause of Tobin’s death is
Engines 4.40am Mythbusters Science Abuse 5.10am-6am confirmed as suicide, and Joe wastes
5.30am-6am How Does That Are You Smarter Than a 10 no time in trying to arrange a meeting
Work? Year Old? with Stuart Zedeck.

COFFEE BREAK
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk

QUICK CROSSWORD
    

SUDOKU KAKURO
10 26 28 16 15 37 5
9 24 7
13    
3 39
Place the numbers from 1 to 9 in each empty cell so that each 30 
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 22 10
8 17
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 34 20
   
above or to the left of it. 35
You can only use the digits 1-9 20 4
    and you must not use the
9 38 16
12 14     
same digit twice in a block. 16
    The same digit may occur 6 13 
7 11 29
  more than once in a row or
column, but it must be in a
18
23
35
  
17 23
    separate block.
9 13
23 9
 
15 22 12
    ACROSS DOWN
1 Norwegian sea inlet (5) 1 Secures, fixes (7)
 
    WORDWHEEL F B
4 Mooring (5)
7 Lines on which musical
2 Transmitting live (2-3)
3 Colouring agent (3)
Using only the letters in the Wordwheel, you have notes are written (6)
    5 Rapture (7)
ten minutes to find as many words as possible,
L E 9 Psyche (4)
6 Jeer at (5)
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters E 11 Giant (5)
8 Banded with pieces of
LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
I D 12 Breadwinner (6) contrasting colour (7)

SOLUTIONS KAKURO is at least one nine-letter word in the wheel.

S I
14 Painting, sculpture,
music, etc (4)
10 Device used to
propel a boat (3)

QUICK CROSSWORD 5 9 9 4 1 8
16 Make a pretence (4) 13 Candidate (7)

( ( : 6 7 2 , &
6 7 3 8 1 2 4 9 5 SUDOKU          19 Purging medicine (6) 15 Victory (7)
1 2 3 2 7 1         
7 ( 5 0
+ *
, 7 (
5 5
'
'
$
% 8 9 4 7 1 3 21 Get up (5) 17 Jarring (5)
        
6 1 2 8 5 6 9 7
( 0 2 7 ( ( 1 6 8 (
         22 Small bird (4) 18 (They) exist (3)
5 + $ 5 9 6 8 9 6 7 1

WORDWHEEL
        
' , 5 ( & 7 , 2 1 7 8 4 9 6 1 3 2 23 Harm (6) 20 Tip at an angle (5)
% ( 9 0
1 7 5
        
3 8 9
2 , / ( ' 3 ( 6 7 2
1 9 3 5 9 3 The nine-letter word          25 Woolly ruminant 24 Be unwell (3)
* , 2 / $ 8
3 8 5 7 6 1 2 9 4          mammal (5)
8 5 6 : $ * 0 $ 1
was POSTDATED         
6 / $ < 6 1 ( 7 5 2 9 8 5 3
26 Asian water lily (5)
 Sport
26 CITYA.M. 24 MARCH 2010

Results
Franco 90
Att: 33,988
BARCLAYS PREMIER LEAGUE
West Ham.....................(0) 1 Wolverhampton.............(1) 3
Doyle 28, Zubar 58
Jarvis 61
Tigers chief
urges salary
P W D L F A GD Pts
Man Utd 31 22 3 6 72 25 47 69
Arsenal 31 21 4 6 73 33 40 67
Chelsea 30 20 5 5 70 28 42 65
Tottenham 30 16 7 7 55 29 26 55
Man City 29 14 11 4 55 37 18 53
Liverpool 31 15 6 10 50 32 18 51
Aston Villa 29 13 11 5 41 24 17 50

cap overhaul
Everton 30 12 9 9 48 42 6 45
Birminghm 30 12 8 10 31 34 -3 44
Fulham 30 10 8 12 33 34 -1 38
Stoke 30 8 12 10 29 35 -6 36
Blackburn 30 9 8 13 32 49 -17 35
Sunderland 30 8 10 12 40 46 -6 34
Bolton 31 8 8 15 36 56 -20 32
Wolves 31 8 7 16 28 50 -22 31
Wigan 31 8 7 16 29 59 -30 31
West Ham 31 6 9 16 38 54 -16 27
Burnley 31 6 6 19 31 64 -33 24 Leicester who are affected but that
▲

