BUSINESS WITH PERSONALITY
SPURS THUMP EUROPEAN
Issue 1,255 Wednesday 3 November 2010
EXCHANGE CRASH
MAY BE SABOTAGE
▲
FINANCIAL SERVICES
BY STEVE DINNEEN AND JULIET SAMUEL
A WORKER at the London Stock
Exchange is being investigated over
allegations he deliberately sabotaged
its Turquoise trading platform.
The high frequency trading plat-
form crashed during early morning
trading yesterday and was offline for
two hours. The exchange released a
statement saying the incident was
caused by human error that “may
have occurred in suspicious circum-
stances.”
City A.M. has learned the crash may
have been timed to coincide with an
announcement by the LSE, planned
for later that morning, confirming
the date it would transfer its main
exchange to a new Millennium IT
software platform.
Turquoise made the switch to
Millennium software last month and
the main exchange had completed its
third “dress rehearsal” for the switch
last weekend. The LSE has now been
forced to postpone the transfer until
the new year.
The problem is believed to have
locked customers out of the network
but not affected the platform itself.
According to the release a small num-
ber of executions that took place will
be “busted”. A spokesman said: “A
virus is one theory but it is too early
to say.”
An internal investigation is now
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CHAMPS INTER MILAN
BALE STARS IN TRIUMPH P34-35
Xavier Rolet is chief executive of the London Stock Exchange, whose Turquoise trading platform crashed yesterday
focusing on an individual suspect to
discover who is behind the crash. A
Financial Services Authority probe has
also been launched. It is not yet clear
what the motive for an attack could
be.
A source close to the exchange told
City A.M.: “There is a person being
investigated. There was an announce-
ment about the platform change
planned later the same day.
“It looks like someone may have
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PROPERTY
www.cityam.com
been trying to undermine this.”
He added: “There is no problem
with the IT system. It is working just
fine.”
A second source said: “This is a
highly competitive market and the
stakes are very high. Exchanges move
very quickly and everyone is trying to
muscle into the space.”
The LSE bought Sri Lanka-based
Millennium in a bid to upgrade the
bourse’s system to compete with
super-fast transfers offered by rivals
including Bats Europe and Chi-X
Europe.
However, Turquoise was forced to
close for an hour a day after launch-
ing on the Millennium software fol-
lowing a problem with a network
card. The platform was created with
backing by banks including Citi,
Goldman Sachs, Credit Suisse, UBS
and Merrill Lynch before being
bought by the LSE.
REVIVAL
LAND SECURITIES
CHIEF EXECUTIVE
INTERVIEW P20
FREE
MP hits out
at attacks
on the City
▲
POLITICS
BY DAVID CROW
THE Square Mile’s local MP will today
launch a rare but impassioned
defence of the City and financial serv-
ices, accusing the coalition of “playing
to the gallery” to appeal to “general
banker bashing sentiment”.
Mark Field, the Conservative MP for
the Cities of London and Westminster,
will use a speech at Westminster Hall
to hit out at the “near universal dis-
taste reserved for financial services”.
Field will also warn the government
against punishing the financial servic-
es sector while “picking winners” to
engineer a rebalancing of the econo-
my. He will concede that the financial
crisis highlighted the UK’s depend-
ence on the City and its exposure to
the global banking system.
But he will add: “My worry is that it
is being used as code – even by
Conservative coalition ministers – for
a playing to the gallery as part of the
general banker bashing sentiment.”
And he will warn against “penalis-
ing our most competitive sector”
while “fooling ourselves that a mirac-
ulous rebalancing of the economy will
occur by default”. “It is not for the gov-
ernment to pick winners and losers,”
Field will say.
Last night, Field told City A.M.: “The
thing I’m trying to get across is this:
time and time again, foreign bankers
tell me we must be mad, because we
have a business that links us success-
fully to international markets, but we
want to throw it away.”
ALLISTER HEATH: P2
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30/08/10 – 03/10/10 is 110,015
 2 News
Time to take inflation seriously again
EDITOR’S LETTER
ALLISTER HEATH
WHO said inflation is no longer a dan-
ger? Wherever one looks, prices are
rising, demolishing the flimsy case
made by the deflationistas. The British
Retail Consortium/Nielsen shop price
index out this morning confirms that
the cost of living is continuing to go
up, hitting ordinary folk and fuelling
general negativity about the state of
the economy. Those of us who have
been calling for months now for a
gradual normalisation of monetary
policy to remind the public that the
authorities haven’t given up on the
war against inflation are tearing out
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Deputy Editor David Hellier
News Editor Ben Griffiths
Night Editor Katie Hope
Associate Editor David Crow
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Lifestyle Editor Zoe Strimpel
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WHAT THE OTHER PAPERS SAY THIS MORNING
ITV BLAMES REGIME FOR NEED TO
CHASE RATINGS
ITV could invest more in arts, factual
programming and drama were it not
for regulations, its managers told a
Lords committee. Archie Norman,
chairman of the UK’s largest commer-
cial broadcaster, and Adam Crozier,
chief executive, told the communica-
tions committee that ITV had been
driven into a “ratings rat race” by reg-
ulations, particularly the contract
rights renewal measure.
LAWYERS CAUTION ON COSTS TO
JUSTICE
The fairness of trials could be under-
mined by court closures and greater
use of video links and telephone legal
advice under plans to slash funding
of the £23bn criminal justice system,
legal experts say. The coalition is
being urged to ensure that its plans
do not threaten fundamental rights
what little hair we have left. What a
shame nobody is listening to Andrew
Sentance, the Bank of England’s lone
inflation hawk. Of course, shop price
figures are merely a small part of the
picture; but they do hugely influence
people’s perceptions of costs.
Overall shop price inflation
increased to 2.2 per cent in October,
from 1.9 per cent in September; given
how competitive retailers are and how
they have been fighting to keep down
price increases, this is worrying.
Especially problematic is food infla-
tion, which increased to 4.4 per cent
in October from 4.0 per cent in
September. Even non-food inflation
increased to 1.1 per cent from 0.7 per
cent in September. While clothing
and footwear deflation accelerated to
1.4 per cent, as new-season ranges con-
tinued to hit the shelves, three-month
average annual deflation was just 1.5
per cent, compared with 5.5 per cent
in 2009. For years during the boom,
tumbling clothing and white goods
prices helped keep down the overall
TfL brings in
extra services
TRANSPORT
▲
BY JULIET SAMUEL
LONDONERS trying to beat today’s
underground strike will be able to
make use of over 100 extra buses,
10,000 more places on riverboat servic-
es and a Tube service operating at 40
per cent capacity, Transport for
London (TfL) has said.
The strike is due to end at 9pm
today after a 24-hour walk-out.
However, TfL says it cannot promise
that normal services will resume until
tomorrow morning.
In zone one, all lines except the
Circle and Piccadilly lines will have
some services running, although
trains are likely to be less frequent
than normal. In other zones, most sta-
tions will be closed but could open late
in the evening when the strike has
officially ended. Buses and riverboats
for suspects to be properly represent-
ed and to answer their accusers in
person.
US BANKS SEEK FORECLOSURE EXPERTS
US banks are beefing up their mort-
gage departments in response to
growing pressure and concern over
the use of “robo-signers”, employees
who rubber-stamped thousands of
foreclosure documents without
checking the accuracy of the informa-
tion they contained, as required by
law. Recent job postings indicate that
banks are recruiting “foreclosure spe-
cialists” and “bankruptcy documenta-
tion” experts.
CHINA’S BANKS IN DRIVE TO BOOST
FUNDS
China’s biggest banks plan to raise
more than a combined 190bn yuan
($28.4bn) in the coming weeks
through rights issues in Shanghai
and Hong Kong as they seek to shore
up their balance sheets in the after-
math of a record lending spree.
inflation average – this imported dis-
inflation, courtesy of China, helped
camouflage the excessive liquidity in
the system and conned the authori-
ties into a false sense of security. But it
did wonders for living standards, a
phenomenon which has now ended.
The large supermarkets, who have
done more for consumers than any
other part of the UK economy in
recent years, are finding it much
tougher to continue to discount. This
is due to higher input costs from com-
modities, rising distribution and
freight charges, and the rolling effect
of January’s return to 17.5 per cent
VAT. In particular, cotton prices con-
tinue to edge up on the back of weak-
er ending-stock estimates, pushing
Cotlook’s A-index, which measures
world cotton prices, to a 15-year high.
There are only a few bits of good
news: as global wheat stocks remain
50.2m tonnes above 2007/8 levels, and
prices around 40 per cent lower than
their peak in 2008, commodity-fuelled
food inflation is unlikely to return to
will run extra services while the over-
ground, Tramlink and Docklands
Light Railway will operate as normal.
Volunteers will also hand out walking
and cycling guides at Tube stops.
CBI deputy general director John
Cridland said: “Just 33 per cent of bal-
loted members supported the strike –
only 17 per cent of the total London
underground workforce.”
The biggest Tube transport unions,
RMT and TSSA, say they are striking in
protest at 800 job losses. Three hun-
dred of the jobs are to be shed through
not filling vacated posts.
Transport for London
managing director
Steve Allen has
pledged to keep
London moving.
TALKTALK ORDERED TO CLEAN UP ITS
ACT
Ofcom has given TalkTalk 30 days to
resolve a problem that triggered a
deluge of complaints from former
customers who received bills despite
cancelling contracts. The regulator
said it had issued a stinging rebuke to
Britain’s second-largest internet
provider and Tiscali, which the com-
pany acquired in May last year, for
breaching consumer protection rules
after more than 1,000 customers
wrote in with their protests.
LESOTHO MINE OFFERS SECOND GIANT
DIAMOND
A giant diamond worth about $10m
has been unearthed in southern
Africa. The find by the London-listed
miner Gem Diamonds is the second
exceptionalrough diamond to come
from the Letseng mine in Lesotho in
the past two months.
CITYA.M. 3 NOVEMBER 2010
NEWS | IN BRIEF
Mitsubishi set to buy RBS unit
Mitsubishi, Japan's biggest bank by
assets, is planning to buy the project
past elevated levels. But in virtually financing unit of the Royal Bank of
every other way, inflationary pres- Scotland for about 500bn yen (£3.9bn).
sures are now far too high for comfort The Japanese bank presented a final
– and that is even before the massive offer price late last month to the British
VAT hike to 20 per cent kicks in early government, which controls 84 per cent
January. It is time for a renewed war of RBS' voting rights, and is expected to
against inflation – there is no time to sign a deal by year end and complete it
lose. in the first half of 2011. RBS’ project
financing unit is one of the non-core
WELL DONE, MARK operations that the government has
Congratulations to Mark Field, the asked the bank to sell to pay back public
Tory MP for the Cities of London and funds.
Westminster. His excellent speech,
which we highlight on our front page Westfield in £2.2bn rights issue
and in which he stands up for The owner of Westfield shopping centre,
London’s financial services industry Westfield Group, is to raise A$3.5bn
in defiance of his party’s dogmatic (£2.2bn) through a rights issue that will
