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Friday Papers: Call for QE to stave off eurozone deflation

Friday Papers: Call for QE to stave off eurozone deflation

Top stories

  • Financial Times: Lorenzo Bini Smaghi, European Central Bank executive board member, has called for “quantitative easing” to be used to boost the eurozone economy if deflation risks emerge across the 17-country region.
  • The Daily Telegraph: Sir Mervyn King, Governor of the Bank of England, has used his position as vice-chairman of Europe's "early warning watchdog" to warn that the developing debt crisis is causing a dangerous "dependence on central banks"; his comment comes just a day after the European Central Bank provided a record €489 billion of cheap loans to banks.
  • The Independent: The "environmental squeeze" that helped prompt British Airways owner IAG's takeover of BMI is set to ignite a trade war between China and Europe after the EU's top court upheld a move to charge airlines using the Continent's airspace for their greenhouse gas emissions.
  • The Guardian: The UK has revised its GDP growth for third quarter to 0.6% from a previous estimate of 0.5%, boosted by a pickup in services and construction sector output; but the second quarter was revised down from 0.1% growth to show no expansion at all.
  • Daily Express: Royal Bank of Scotland Thursday warned it is likely a “small country” will be forced to quit the eurozone; analysts said the likeliest drop out would be Greece.

Business and economics

  • The Daily Telegraph: Link, the cash machine network which accounts for 70% of cash machines in the UK, said the total value of withdrawals from its network in December so far had risen by 7% to £7.6 billion when compared with the same period last year.
  • Daily Mail: The Dutch finance ministry has given its support to Britain’s efforts to prevent a financial transactions tax being imposed across Europe.
  • Financial Times: The private sector would play an increasingly prominent part in weapons and equipment purchases for the UK’s armed forces under radical proposals seeking the removal of that role from the Ministry of Defence.
  • Financial Times: Britain has restructured its aid programme in India to give it the characteristics of a sovereign wealth fund; the ambitious re-engineering of a programme worth £280 million a year will direct half the budget towards private sector investments that seek to lift millions of Indians out of poverty without making a loss.
  • Financial Times: Exchanges and brokers must take the lead in policing high-frequency trading, according to the European Securities and Markets Authority, a pan-European markets regulator, which has given market participants slightly more than four months to comply with guidelines on computerised trading.
  • The Independent: Ravi Ruia, the billionaire founder and chairman of Essar Energy, is to step down temporarily, following a ruling in India that he is to face charges relating to a $39 billion telecommunications scandal in the country.
  • Financial Times: US consumers will have access to a new range of “super Wi-Fi” wireless services next year after the Federal Communications Commission removed the final obstacle to the commercial use of the so-called “white spaces” of unused spectrum between broadcast TV channels.
  • Financial Times: Toyota said on Thursday that it expected its worldwide sales of Toyota and Lexus premium-brand vehicles to rise 20% to 8.48 million next year, from 7.05 million in 2011.
  • The Daily Telegraph: Public Company Accounting Oversight Board has found problems with 13 of the 61 reviews made by Ernst & Young in its latest annual review of accountants; the deficiencies found included failure to address financial mis-statements as well as failure to meet disclosure requirements.
  • Financial Times: Thomson Reuters has suspended the auction of its healthcare business; the Canadian-controlled company said global economic conditions had become “more challenging” and were “not conducive to concluding a transaction that reflects the fair value of the healthcare business at this time”.
  • The Daily Telegraph: The British government was forced to deny that its North Sea tax hike had hit the UK oil and gas industry, after UK natural gas production in the third quarter of 2011 slumped to the lowest level since records began in 1996, at 103TWh.
  • The Guardian: News Corporation directors are coming under renewed pressure from investors to loosen the grip of the Murdoch family after one of America's leading bodies on corporate governance called for an end to the company's dual-class stock structure that reinforces Rupert Murdoch's dominance over its affairs.
  • Financial Times: Mead Johnson Nutrition’s shares plunged 12.3% to $67.08 in early afternoon trading on Thursday after a batch of its Enfamil powdered baby formula was pulled from more than 3,000 Walmart stores; an infant who had consumed the product and died was found to have been infected with Cronobacter, a rare bacterial illness that could have been contracted by ingesting a tainted product.
  • The Daily Telegraph: Standard & Poor’s has risked further criticism after the ratings agency was forced to retract a ‘downgrade’ for US investment bank Goldman Sachs.
  • Financial Times: A dispute between Alfa Group, headed by Russian oligarch Mikhail Fridman and Mehmet Karamehmet, one of Turkey’s richest men, has taken a new turn with claims that have raised questions over the ownership history of London-listed Genel Energy, the group headed by former BP chief executive Tony Hayward.
  • The Daily Telegraph: Lloyds Banking Group has sold a portfolio of debt valued at more than £900m to Lone Star, a US private equity firm, as the state-backed lender continues to shrink its balance sheet.
  • The Independent: The stockbroker Daniel Stewarthas come up with a novel alternative to the City bonus; it now pays its 57 staff, from receptionist to chief executive, a monthly "retention payment" equivalent to what their bonus for the year would be.
  • Financial Times: The attorney-general for New York state has opened an investigation into the Pearson Foundation, looking to establish whether trips it organised to international educational conferences were intended to influence state officials’ decisions when awarding commercial contracts.
  • The Daily Telegraph: Deutsche Bank has been sued by two hedge funds - Kingate Global Fund and Kingate Euro Fund – that allege Germany's biggest bank has pulled out of a $1billion agreement to buy claims the funds have for losses incurred investing with Bernie Madoff.
  • Financial Times: VW’s email server will stop routing messages 30 minutes after the end of staff shifts amid worker anger at the blurring of home and the workplace.
  • Daily Mail: Upmarket furniture chain Heal’s posted a £2.5million loss for the year to September 17 – slightly narrower than the £3.7million posted the previous year.
  • The Independent: The property investor Hansteen Holdings and a fund managed by the firm have spent £150 million on 88 industrial warehouses formerly owned by the Merseyside-based Spencer Group.
  • The Guardian: Thousands of workers at retail chain Blacks Leisure are facing a nervous Christmas as the outdoor clothing and equipment firm teeters on the brink of administration.
  • Daily Mail: Private health firm Bupa has hired hired Diageo executive Stuart Fletcher as its new chief executive.