Hull 30 5 9 16 29 64 -35 24
RUGBY UNION
the standards in the Guinness
Portsmouth 30 6 4 20 28 53 -25 13 BY JON COUCH
Premiership might go down,”
COCA-COLA CHAMPIONSHIP LEICESTER TIGERS director Peter Wheeler said. “We don’t want the
Blackpool......................(2) 5 Swansea.............................(0) 1
Bristol City ..................(2) 5 Barnsley..............................(2) 3 Wheeler last night called for a major league to become stagnant and see
Doncaster ....................(0) 0 Newcastle .........................(0) 1 review of the salary cap system in the world class players from Europe,
Ipswich..........................(0) 0 Plymouth ............................(1) 2 order to help English rugby compete or those who come into European
Middlesbrough..........(1) 2 Preston................................(0) 0
Nottm For......................(1) 2 Crystal Palace ................(0) 0 with Europe’s elite. rugby, going to the Top 14 or the
QPR....................................(1) 1 Derby ....................................(0) 1 The Guinness Premiership has suf- Magners League.”
Scunthorpe .................(3) 4 Peterboro ..........................(0) 0 fered from an exodus of players The introduction of Elite Player
COCA-COLA LEAGUE ONE heading for the bright lights and big Squads (EPS) payments to clubs who
Colchester ...................(2) 3 Brentford...........................(2) 3 wages of the French Top 14 league, provide players for England has eased
Southamptn ...............(2) 3 Hartlepool..........................(1) 2
Southend.......................(1) 3 Walsall.................................(0) 0 including the world’s best tight- the burden somewhat, but Wheeler
COCA-COLA LEAGUE TWO
head prop Carl Hayman, who opted insists it is not the answer.
Accrington S..............(0) 0 Burton Albion..................(1) 2 to leave Newcastle for Toulon this “We get money for producing
Bradford........................(0) 0 Notts County...................(0) 0 week. international players but are not
Darlington ...................(0) 1 Aldershot...........................(2) 2 At the same time, Premiership allowed to spend it on the playing
Rotherham...................(1) 3 Macclesfield.....................(1) 1
clubs have slumped to their worst side because of the salary cap,” he
ACTIVE NATION SCOTTISH CUP SIXTH Heineken Cup performance for 13 said. “Wages are going up but the
ROUND REPLAY
Ross County................(0) 2 Hibernian...........................(0) 1 years with Northampton the only wage cap will be the same for the sec-
CLYDESDALE BANK PREMIER LEAGUE English side to reach the last eight. ond or third year running. Squads are
St Johnstne.................(1) 1 Falkirk...................................(1) 1 Premier Rugby is to review the reducing in size and that makes any
CRICKET £4m salary cap for the start of the injuries even harder to deal with,
SECOND TEST MATCH (Mirpur): Bangladesh 419 (Tamim
2011-12 campaign, but Tigers chief especially if you have players away on
Iqbal 85, Naeem Naeem Islam 59no, G P Swann 4-114) and Wheeler believes it should be made a international duty. The ambition of
172-6 (68.0 overs) (Tamim Iqbal 52) v England 496 (I R Bell priority in order to avoid another sea- our league has to be the best profes-
138, Shakib Al Hasan 4-124). son of mediocrity. sional league in world rugby and it
FIRST TEST MATCH (Wellington): Australia 459-5 dec. (M “The worry is that it is not just won’t be if that happens.” Hayman’s move to Toulon has reignited the salary cap debate. Picture: ACTION IMAGES
J Clarke 168, M J North 112no, S M Katich 79) and 106-0
(P J Hughes 86no) v New Zealand 157 (D E Bollinger 5-28)
and 407 (B B McCullum 104, T G McIntosh 83, D L Vettori
77, R J Harris 4-77). Australia won by 10 wickets.
RUGBY CHAT: DID MARTIN JOHNSON’S ENGLAND TURN THE CORNER AGAINST FRANCE? Interviews by Jon Couch
TODAY’S DIARY
(Football 7.45pm unless stated)
FA Cup Sixth Round Replay DUNCAN BROWN | PETER DAVIS | TIM DONALD |
Tottenham v Fulham .................................................................................................. MINSTER LAW SOLICITORS TOUCHSTONE GROUP DANSKE BANK
Barclays Premier League
Aston Villa v Sunderland..........................................................................................
Blackburn v Birmingham (8pm)............................................................................
“I don’t think we were going to ever “England remain predictable and don’t “Johnson looks to have run out of ideas. We
Man City v Everton .................................................................................................... beat France, but it was a fairly good play with that dynamism or excite- went back to an old-fashioned
Portsmouth v Chelsea ..............................................................................................
Coca-Cola Championship: Cardiff v Sheff Utd, Leicester v performance and I felt we turned ment you see in the southern hemi- style of play and didn’t make
Reading, Sheff Wed v Watford, West Brom v Coventry.
Scottish Cup Sixth Round Replay: Dundee Utd v Rangers. the corner in many respects. The sphere. They’ll have to up their best use of the quality players
Clydesdale Bank Scottish Premier League
Kilmarnock v Hamilton, St Mirren v Celtic.
introductions of Ben Foden and game in Australia this summer. we have in the squad. I don’t
CRICKET Chris Ashton gave us Johnson should stay but think we are too far away from
Second Test Match—day 5 of 5: Bangladesh v England (Mirpur). impetus but Johnson how about teaming up having a decent side, but
SPORTS EDITOR JON COUCH
needs to blood more with Lawrence it needs fresh ideas
email sport@cityam.com like these.” Dallaglio?” from a new manager.”