populism, is unusually brave and involve creating a new company from
lucid. He is right that foreigners think 54 Australian and New Zealand shop-
we have gone mad as we attempt to ping centres. The issue will be made up
destroy – rather than improve and of an Au$2bn public offering, with the
reform – a vital industry for this coun- rest offered to existing security holders.
try. Others in the House of Commons The main benefit to the group will be a
must now defy their parties and stand A$4.4bn reduction in its debt, enabling
up for London’s most important it to pursue what it claims are plans for
industry, taxpayer and employer. A$10bn worth of development and new
allister.heath@cityam.com opportunities.
CITY VIEWS: IS STRIKING THE RIGHT ACTION FOR
LONDON’S TRANSPORT UNIONS? Interviews by Matthew West
CHRIS BRADSHAW | NORTHDOOR
“I will be working from home I can’t be bothered with all the
malarkey. They might have a legitimate cause but they are not
hitting the right people. They should be sorting this out
with the people they have the grievance with. ”
VICTORIA JUST | ARTEMIS
“Fortunately I usually get the overground in but I think it
causes a lot of an inconvenience with people not turning
up to work and businesses losing out on working hours.
It’s a bit of a nightmare to be honest.”
KESH SHARMA | MAGELLAN
“I’m not a fan of the tube strikes because it stops everyone
else working and getting into London. I can still get in so I’m
very fortunate but a lot of my meetings get cancelled
because people can’t get in. I just think the strikers
have the ability to hold London to ransom. ”
WESTFIELD SET TO REVEAL DEMERGER EUROPE'S DEBT WORRIES RETURN
PLANS Borrowing costs of weaker European
Westfield, the world's largest shop- countries are again on the rise amid a
ping centre owner, is expected to steady stream of bad news. Several
announce the spin-off of its factors are contributing to the misery
Antipodean assets in a move that of bond markets in countries on the
could pave the way for development geographic edge of the 16-nation euro
plans in the UK. The Australian group bloc. Ireland's bank bailout is getting
issued a statement requesting that ever more costly, and it looks like tax-
trading in its shares be halted “pend- payers may have to take control of
ing a further announcement about a another large bank. Officials in heavi-
possible transaction” ly indebted Greece are talking more
openly about potential debt restruc-
HOME OWNERS INCREASINGLY OVER turing. In Portugal, political oppo-
40 nents have had a tough time finding
Britons who own their own homes a convincing budget compromise.
will increasingly be in their 40s, 50s
and 60s, lenders said yesterday. The RUSSIA BACKS A RENAULT-NISSAN
Council of Mortgage Lenders said the STAKE IN AVTOVAZ
shift follows the first significant Russia yesterday gave its backing to
decline in home-ownership since French car maker Renault and its
2003. Owner-occupation peaked at Japanese alliance partner Nissan
70.9 per cent in 2003 but had declined building up a 50 per cent stake in car
to 67.9 per cent by 2008/9, it said. maker OAO AvtoVAZ.
CITYA.M. 3 NOVEMBER 2010
DEMOCRATS SET TO LOSE CONTROL OF CONGRESS
BBVA in €5bn
cash-call as it
buys Garanti
▲
BANKING
BY KATIE HOPE
SPANISH bank BBVA yesterday
launched a €5bn (£4.4bn) rights issue
to help it fund its diversification away
from a stagnant home market and
bolster its capital levels in line with
new Basel III requirements.
BBVA, the second-largest Spanish
lender after Santander, said that it
would buy nearly a quarter – 24.9 per
cent – of Turkish bank Garanti for
€4.2bn, and raise €5bn with a rights
issue to part-finance the deal.
The deal, which gives BBVA joint
control with Garanti parent Dogus
Group, will officially make the
Spanish lender an emerging markets
bank with 51 per cent of its earnings
now coming from that source. Until
now, the bulk of BBVA’s overseas busi-
ness was in Latin America and the
United States.
The BBVA rights issue will be a one-
for-five offer which will entitle the
holders to buy shares at €6.75 each,
29 per cent below Friday’s closing
price of €9.11.
BBVA paid eight Turkish lira per
share for the stake, a 10 per cent dis-
Stocks rally as market anticipates
Fed decision on QE this evening
▲
ECONOMICS
US TREASURY yields were yesterday
close to their lowest levels since January
2009 on the back of expectations that
the Federal Reserve will today restart its
quantitative easing (QE) programme.
Ten-year treasury yields are at 2.6
per cent while five-year notes hit 1.2
per cent. Analysts expect the Fed to
announce bond purchases of between
$500bn (£311.7bn) and $1 trillion this
evening, with most anticipating a
gradual strategy over several months
rather than a “shock and awe”
approach.
However, it is not clear how much
the market has priced in and therefore
News 3
EARLY exit polls
Juror dismissed in
Terra Firma battle
suggest that
President Barack
Obama will have to
deal with a new
balance of power in
Washington after
yesterday’s
midterm elections. Story”. Trial lawyer Ted Wells dis-
▲
COURTS
The Democrats BY HARRY BANKS played on a screen in a Manhattan
appeared to have federal court the “special thanks” the
lost control of the A JUROR in the civil fraud legal battle juror received for her contribution.
US House of between Citigroup and private equity Terra Firma sued the bank, which
Representatives, group Terra Firma was dismissed yes- was bailed out with taxpayer money
with voters most terday after the bank complained in the financial crisis, accusing it of
concerned about about her involvement in an anti-cap- fraud in the May 2007 bidding
the direction of the italist film. process for music company EMI. The
economy, in partic- Citibank cited Donna Gianell’s private equity firm bought EMI for
ular high unem- name in credits for filmmaker £4bn. Citigroup provided £2.6bn in
ployment. Michael Moore’s “Capitalism: A Love loans for the acquisition.
count to last week’s average price, but
shares in Garanti, viewed as one of
Turkey’s best-run banks, have risen by
over a third since the start of the year.
As part of the deal, BBVA acquires
an option to increase its stake by a
further one per cent and get a major-
ity of board seats in five years time.
Shares in BBVA fell as much as 3.8
per cent to hit a four-month low of
€8.76 before retracing lost ground to
close one per cent lower after
investors baulked at the price paid
and the dilutive effect of the rights
issue. Goldman Sachs estimated the
rights issue would dilute earnings per
share by four to five per cent for 2011-
2012. BBVA’s move comes three to
four years after other major interna-
tional banks such as Citigroup, ING
and BNP Paribas bought or took
stakes in Turkish lenders.
BBVA said €3.1bn of the €5.1bn
rights issue would be used for the
acquisition, with €1bn earmarked for
the potential impact of the purchase.
The rest would be used for non-
acquisitive growth. Morgan Stanley
and Goldman Sachs will act as joint
global coordinators and bookrunners
for the rights issue.
what effect any announcement will
have on asset prices or the strength of
the dollar. There also remains the
question of whether the Fed will set an
upper limit for purchases.
Ahead of the decision the dollar
index fell from 78.1 to 77.3 while the
S&P 500 rallied to close at 1,194, up
0.84 per cent from Monday’s close.
The price movements have prompt-
ed concerns that a restart of QE could
spark asset price bubbles, capital flow
imbalances and, when the US recovery
speeds up, inflation.
Meanwhile, expectations of further
QE in the UK are waning due to strong
economic data and persistent above-
target inflation.
 4 News
GM wheels in
tax break on
$50bn profit
▲
AUTOMOTIVE
BY HARRY BANKS
GENERAL Motors will not have to pay
US federal taxes on up to $50bn
(£31bn) of profits for as long as 20
years because of a tax exemption for
companies bailed out by the govern-
ment under the Troubled Asset Relief
Programme (Tarp).
The government ruling, passed last
year, means the losses racked up by
GM before its government-funded
bankruptcy can be used to offset its
future tax liabilities, according to a
report in the Wall Street Journal.
With the standard federal corpo-
rate tax rate at 35 per cent, that tax
break could save GM $17.5bn.
The news comes as the Detroit car-
maker sets out to repay around $7bn
of the $58bn it owes the taxpayer,
through a public share listing of
between $9.5bn and $10.5bn, valuing
the company at around £60bn –
roughly equivalent to rival Ford.
The tax benefit comes from so-
called tax-loss carry-forwards, which
allow companies to use previous loss-
es to shield profits for up to 20 years.
Previously, companies that have a
significant change in ownership – as
GM did when the government took a
61 per cent stake in the company –
would be restricted from claiming
the tax break.
But, according to reports, the gov-
ernment last year decided Tarp recip-
ients would not be barred – because
the tax boost makes bailed-out com-
panies more attractive to investors.
The rationale is that even though the
government loses out on tax pay-
ments, there would be no taxes paid
at all if the companies fail.
GM expects to sell 365m common
shares at $26 to $29 each. GM also
plans to sell $3bn of preferred shares
that would convert to common
shares under mandatory provisions.
GM, which emerged from bank-
ruptcy in July 2009 with the US
Treasury as its majority shareholder,
is likely to sell a combined $1.5bn to
$2bn stake to four or five sovereign
wealth funds, sources said.
Industry minister Tony Clement has not yet decided on the Potash deal Picture: REUTERS
All eyes turn to Canada
ahead of Potash decision
M&A
▲
BY MARION DAKERS
CANADA’S industry minister said yes-
terday he had still not made a deci-
sion on whether to allow BHP
Billiton’s $39bn (£24.7bn) takeover of
Potash Corp to continue.
Tony Clement has until the end of
today (4am Thursday, UK time) to give
the green light to BHP Billiton under
the Investment Canada Act, which
requires foreign takeovers to bring a
net benefit to the country.
Clement issued a statement yester-
day morning, following reports in the
local press that he had cleared the
deal. “I am currently reviewing the
facts of the case. As of yet no decision
has been made, and no decision or
recommendation has been communi-
cated to the investor,” he said.
The Canadian government has only
rejected one foreign takeover since
the investment laws were changed in
the 1980s.
CITYA.M. 3 NOVEMBER 2010
NEWS | IN BRIEF
Hewlett-Packard boss to testify
Hewlett-Packard’s new chief executive is
set to testify at Silicon Valley’s biggest
trial in years, possibly answering
charges he oversaw SAP’s theft of soft-
ware from Oracle. Oracle attorney
Geoffrey Howard told a court yesterday
that former SAP boss Leo Apotheker --
who started his job as head of HP on
Monday -- would testify at the high-
stakes trial, with his credibility at stake.
The trial’s other celebrity witness will be
Oracle chief Larry Ellison, a billionaire
playboy known for his public outbursts
and a passion for racing sailboats and
cars. SAP has admitted liability for the
wrongful downloading of software con-
tent from Oracle, but the two disagree
sharply on how much SAP should pay in
damages.
Boris Johnson: Donate bonuses
London mayor Boris Johnson yesterday
called on bankers to donate some of
their bonus to good works projects,
after Japanese investment bank Nomura
donated £150,000 to an after-school
club in Camberwell and a Saturday
school near King’s Cross. “With the
bonus season upon us I hope others —
individuals, as well as institutions — will
give something back.” he said.
Xstrata lifts offer for Sphere
Anglo-Swiss miner Xtrata unit Sidero
last night raised its takeover offer for
Sphere Minerals to A$3.00 per share
from A$2.50 per share, valuing its offer
at A$514m (£420.4m). Xstrata has been
forced to extend its offer after poor
uptake of its initial offer. China-backed
Sin-Tang holds an estimated 12 per cent
interest in Sphere, an Africa-focused
iron ore miner.
CITYA.M. 3 NOVEMBER 2010 Focus on Lloyds Banking Group 5