Share tips, comment and bids

  • Financial Times: Deutsche Börse and NYSE Euronext have won US approval for their planned merger even as the companies prepare to step up political lobbying in Europe after failing to convince European Union officials that proposed antitrust concessions go far enough.
  • Financial Times: Deutsche Börse and NYSE Euronext have won US approval for their planned merger even as the companies prepare to step up political lobbying in Europe after failing to convince European Union officials that proposed antitrust concessions go far enough.
  • The Daily Telegraph: The National Grid is poised to sell off its four remaining UK gas distribution networks to the Chinese government early in the new year; a price-tag of between £1 billion and £2 billion per network is understood to be the most likely sum agreed, sources said.
  • Financial Times: Three Gorges Corporation has won a bidding contest to buy a stake in Energias de Portugal, the country’s dominant power company, for $3.5 billion in a deal that is seen as a forerunner of other potential asset sales to China by debt-stricken eurozone economies.
  • Financial Times: International Airlines Group, which was only formed in January from a merger of British Airways and Spain’s Iberia, on Thursday unveiled a $270million deal to buy BMI British Midland, Lufthansa’s loss-making UK subsidiary.
  • Financial Times: Executives at Vulcan Materials, the building materials company, have urged shareholders to reject a $4.9billion bid for the company from rival Martin Marietta, arguing that the hostile offer is illegal, inadequate and risky.
  • The Independent: Scapa Group, which supplies adhesive bonding for electronics and medical equipment, has splashed out up to $45 million to buy US rival Webtec Converting.
  • Financial Times: Repsol has signed a $1 billion deal to buy stakes in oil and gas fields in Mississippi owned by SandRidge Energy as part of a drive to diversify into producing assets in less politically volatile countries.
  • Financial Times: The China Investment Corporation, China’s sovereign wealth fund, has paid about $243 million for a 25% stake in Shanduka Group, a prominent South African company whose investments stretch across a range of sectors including, energy, mining, telecommunications and financial services.
  • Financial Times: TeliaSonera has moved into pole position in the fast growing Kazakh mobile market by agreeing with state-owned carrier Kazakhtelecom to buy its 49% stake in Kcell, Kazakhstan’s leading mobile operator, for $1.5 billion.
  • Financial Times (Comment): The assumption that banks provide funding to the private sector rather than act as piggy bank to the state is quietly crumbling
  • The Daily Telegraph (Comment): The ECB’s back-door bail-out for Italy, Spain, Belgium, and… France? …is €489 billion.
  • The Daily Telegraph (Comment): The Conservatives and Labour have both turned to private equity donors for insights on the burdens on business but their conclusions differ markedly.
  • Financial Times (The Lex Column): Lufthansa: The German airline has made a small start to much-needed consolidation.
  • Financial Times (The Lex Column): RBS and Lloyds: Lloyds shares trade at 0.4 times book value; RBS’s at 0.3 times. Even allowing for a discount to reflect state control, investors are sceptical
  • Financial Times (The Lex Column): Elpida / Nanya: Deeply troubled DRAM industry is in need of alliances or full mergers

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