Bresnan issues warning as SPORT | IN BRIEF

Button’s eyeing Aussie success third-place finish in the Cheltenham Gold

England close in on victory

FORMULA ONE: World champion Jenson
Button says McLaren can close the gap
on their rivals at this weekend’s
Australian Grand Prix.
Button could only finish seventh in the
season-opening Bahrain Grand Prix a
fortnight ago, while team-mate Lewis
looking to polish off the four remain- and we are sniffing a result.” Hamilton was third.
▲
Cup last week.
Another Cheltenham big-hitter,
Albertas Run is, arguably, the most
notable scratching, while Madison du
Berlais and Notre Pere remain at the
head of the weights with 11st 10lb.
Hoy leads British assault

CRICKET
BY JON COUCH ing wickets in double-quick time to Debutant James Tredwell chipped But Button said: “It’s a low downforce CYCLING: Triple Olympic champion Sir
leave the tourists a modest run chase. in with a valuable 37, but it was the circuit which suits us. I’m excited – I Chris Hoy leads a team of 19 British rid-
ALL-ROUNDER Tim Bresnan has But while he accepts his side are in England bowling attack who were wouldn’t be if I didn’t think we'd have a ers as they look to reassert their global
warned against complacency despite a great position to complete a series credited with hauling the tourists good race. dominance at the World Track Cycling
England moving into a winning posi- whitewash, Bresnan warns it won’t be back into the game, and three crucial “Ferrari are quick and Red Bull are Championships in Denmark, starting
tion in the second Test against an easy to dislodge a resilient wickets in the final session turned very strong but we’ll be a lot closer.” today.
Bangladesh in Mirpur. Bangladesh tail. the Test on its head. Hoy missed the 2009 event through
Bresnan earlier nudged his way to a “They don’t play as many shots as Yet it could have even more con- Mon Mome leads the way injury but believes he is back to his best.
career-best 91 in only his second Test the top order so you get less chances,” vincing had Jonathan Trott, Matt RACING: Last year’s winner Mon Mome “I’ll do my best and I know when I’m
match to help the tourists to 496. the Yorkshire medium-pacer said. Prior and Tredwell not put down is among the 75 horses remaining in the at my best, there are not many people
And he also contributed with the “Some would argue the lower half catches to dismiss opener Tamim. John Smith’s Grand National after the who can beat me.”
ball as, despite a series of dropped is harder to get out than the top so Spinner Graeme Swann recovered latest entry stage. Britain dominated the medals at the
catches, the Tigers were left lagging we’ve still got a lot of hard work to do. from an earlier knock to take 2-38, The 10-year-old famously romped 2008 Beijing Olympics, but struggled to
on 172-6 – a lead of just 95. “We are in a great position. It has while Stuart Broad (2-37) claimed the home as a 100-1 shot last season but will replicate that form at last year’s World
Captain Alastair Cook will now be been slow but we accelerated today vital late wicket of Mushfiqur Rahim. be a front runner this year following his Championships in Hoy's absence.
CITYA.M. 24 MARCH 2010
Horne named acting FA chief executive
but permanent appointment put on ice
▲
GOVERNANCE
BY FRANK DALLERES
CHAIRMAN Lord Triesman insists the
Football Association will not be
rushed into appointing a new perma-
nent chief executive before this sum-
mer’s World Cup.
Alex Horne, the erstwhile chief
operating officer, was yesterday made
acting chief executive after the shock
resignation of Ian Watmore on
Ancelotti: Chelsea won’t sack me
Italian is confident but
history suggests the
Blues boss is on thin ice,
writes Frank Dalleres
C
HELSEA manager Carlo
Ancelotti is convinced he will
still be in charge next season,