ODDS ON | THE CONTENDERS TO REPLACE ERIC DANIELS

RICHARD
MEDDINGS
FINANCE DIRECTOR
AT STANDARD
CHARTERED
IN THE next few weeks, Lloyds is set
to hold a “beauty parade” of head-
hunters clamouring to be the ones
appointed to sniff out a worthy suc-
cessor to chief executive Eric Daniels.
In the month or so since Daniels
Eric Daniels will tendered his resignation, several of the
step down as contenders originally mooted for the
chief executive of post have found other positions –
Lloyds next year notably Naguib Kheraj, the ex-boss of
Picture: REX JP Morgan Cazenove, who has joined
Lazard; and HSBC’s finance director
Douglas Flint and investment banking
head Stuart Gulliver, who, of course,
are stepping up to become chairman
and chief executive of the bank.
That leaves the field a little more
open for the rest, of which Standard
Chartered finance director Richard
Meddings is quickly becoming a firm
favourite among punters (with odds of
7/4 quoted by Cantor Index).
Nationwide chief executive Graham
Beale, Royal Bank of Canada chief
executive Gordon Nixon, former
Barclays domestic banking head Fritz
Seegers and Gail Kelly, chief executive
of Westpac, are also favoured as out-
siders, while Helen Weir, Lloyds’ exec-
utive director for retail, is regarded as
the strongest candidate internally.

Lloyds sees
its recovery
start to slow
the negative impact that Ireland is
▲

BANKING
BY VICTORIA BATES
LLOYDS Banking Group shares yes-
terday lost more momentum after a
muted third-quarter interim state-
ment which indicated that the
group’s progress towards its objec-
tives has slowed compared to the
first half of the year.
In an update notably thin on
numerical detail, Lloyds said it deliv-
ered “good underlying income
growth…[and] lower costs through
continued strong integration deliv-
ery”. The group’s banking net interest
margin, a key driver of its recovery, is
expected to rise only “modestly” over
the second half, Lloyds said, adding
that it remains on track to deliver
£1.3bn of cost savings from the inte-
gration of HBOS by the year end.
Although impairments continued
to decline over the third quarter,
Lloyds said lower impairments in the
wholesale division had been offset
by higher charges in the wealth and
international businesses – where
continuing high levels of bad debts
in the Irish business were com-
pounded by weakness in Australia.
Charles Stanley analyst Nic Clarke
said: “We remain concerned about
having and despite good progress
this year we believe the market still
frets about the significant amount
of wholesale funding that matures
in the next couple of years and the
potential impact that a weakening
UK economy would have on Llloyds
given its significant exposure to UK
retail and commercial customers.”
But Lloyds also issued positive
guidance on its funding position,
having hit its target of £25bn of full-
year public term issuance by the end
of September. The group issued a fur-
ther £2.5bn in October, allowing it to
accelerate repayment of its central
bank funding facilities.
Lloyds shares fell 3.18 per cent
over the day to close at 67.39p.
ANALYSIS l Lloyds Banking Group
78 p
67.39
2 Nov
74
70
66
2 Aug 20 Aug 10 Sep 30 Sep 20 Oct

Understandably mixed picture

CONSIDERING the turmoil that
Lloyds has been through in recent
years, it would be wrong to expect
anything other than a mixed pic-
ture at this stage in its long march
back to health. Still, it would be
nice if the image were a little clear-
er, a fact not helped by manage-
ment’s aversion to numbers in
yesterday’s remarkably sketchy
trading update.
There was good underlying
income growth and a modest
improvement in the all-important
net interest margin (NIM), which
stood at 2.08 per cent in the first
half.
Elsewhere, impairments contin-
ue to fall, albeit at a slower rate,
with some analysts worried that it
is too early for Lloyds to be losing
steam at this juncture in its recov-
ery.
The mix of impairments has also
shifted, with Ireland’s woes taking
their toll on the loan book in the
Republic. However, an improving
environment in wholesale, where
write-offs are falling more quickly
than expected, is said to have offset
the worst of the impact.
Meanwhile, Lloyds continues to
wean itself off of government fund-
ing, a necessary if painful process.
But investors should urge caution
until we get the full numbers.
BOTTOMLINE
Analysis by David Crow
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CITYA.M. 3 NOVEMBER 2010 Focus on BP 7

BP sees profit THIRD QUARTER RESULTS

Shell Exxon BP
despite $40bn
Replacement cost Underlying pre-tax Replacement cost
profit: $3.52bn profit: $7.35 bn profit: $1.85bn
Change year on year: Change year on year: Change year on year:
+17.7 per cent +55 per cent -63 per cent

Gulf spill costs

Effects of Gulf of Effects of Gulf of Effects of Gulf of
Mexico: lost 10,000 Mexico: none men- Mexico: $7.7bn cost
barrels of oil equiva- tioned; production this quarter; total
lent per day so far rose 20 per cent in cost to date $39.9bn
the last three
months
▲

ENERGY wake of the spill. During a conference

BY MARION DAKERS
BP revealed the enormous full cost of
the Gulf of Mexico spill yesterday, as it
posted a 63 per cent drop in profit that
still managed to beat forecasts.
The UK-listed oil giant said the disas-
ter in April has cost $39.9bn to date,
including a $20bn fund set aside for
call chief financial officer Byron Grote
told analysts the impact of the ban
would continue well into 2011. BP has
also lost around 100,000 barrels of oil
per day from its production figures fol-
lowing the sale of assets worth $14bn
ANALYST VIEWS: WHAT DO YOU MAKE OF BP’S RESULTS? Interviews by Marion Dakers
to fund the Gulf clean-up. The compa-
ny said it will reconsider its suspension
of dividend payments in February
TONY SHEPARD | JONATHAN JACKSON |
CHARLES STANLEY KILLIK & CO

compensation claims. The company
booked a bigger than expected $7.7bn
charge in the three months to the end
of September to cover ongoing costs
linked to the clean-up.
BP posted a replacement cost profit,
2011, in a nod to a potential pay-out for
long-suffering investors, and that
bonus payments in the next quarter
will be based solely on safety targets.
ANALYSIS l BP
“ “
BP is making progress. It is As expected, the numbers were
doing very well on the disposals and hit by a further provision for the Gulf
improving safety. It’s going ahead with spill, but we remain confident BP has

which excludes changes in oil prices, of
$1.85bn for the quarter, down from
$4.98bn a year ago. This figure rose to
$5.53bn when the cost of the
Deepwater Horizon disaster was
” ”
431.65 investments too, which suggests a good the financial strength to cope with the
p 2 Nov
440 deal of confidence. final cost of the incident.
420
GREG SMITH | FAT PROPHETS

“
stripped out, which comfortably over-
400
shot analyst forecasts and represented
an 18 per cent rise in underlying profit. Oil and gas prices have meant higher production income despite a fall in actual production,

”
Oil production was down four per 380
cent in the quarter, in part due to the which was expected given the moratorium in the Gulf. There was even talk of dividends. On the other
deepwater drilling ban in the US in the 2 Aug 20 Aug 10 Sep 30 Sep 20 Oct
hand, the cost of the clean-up is higher than expected, and the firm has systemic safety issues.

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 8 Politics CITYA.M. 3 NOVEMBER 2010

Landlords
ordered to do
CBI CHIEF TO PROMOTE UK PLC
Anglo-French
green works tie-up cheers
defence firms
▲

ENERGY
BY DAVID CROW
LANDLORDS will be forced to make
their properties more energy effi-
cient, after the government
announced plans for a new “Green DEFENCE tion of European unmanned aircraft,

Deal” yesterday.
Tenants will be given the right to
request everything from insulation
and double glazing to new boilers
when the Energy Bill is passed before
the end of the year.
However, the National Association
of Landlords welcomed the plans,
which were unveiled by energy secre-
tary Chris Huhne, because there will
be no crippling upfront costs for prop-
erty owners.
The government will provide land-
lords with loans to fund the improve-
ments, which will be repaid by
tenants via a levy on their energy bill.
It is hoped that the levy will be off-
set by lower gas and electricity bills,
which should fall as a result of the
energy efficiency measures.
Huhne said: “Landlords will face no
upfront cost, and will benefit from an
improved property. By 2015 every ten-
ant should be able to be as warm as
toast in their home.”
▲
BY DAVID CROW
DEFENCE contractors yesterday gave a
cautious thumbs up to plans for
greater military cooperation between
Britain and France, which could help
soften the blow of swingeing cuts to
government spending on big projects.
Prime Minister David Cameron and
French President Nicolas Sarkozy yes-
terday signed two treaties, paving the
way for an unprecedented degree of
collaboration in a number of defence
areas, including aircraft carriers, sub-
marines, nuclear technology and a
joint ground force.
BAE Systems, Britain’s largest
defence contractor, welcomed the
decision to cooperate on unmanned
air systems or “drones”, which have
OUTGOING CBI chief Richard Lambert is to take up a role as a British trade ambassador, become commonly used in the Iraq
Prime Minister David Cameron will announce next week during a visit to China. The and Afghanistan conflicts.
trade ambassadors programme was started under Gordon Brown in order to promote A source close to BAE said that
lobbying for UK business interests abroad. Its current makeup includes AstraZeneca France and Britain should pool their
chairman Chris Brinsmead and Barclays chairman Marcus Agius. Picture: REUTERS resources to invest in a new genera-
instead of buying off the-peg systems
from the US.
Pursuing the latter option would
lead to a skills shortage in Europe and
the UK, the source said, adding: “You
need a steady trickle of work to main-
tain those skills for the future.”
Meanwhile, Cobham also gave a
cautious thumbs up to the “Entente
Coridale”. “Anything that protects
defence spending and programmes is
a good thing as far as we’re con-
cerned,” a source close to Cobham
said.
Rolls Royce was more equivocal,
believing that it is too early to tell
whether the agreement will have any
impact on defence spending. “The
real answer is the devil is in the
detail, the feeling is it’s hard to say
either way,” said one source.
Tina Cook, defence analyst at
Charles Stanley, said the Anglo-
French deal would likely mean fewer
project cancellations.