irrespective of whether the
team’s Premier League and FA Cup
challenges flourish or flounder. It can-
not have escaped the self-confessed
fan of statistics, however, that Roman
Abramovich has dispensed with
coaches with better records than his.
Ancelotti takes his side to
Portsmouth tonight seeking a swift
return to winning ways, having fol-
lowed the hugely demoralising
Champions League exit to Inter Milan
with a limp draw at Blackburn that
saw Chelsea slip out of the top two for
the first time since August. Suddenly
a trip to Fratton Park that seemed
sure to yield three points looks alto-
gether trickier.
Momentum has fallen of a cliff just
as the season reaches its most decisive
stage. Chelsea were title favourites
before dropping 10 of the last 21
points; even victory this evening in
their game in hand will not be
enough to hoist them back to the divi-
sion’s summit. A draw would not
even put them back in front of
Arsenal and into second.
If his team’s confidence has been
shaken by recent results, Ancelotti’s
seems intact, with the Italian yester-
day batting away suggestions he
Spurs land starlet Sandro
in £10.5m summer deal
PREMIER LEAGUE
▲
TOTTENHAM last night confirmed a
deal to sign Brazilian midfielder
Sandro, subject to a medical.
The 21-year-old is due to arrive at
White Hart Lane later this week with
a view to completing an estimated
£10.5m deal from Internacional.
Sandro will not join the club, how-
ever, until the conclusion of the Copa
Libertadores in August, while a work
permit must also be granted.
Sandro is a defensive midfielder
who has made 73 appearances for
Inter, scoring three times, and made
Monday. But Triesman, who held an
emergency board meeting at
Wembley yesterday, says the search
for the organisation’s seventh chief
executive in 11 years will take time.
“There’s no desire to spend a huge
amount of time on this but I want to
make sure that when the board is
slightly reconfigured, as it is each
summer, that it has the chief execu-
tive that it wants,” he said.
“If we appointed a new CEO before
CARLO ANCELOTTI
PLAYED WON DRAWN LOST WIN %
46 30 9 7 65.2
could be the fifth Blues manager to
be sacked in six years. “First of all I
believe that we will do well this year,”
he said. “However, my future will def-
initely be at Chelsea next year, inde-
pendent of results.”
Abramovich may be reluctant to
ditch Ancelotti after his first season,
having identified the former AC
Milan coach himself and lavished
him with a three-year contract
thought to be worth £6.5m a year. The
former Italy midfielder has also large-
ly succeeded in delivering the enter-
taining style the Russian craves.
Yet survival at Stamford Bridge is
not earned by goals scored.
Ancelotti’s win percentage may be
his full debut for Brazil in a World
Cup qualifier with Chile.
Spurs boss Harry Redknapp is
delighted with his new acquisition.
“He is an outstanding young play-
er,” he said. “He is on the verge of the
Brazilian team, he has already played
for Brazil and captained the Under-
18s, 19s and 21s. He is strong. He looks
a very, very good player so I am look-
ing forward to getting him here.”
Sandro’s arrival casts further doubt
on the future of Wilson Palacios, who
has admitted he is using Spurs as a
“stepping stone” for a dream move to
Real Madrid.
the World Cup we’d only do it by fail-
ing to advertise and failing to find the
right candidates.”
Watmore had been in the job for
less than a year before quitting over
disagreements with senior figures on
the FA board. He is thought to have
been particularly angered by the leak-
ing of an email. Horne, expected to be
in charge until the end of the year,
was acting chief executive in 2008
after Brian Barwick’s departure.
better than those of Luiz Felipe
Scolari and Claudio Ranieri, but
Abramovich’s patience with either