Hot fares!
@
@Royal
Fly from Heathrow
Vince Cable wants to sell off Royal Mail

Dubai from £
340 Mail
Lagos from £
340
Nairobi from £
417
reports fall
in profits
@
Kuala Lumpur from £
489
Johannesburg from £
505
▲

POLITICS
BY DAVID CROW

Seoul 509
from £ PROFITS at state-owned postal service
Royal Mail tumbled in the first half,
highlighting the mammoth task the
government will face in finding a
Return fares, incl taxes trade buyer or completing a flotation.
In the six months to the end of
September, operating profit plunged
by 72 per cent to £52m, against
More offers on KLM.com £184m a year earlier,as falling mail
volumes, stiff competition, and the
inexorable rise of electronic commu-
www.cityam.com

nication took their toll. Revenues

tumbled from £4.6bn to £4.4bn.
Fares quoted are for return flights from Heathrow to/via Amsterdam, including taxes and charges, which are subject to change. Vince Cable, the business secretary,
Book by 15/11/10. Travel periods vary. Fares are subject to availability. Credit card surcharge will apply. Specific booking conditions recently unveiled plans to privatise 90
and the General Conditions of Transportation of KLM and AIR FRANCE apply. Prices correct at 29/10/10. per cent of Royal Mail, either through
a flotation or trade sale.
Trova Consulting, an advisory firm
commissioned to value to postal serv-
ice, said it could be worth as little as
£700m. Possible trade buyers include
dutch rival TNT and Deutsche Post.
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 10 News CITYA.M. 3 NOVEMBER 2010

Aviva plans £400m

savings in two years
create a simplified, more modern eight key European markets, plus

▲
INSURANCE
BY JEREMY HAZLEHURST
INSURANCE company Aviva has
announced plans for £400m in sav-
ings over the next two years, half of
which will come from efficiency
gains, and half from cost savings. It
has also said that it will close its
final salary pension scheme, which
has 7,600 members, something
that will save £50m a year. Several
hundred jobs will also go in its
Canadian business, although there
will be no job-losses in the UK.
Chief executive Andrew Moss
said: ‘We will continue our drive to
way of doing business, which will
both improve our efficiency and
reflect customers’ changing prefer-
ences.”
Sales in the UK were up 26 per
cent in the UK, to £2.4bn, taking
domestic sales to £12.3bn for the
first three quarters of 2010 – a 16
per cent increase on 2009. In the
UK sales of long-term savings prod-
ucts were up 22 per cent and, glob-
ally, new life and pensions sales
were £25.6bn, up from £24bn on
the same period last year.
The company said that going
forward it will concentrate on
North America, China, and India,
while it will pull out of low return
markets, such as Taiwan.
“As we look to the next phase of
our growth, Aviva will sharpen its
geographic focus and deepen its
position in its key markets,”
Andrew Moss said.
Aviva’s global business contin-
ues to be uneven, with total sales
in North America up just one per
cent and life and pensions sales
down two per cent, while in Asia
Pacific sales were up 24 per cent
and life and pensions sales
increased by 46 per cent.

State Street
eyes further
acquisitions

▲
FUND MANAGEMENT
BOSTON-based bank State Street’s

@@
asset management arm is on the
hunt for more acquisitions in Europe
after its €57m (£50m) acquisition of
Bank of Ireland Asset Management
earlier this year.
In 2009, 36 per cent of the bank’s
total revenues came from outside the
US, but the bank is now focused on
expanding abroad.
In a briefing with journalists yester-
day, State Street president and chief
executive Jay Hooley said that the

> > > >

European pensions market presents

> > >

>> > >
more exciting opportunities due to
the ongoing pensions shake-up in
many European countries.

>
Hooley’s comments come on the

>>>>
back of his firm winning the lucrative
MORE NEWS National Employment Savings Trust
ONLINE AT contract to manage the UK’s new gov-
ernment-mandated national pension
www.cityam.com State Street boss Jay Hooley said the bank is looking to expand in Europe scheme.

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CITYA.M. 3 NOVEMBER 2010
ANDREW WOOD
SANFORD
BERNSTEIN
CITY A.M.
ANALYST OF THE
YEAR AWARD
WINNER
RECKITT Benckiser's (RB’s) spec-
tacular stock performance over the
last decade (from below £6 in early
2000 to £36 today) has been predi-
cated on very strong top-line
growth (well above its markets) and
equally strong margin growth (from
14 per cent in 2000 to 24 per cent
today) driving excellent earnings
growth, well above expectations and
targets. This model has been some-
what lacking year-to-date in 2010
as tough markets in Europe and the
US have held back growth to “only”
in line with FY targets. The third
quarter reporting yesterday saw
more of a return to the RB of
"old"...with top-line growth well
ahead of the markets and profit
growth ahead of expectations.
Although the full-year 2010 targets
were maintained, it is more likely
that RB will beat those targets when
it reports full-year results in
February. We await more details of
the SSL acquisition in the investor
presentation…but overall the third
quarter reporting confirms our the-
sis that RB remains a well-managed
company despite the market pres-
sures. However, at 16 times 2011
earning per share we see the stock
as reasonably valued and continue to
see few major catalysts to drive the
stock forward from here. We believe
that RB should over-deliver guid-
ance, especially on EBIT/Net income.
Reckitt looks
to Asia as SSL
joins the fold
▲
CONSUMER
BY JOHN DUNNE
RECKITT Benckiser predicts it will
increase profits by 16 per cent in the
next year as rising sales in Brazil,
India and East Asia drive the compa-
ny forward despite tough UK and
North American markets.
The Slough-based company posted
a 19 per cent rise in profit to £426m
for the three months to September.
Revenue rose 11 per cent to £2.11bn –
ahead of City forecasts.
The firm said it was hoping the
the acquisition of Durex condom-
maker SSL, which it completed this
week, would help to drive sales up by
six per cent.
Chief executive Bart Becht said the
company, which makes products as
wide-ranging as Cillit Bang, Dettol
and Nurofen, will prosper as new
products such as Airwick Aqua Mist
take off.
Becht said: “The consumer envi-
ronment is challenging, especially in
News 11
19%
rise in total profit to £426m
for the three months
to September.
Revenue rose
18%
in developing markets
European revenue
flat at
£843m
western Europe and North America
where there is little or no growth,
but we are seeing good growth in
developing markets.”
The developing markets, which
Total revenue rose
account for nearly a quarter of
Reckitt’s sales, saw third-quarter rev-
enue up 18 per cent, led by strong
11%
growth of its Dettol soaps, Strepsil
throat lozenges, Vanish stain
to £2.11bn.
removers and Mortein pest control
aerosol sprays.
Reckitt said third-quarter underly-
ing sales, excluding its pharmaceuti- Third-quarter figures (above) have prompted Reckitt to target growth in emerging markets
cal products, rose five per cent and
operating profit 10 per cent, both in However, it lost its exclusive ANALYSIS l Reckitt Benckiser
line with its targets, helped by the licence for Suboxone in October 2009 3,600 p
3,602
launch of products such as its and expects generic competition to 2 Nov
Lysol/Dettol no-touch hand soap sys- eventually emerge and hit the divi-
tem. sion’s healthy profit. 3,400
Reckitt sets targets for its core busi- Analysts expected competition to
ness, excluding its drugs arm whose intensify with Procter and Gamble’s
main revenue generator is heroin Actilift stain remover being rolled 3,200
substitute Suboxone. out in Europe, while the US giant
The pharmaceutical arm had a 33 keeps up the pressure with its Fairy
per cent increase in currency adjust- dishwash products and AmbiPur air 3,000
ed revenue to £195m. freshener acquisition. 2 Aug 20 Aug 10 Sep 30 Sep 20 Oct
 The Capitalist
12
BOBSLEIGH FANATIC
TO INJECT CITY WITH
SHOT OF ADRENALINE
YEARNING for an unusual extra-cur-
ricular hobby to brighten up your
working week? Addicted to adrena-
line? The Capitalist might have chanced
upon just the thing for more adven-
turous City types.
Ian Barbour is best known for his
position as director of financial print-
ing group Millnet, where he runs the
financial document services opera-
tions. Yet he’s just been nominated
for a new and rather different role –
as a board member of the British
Bobsleigh Association (BBA).
Barbour, you see, is a keen enthusi-
ast of all the various perilous meth-
ods man has devised to throw himself
down an icy track – from luge (feet-
first, one-man bobsleighs) to skeleton
(the same, but going headfirst) and
regular two- or four-man bobsleighs.
If his nomination to the board is
approved at the BBA’s next general
meeting, he’ll be tasked with encour-
CITYA.M. 3 NOVEMBER 2010
EDITED BY
VICTORIA BATES
GOT A STORY? EMAIL
thecapitalist@cityam.com
“There’s
already a
small base of
bobsleigh
devotees in
aging membership of the association, the Square
and what better place to start than
the City? Mile, but
There’s already a small and grow-
ing base of bobsleigh devotees in the Barbour
Square Mile – this column has previ-
ously featured the escapades of the wants more”
likes of Bird & Bird’s Alistair Crellin
and Richard Pavry at Jupiter – and
Barbour would like there to be a lot
more.
MIND OVER MATTER
To Sotheby’s on New Bond Street on
Monday evening for a private dinner
and auction hosted by Krug cham-
pagne, where some of the sharpest
minds in the business, political, art
and entertainment worlds were auc- Millnet director Ian
tioned off for charity. Barbour in action on
Those “up for sale” included the skeleton bob, main
Glastonbury festival founder Michael picture, and inset, in
Eavis (who fetched £5,000); PR and his day job
advertising doyen Lord Tim Bell (£6,000);
designer Anya Hindmarch, and departing
Marks and Spencer boss Sir Stuart Rose
(£7,000 apiece); chef Marco Pierre White
(£8,000); and Lord Mandelson, actor Kevin
Spacey and Pink Floyd drummer Nick
Mason (all for £9,000).
Among the moneyed guests attending
the dinner was one David Ross, the flam-
boyant co-founder of Carphone
Warehouse, who shelled out his cash to
pick the brains of both Mason and
Mandelson.
After Ross’ high-profile resignation
from Carphone a few years ago – when he
admitted using his shareholdings as secu-
rity on hefty personal loans without noti-
fying the board – perhaps he’s looking for
some snippets of sage advice from Mandy,
the “comeback king” of politics?
Pub crawlers now have a useful map to find the next drinking hole
MORNING GLORY style diagram of all the pubs in the area.
Greg Dyke, former BBC director-general According to the map, available online
and chair of the British Film Council, was at JJM Designs, there are no less than 124
at the Hospital Club last night for a boozers in the Square Mile – from the tav-
Penfolds Vintage Years event designed to erns of Fleet Street up to the Butcher’s
inspire budding entrepreneurs. Hook and Cleaver and the Rising Sun
Dyke picked as his “vintage year” 1991 – towards the Barbican, over to the George
the year he became chief executive of and the cosy nooks of Liverpool Street, to
London Weekend Television, which he the old-school charmers of the Bank and
described as “full of intrigue, risk, drama Monument area, including the Ship and
[and] great comradeship”, and during the Lamb Taverns.
which he tripled the share price to £3. Happy crawling!
But he was equally happy to chat after-
wards about the trickier years of his career
– and how they relate to the problems
encountered at the moment by ITV’s flail-
COMIC TIMING
Ping! In comes an email courtesy of
ing revamped Daybreak show. Julia Streets, founder of the epony-
“When I first joined TV-am back in the mous financial services marketing
Eighties, it had no money, no viewers, the and communications agency, to
chief executive had resigned and most of flag up an event in aid of
the presenters had as well,” Dyke said. Children in Crisis on 16
“Daybreak is emphatically not in that November.
position – and they should be grateful The event itself is a one-off
they’re not there. What I’ve learnt is that date of working mother, colum-
there comes a moment when you hit rock nist and author Mrs
bottom and it stops – and then it’s crunch Moneypenny’s sell-out Edinburgh
time, that’s when they’ve got to grasp the Fringe show, but Streets herself, I
bull by the horns. There’s no secret to it... note, is also performing as a stand-
it’s just hard graft.” up comedienne.
Sage advice indeed for much-hyped pre- Digging deeper, it appears Streets,
senters Christine Bleakley (right) and adviser to the likes of Chi-X and
.com
Adrian Chiles, who this week were hit by Instinet – is something of an estab-
the latest drop in their viewing figures to lished name in the comedy world,
just 530,000. having also performed at the Fringe
in the past in Edinburgh and Henley
on Thames. Her show, Streets in the
PUB CRAWL City, is an observational take on cor-
A handy guide for those who’ve made it porate life – though she insists no
something of a life mission to discover the clients “have been harmed in the making
finest drinking holes the Square Mile has to of the show”.
offer: an enterprising chap, John Coates, The Capitalist bets they’ll be watching
has put together an alternative Tube map- nervously, in any case.
CITYA.M. 3 NOVEMBER 2010
Liquified gas
arm boosts
BG’s profits
▲
OIL AND GAS
BY JEREMY HAZLEHURST
GAS company BG yesterday
announced total revenues of $4.45bn
(£2.78bn) for the third quarter of
2010, an increase of 23 per cent on
the figure for the same period in
2009. Total operating profit increased
by 21 per cent to $1.67bn.
Exploration and production made
the FTSE 100 company profits of
$761m, while the operating profit for
the business’s liquified natural gas
arm was up 43 per cent to $725m.
The group’s chief executive Frank
Chapman said: “Alongside a set of
good quarterly results, we have made
significant progress in the delivery of
our growth plans.”
Over the third quarter the compa-
ny increased the estimate of the
resources at the Tupi, Iracema, and
Guará fields in the Santos Basin of
Brazil. It now calculates that the
fields contain 10.8bn barrels of oil, a
third more than previous estimates.
However, the most positive news
for BG came from Australia, where
earlier this week it got the green light
for a liquid natural gas project after it
was approved by the government,
which will be the first of its kind any-
where in the world. BG plans to sink
$15bn into the project, which will
involve the construction of a 540km
underground pipeline in Queensland
that will take gas to the coast to be
exported by tanker. It is expected to
produce 8.5m tonnes of liquified nat-
ural gas each year when it comes on
line in 2014, equivalent to a tenth of
the UK’s total gas consumption.
ANALYSIS l BG Group
1,300 p 1,252.00
2 Nov
1,200
1,100
1,000
2 Aug 20 Aug 10 Sep 30 Sep 20 Oct
Abbey’s former executive director for retail banking Graeme Hardie has joined Metro Bank
Metro Bank hires former
Abbey director to board
BANKING
▲
BY VICTORIA BATES
METRO Bank, the first new start-up
bank to hit the UK high street in 100
years, yesterday said it had hired
Graeme Hardie, the former executive
director for retail banking at Abbey
National, as a non-executive director.
Hardie is an old hand in the retail
and business banking world. Prior to
joining Abbey, where he was part of
the team overseeing the firm’s acqui-
sition by Santander, he was manag-
ing director of the branch network of
NatWest following its takeover by the
Royal Bank of Scotland.
More recently, he has been a senior
adviser on retail markets to the
Financial Services Authority.
He joins seven other non-executives
on Metro Bank’s board, including
Commerce Bank founder Vernon Hill,
former Midland Bank chief executive
Eugene Lockhart and Stuart Bernau,
ex-retail director at Nationwide.
News 13
Stagecoach on
track for year
after sales rise
TRANSPORT
▲
BUS and rail group Stagecoach said
ticket sales rose across its bus and rail
operations in the first half of its
financial year and that it expects to
meet its profit expectations for the
full-year.
The FTSE 250-listed group said rev-
enues in its rail business grew 6.5 per
cent in the 24 weeks to 17 October.
Virgin Rail, in which the group owns
a 49 per cent stake, achieved sales
growth of 15.2 per cent, the group
said in a trading update yesterday.
Turnover in Stagecoach’s bus unit
rose 2.3 per cent, while its coach
operations in North America rose 7.5
per cent.
The company said the govern-
ment’s changes to bus subsidies will
not impact profit this year, but that
the 20 per cent cut from April 2012
announced last month will affect
future decisions on bus fares, tenders
and services.
The firm returned to the London
bus market last month after it
bought the East London Bus Group
out of administration for £52.8m, but
said the purchase will not make a
material difference to results in the
full year to April.
Shares in the company, which have
risen a fifth in the last three months,
closed up 0.9 per cent at 216.1p.
 14 News
BP recovering reputation after oil disaster
BRANDINDEX
STEPHAN SHAKESPEARE
I
N July, I reported that BP’s han-
dling of the oil spill crisis was
damaging its brand, and was
even affecting the reputation
of other British brands in America.
The crisis cost BP $40bn and saw
its share price nearly halve.
Imperial sees profit double
▲
LEISURE
BY HARRY BANKS
BRITISH group Imperial Tobacco, the
world’s fourth-biggest cigarette
maker, met forecasts with an 11 per
cent rise in full-year earnings as price
increases and cost savings offset
lower sales volumes.
The maker of Lambert & Butler,
West and Gauloises has seen cigarette
volumes fall as smokers switch to
cheaper, and sometimes illicit, ciga-
Negative publicity became front-
page news when President Obama
declared:
“We will make BP pay for the
damage their company has
caused.”
BP BRAND RECOVERING
The good news for BP is that its
brand has now recovered to some
extent in the UK, and that some of
its competitors have struggled to
promote their own brands during
the interim period.
The graph shows that BP’s
BrandIndex “Index” score – which
combines six measures of brand
health including value, reputation
and likelihood to recommend – hit
rettes in the global downturn.
Tough economic conditions in
Spain, the United States, Russia and
Ukraine saw group annual cigarette
volumes fall 4.2 per cent, but 8.7 per
cent growth in fine cut loose tobacco
volume meant its cigarette equiva-
lent volumes fell just 2.9 per cent.
For the 12 months to 30 September,
Imperial Tobacco revenues grew from
£26.5bn to £28.2bn, with pre-tax profit
rising from £945m to £2.1bn, partially
due to a £660m hedging loss in 2009.
CITYA.M. 3 NOVEMBER 2010
a low of -13.4 points on 15 June. Shell’s scores demonstrate that cuts, the last thing the Coalition
Despite the large dip, it had re- one brand’s crisis may not neces- government needs is a fight over
emerged back into positive territo- sarily adversely affect the health of Europe.
ry by 27 September. other brands in the sector. Stephan Shakespeare is chief executive
Texaco enjoyed a slight lift dur- and co-founder of YouGov.
ing this period, while Exxon NEW ROUND OF EUROSCEPTCISM
Mobil’s BrandIndex scores The Eurosceptic mood of the pub- ANALYSIS l BP BrandIndex
remained consistent around -5 lic is clear from the results of 20
BP Texaco
points. YouGov’s polling during the past Exxon Shell
few weeks. 70 per cent think 15
SHELL IS BIGGEST WINNER Britain pays too much towards 10
The winner from this period of the EU; 63 per cent want the
5
turbulence for oil company brands organisation of the EU to con-
is clearly Shell, which saw its tract, and 80 per cent backed 0
BrandIndex scores closely pegged Cameron’s attempt to block the -5
to BP’s for the first four months of proposed sixper cent increase in
2010. the EU’s Budget. -10
Thereafter, Shell’s “Index” As the country braces itself for -15
scores have risen to a high of +14. the economic impact of spending 1 Mar 1 Apr 1 Jun 1 Aug 1 Oct
Lords told big four auditors pose
systemic risk to British economy
ANALYSIS l Imperial Tobacco
FINANCIAL SERVICES
▲
2,050 p auditors Deloitte, KPMG,
THE dominance of the “big four” Pricewaterhouse- Coopers and Ernst
2,035.00 auditing firms poses a systemic risk, & Young as part of a review of compe-
2 Nov
1,950 the House of Lords Economic Affairs tition in the industry. The committee
Committee was told yesterday. will produce a report that could rec-
Managing partner of auditor BDO ommend regulatory changes.
1,850
Simon Michaels said: “If one of the However, others do not agree that
big four were to exit the market, with- there is a problem. RSM Tenon’s
out a plan B, there could be chaos.” Russell McBurnie said: “As a multina-
1,500 The lords were asking about the tional, you’ve got four choices – you
2 Aug 20 Aug 10 Sep 30 Sep 20 Oct concentration of business among have four quality firms.”
CITYA.M. 3 NOVEMBER 2010 News 15