did not extend beyond a year. Avram
Grant won a greater proportion of
games but was axed for failing to land
a trophy, while Jose Mourinho also
had a better ratio than Ancelotti and
won silverware, but was moved on for
other reasons. The only man not
sacked, Guus Hiddink, won 73 per
cent of games before walking away.
Ancelotti says 21 points from the
last eight games will suffice. “I like
statistics and I think that, in the past,
with 86 points every team has won
the title,” he said. “I want to believe
we can win the championship.”
Blame me: Zola tempts fate
WEST HAM 1 Franco responded late on but by then
WOLVES 3 some singing: ‘You’re not fit to wear
▲
PREMIER LEAGUE
BY FRANK DALLERES
UNDER-FIRE manager Gianfranco
Zola urged fans to blame him, not the
players, after furious West Ham sup-
porters revolted during a defeat that
pushed them closer to the drop.
Goals from Kevin Doyle, Ronald
Zubar and Matt Jarvis lifted the visi-
tors to relative safety and left the
Hammers dangling three points
Sport | Football
Broadcasters agree on an even
split for World Cup schedule
WORLD CUP
▲
THE BBC and ITV have confirmed an
even split of matches for this sum-
mer’s World Cup in South Africa.
While ITV will show two of
England’s three group stage games,
the BBC has first pick of last 16 and
quarter-final ties. Both will then show
the final and any semi-final featuring
Fabio Capello’s side.
The BBC kicks the tournament off
with coverage of the opening-day
match between France and Uruguay
LUIZ FELIPE SCOLARI
Hired to much fanfare in July 2008, the
World Cup-winning former Brazil coach was
fired less than nine months later after form
slumped. Big Phil was still in the Champions
League, however, unlike Ancelotti.
PLAYED WON DRAWN LOST WIN %
36 20 11 5 55.6
JOSE MOURINHO
Became club’s most successful boss in three-
year spell that included their first league
titles for 50 years. Failure to repeat his 2004
Champions League win with Porto dogged
him. Left in 2007 after rows with hierarchy.
PLAYED WON DRAWN LOST WIN %
185 124 40 21 66.7
above the drop zone. Guillermo
the home crowd had either departed
or turned against their team, with
the shirt’.
Relegation would be a crippling
blow to the already cash-strapped
club and pressure is mounting on
owners David Sullivan and David
Gold to change managers.
Zola said: “If they want to pick up
on somebody they must pick up on
me. Last year when we were playing
well, I took the compliments. I can
take the criticism as well.
“I have to make sure the team react
in the right way. I have a long night in
front of me to think about that.”
27
on Friday 11 June before ITV shows
England’s match against the United
States the following day.
WHO HAS WHAT? | ENGLAND’S GROUP
Saturday 12 June
England v USA (ITV1, ko 3pm)
Friday 18 June
England v Algeria (ITV1, ko 7.30pm)
Wednesday 23 June
Slovenia v England (BBC1, ko 3pm)
AVRAM GRANT
Handed the reins when Mourinho departed,
Grant exceeded expectations by keeping up
the hunt for league and European glory until
the very end. Finishing runner-up in both was
not enough, however, and he was fired.
PLAYED WON DRAWN LOST WIN %
54 36 13 5 66.7
CLAUDIO RANIERI
Abramovich inherited Ranieri on buying the
club and gave him a season before controver-
sially showing him the door. That he led them
to the Champions League semi-finals and sec-
ond in the title was deemed insufficient.
PLAYED WON DRAWN LOST WIN %
199 107 46 46 53.8
Council could join
club in stadium bid
WEST Ham are in talks with Newham
Council over making a joint bid to
occupy the Olympic Stadium in
Stratford after the 2012 Games.
If the two parties can reach an
agreement they will then submit a
formal bid to the Olympic Park
Legacy Company.
Vice-chairman Karren Brady told
City A.M. on Tuesday that the nearby
stadium represented “a once-in-a-life-
time opportunity”.