Pfizer’s sales
APPLE DOMINATES TABLET MARKET
APPLE dominated
the global market

lag rivals as
for tablets in the
third quarter amid
limited competi-
tion for its iPad
device. Almost 95
per cent of all

generics bite
tablet computer
shipments in the
quarter were of
Apple’s iPad tablet,
according to a
study by Strategy
Analytics. The
research firm said
November 2011, when Lipitor loses US the tablet computer
▲

PHARMACEUTICALS
BY HARRY BANKS
DRUGS giant Pfizer yesterday reported
disappointing sales, hurt by generic
competition for its Lipitor cholesterol
fighter and Effexor XR depression
marketing exclusivity. Pfizer bought shipments rose 26
Wyeth last year for $67bn, aiming to per cent from the
replace vanishing Lipitor revenue with previous quarter.
the US rival’s brands.
Effexor XR, a Wyeth anti-depressant
that once had annual sales of $3bn,

Strong US sales and Ratiopharm drug

drug as well as weak revenue in emerg- was battered by cheaper US generic
ing markets. versions launched over the summer.
The last of the large US drugmakers Sales of the pill plunged to $175m in
to report third-quarter earnings, Pfizer the third quarter.

boost Israeli generic drugs maker Teva

followed the example of most rivals
with higher-than-expected profits –
largely from cost cuts – but disappoint-
ing sales as it faces patent expirations
on some of its top-selling products.
“Generic competition is causing
pain, and this is just a taste of what
“As with the rest of the industry,
patent losses are hurting the bottom
line, and it’s always especially tricky to
gauge the real magnitude of patent
erosion in overseas markets,” Conover
said.
Pfizer is also counting heavily on while generic sales in the US jumped branded treatment for multiple sclero-
▲

Pfizer will be going through in the
next few years,” said Morningstar ana-
lyst Damien Conover.
The world’ largest drugmaker said
global sales of Lipitor dropped 11 per
cent to $2.53bn in the quarter. The
arrival in recent months of Lipitor
generics in Canada and Spain hurt the
world’s top-selling medicine.
The bigger threat to Pfizer comes in
fast-growing emerging markets to bol-
ster results in coming years. But its
sales in those markets, excluding the
Wyeth brands, were essentially flat in
the quarter. The company’s earnings
fell to $866m, or 11 cents per share,
from $2.88bn, or 43 cents, a year earli-
er. Excluding merger costs and other
special items, Pfizer earned 54 cents
per share.
PHARMACEUTICALS
BY HARRY BANKS
TEVA Pharmaceutical Industries, the
world’s biggest maker of generic
drugs, posted higher quarterly net
profit that beat expectations, boosted
by strong US sales and its acquisition
of Germany’s Ratiopharm.
Third quarter sales in North
America rose 22 per cent to $2.72bn
34 per cent to $1.63bn, Israel-based
Teva said yesterday.
Teva attributed the increase to the
exclusive launch of a generic version
of Wyeth’s $2.75bn-a-year antidepres-
sant Effexor XR in the quarter as well
as strong sales of generic drugs
launched in previous quarters.
The results also reflected strong
sales of Copaxone, Teva’s leading
sis, it said.
Quarterly earnings excluding one-
time items rose 46 per cent to $1.30 a
share while sales rose 20 per cent to
$4.25bn. Exchange rates stripped out
$122m in the quarter compared with a
year ago though the effect on operat-
ing profit was negligible, Teva said.
Analysts on average expected Teva to
earn $1.27 a share on sales of $4.37bn.
 16 Comment
If
lif e
The CIPD has predicted 1.6m job losses
Job loss doom
and gloom will
help nobody
g i ve s
GUEST COMMENT
GRAEME LEACH
Y
ESTERDAY, the Chartered
Institute of Personnel and
Development (CIPD) warned the
yo u
government’s austerity meas-
ures would cause 1.6m job losses,
adding to the doom and gloom that
surrounds the spending review. But
their analysis ignores key facts.
The Lamont-Clarke fiscal squeeze in
the 1990s resulted in 600,000 public
sector job losses, but this did not pre-
vent the longest expansion on record
from becoming established. Yes, recov-
ery was helped because the US and
European economies were stronger
then, but we have also seen a shift in
the economic centre of gravity since,
away from the west towards the east,
which is growing fast.
The spending squeeze under the
first two years of the coalition is actu-
ally less than under the first two years
of New Labour. The Brown fiscal
squeeze (implementing the previous
government’s spending plans for the
first two years in office) at the end of
the 1990s coincided with one of the
fastest periods of GDP growth in the
last 20 years. The private sector crowd-
n s
ed in.
o
The CIPD’s analysis is alarmist and
lem
risks talking ourselves into a double-
dip recession. Their economist has
admitted taking “soundings from
public sector managers” to assess the
scale of job losses. This is not an appro-
priate substitute for economic
research. It is dangerous for the CIPD
to make headline-grabbing forecasts
which are based on little more than a
guess. Nobody can be sure what the
future holds, but recent economic his-
tory suggests projections of 1.6m job
losses are hopelessly inaccurate.
We should remember that the pri-
vate sector was able to create 300,000
jobs in the latest quarter alone.
Projected headcount reductions will
take public sector employment back
to the levels seen in the early to mid
2000s.
Picture: PA
Given the scale of deficit reduction
required, this is not an unreasonable
settlement. With an eight per cent
turnover rate in the public sector (and
a workforce of roughly 6m), most of
the headcount adjustment could
come through natural wastage
instead of compulsory redundancy.
Private sector employment growth is
perfectly capable of absorbing the pro-
jected decline in public sector employ-
ment. A one per cent change in
private sector employment is equiva-
lent to nearly 250,000 jobs.
In the wake of the financial crisis,
GDP growth in this cycle is unlikely to
match that seen in the 1990s. We
think the recovery will look more L
than V shaped, though possibly a
square root shaped recovery with the
second and third quarter spurt this
year subsequently levelling off.
However, saying that we won’t match
the 1990s is not the same as saying it
will be all doom and gloom. Weaker
GDP growth is still compatible with
private sector employment growth
over the coming years.
The UK economy faces a difficult
period over the coming years. But if
the government holds firm with the
implementation of the spending
review, long term growth and employ-
ment prospects will be significantly
improved. However, if the coalition
wobbles and the spending review
begins to unravel, long term econom-
ic prospects will be very poor. If minis-
ters now lose their nerve because of
CIPD style headlines, bond holders
could lose their shirt.
Yes – the economy faces the longest
sustained squeeze in public spending
since the war, but we should remem-
ber that is after the longest sustained
upturn in public spending since the
war. Public spending is projected to
fall to 40 per cent of GDP at the end of
the spending review – hardly a small
state. There is a real risk that unless
we regain control of public spending
now, we could lose it for a generation,
as the rising costs of an ageing popula-
tion add further upward pressure for
tax and spend policies. The prize from
public sector restructuring is a poten-
tial acceleration in both public sector
and whole economy productivity.
Doom and glooom headlines
should not distract us from the prize
to be had.
• Graeme Leach is chief economist and
director of policy at the Institute of Directors
CITYA.M. 3 NOVEMBER 2010
New business
boost for St
James’s Place
▲
WEALTH MANAGEMENT
BY JEREMY HAZLEHURST
WEALTH manager St James’s Place
announced healthy growth in the
three months ending 30 September,
with new business of £136.5m, up
30 per cent, on an annual premium
equivalent (APE) basis.
Total single investments were also
up to £1.1bn from £0.8bn, an
increase of 32 per cent on the same
time last year. St James’s Place now
has £24.8bn under management,
after seeing an inflow of £700m in
the quarter, an increase of 11 per
cent. Funds under management
have doubled over the last five
years, said the firm. The group says
that it continues to retain 95 per
cent of clients’ funds.
David Bellamy, the chief execu-
tive, put the results down to healthy
global stockmarkets over the last
few months, and also “the increas-
ing breadth of our investment offer-
ing and the strength of our
distribution.”
He added: “Although the outlook
was uncertain earlier in the year,
2010 is proving to be a very success-
ful year. While we are up against
SAV Credit and Blackstone team
prepare to up offer for Egg bank
▲
M&A
SAV Credit, the owner of the Marbles
and Aqua credit card businesses, has
teamed up with private equity group
Blackstone to prepare an offer for
internet bank Egg.
SAV and Blackstone are expected
to make a joint offer to current
owner Citigroup later this month,
according to a report by Sky News.
Citi’s auction to sell Egg is thought to
be scheduled for November.
Privately-owned SAV, which has
more than 600,000 customers, has
already bought more than half a mil-
lion credit card loans from Citigroup
earlier this year, as part of Citi’s
News 17
Asset managers still not
Chief executive
David Bellamy said
the firm’s strong
figures were down
ready for EU directive
to healthy global
stockmarkets.
The poll of 186 senior industry fig-
▲
HEDGE FUNDS
BY HARRY BANKS ures from the hedge fund, private
ANALYSIS l St James's Place equity and real estate sectors shows
300 p THE UK’s asset management industry only 16 per cent have set up a dedicat-
290
263.90 is still not ready for the introduction ed working group to consider the
2 Nov of the Alternative Investment Fund implications and formulate how they
Managers Directive (AIFMD) a poll should respond.
from PricewaterhouseCoopers (PwC) The aim of the directive is to put
270 revealed yesterday. hedge funds and private equity funds
The poll suggests only two per cent under the supervision of an EU wide
of asset managers have a plan in place regulator in order to improve trans-
250
for responding to the AIFMD despite parency in the financial markets.
41 per cent of them believing manage- James Greig, partner at PwC legal,
2 Aug 20 Aug 10 Sep 30 Sep 20 Oct ment fees will increase and half said the asset management industry’s
expecting profitability will be cut. lack of planning was “surprising”.
tougher comparatives in the short
term we remain confident in our
ability to deliver average new busi-
ness growth within our 15-20 per
cent per annum range over the
medium term.”
The wealth manager, which was
founded by Jacob Rothschild and
Mark Weinberg in 1991, said that it
is continuing to develop its range of
funds such as the one that it recent-
ly launched with fund manager
Artemis.
The results were in line with fore-
casts and analysts wondered if it
spelled the end of a period of rapid
growth for St James’s, as the APE
number was lower than in the last
three quarters.
In a note, Numis’s David McCann
said that: “Productivity is beginning
to level out rather than continuing
to grow significantly.” It estimated
growth for the fourth quarter of 11
per cent and 16 per cent for next
year, just inside the company’s tar-
get range.
St James’s Place, which is 60 per
cent owned by Lloyds Banking
Group, saw its share price close
down 4.90 per cent at 263.90p, well
below its year-high of 298p.
attempts to slim down its non-core
operations.
Citi bought Egg for £575m in 2007
in a drive to attract more UK cus-
tomers.
Barclays has also been named as a
potential bidder for Egg, which still
has more than 2m customers in the
UK.
SAV is backed by a number of
investment firms, including Electra
Private Equity and Morgan Stanley
Alternative Investment Partners, and
is chaired by former Standard
Chartered chief executive Sir
Malcolm Williamson.
Spokespeople at Blackstone, SAV
and Citigroup declined to comment.
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CITYA.M. 3 NOVEMBER 2010
Lebedev bank is
stormed by armed
and masked cops
MEDIA
▲
BY STEVE DINNEEN
ARMED police stormed a Moscow bank
controlled by the billionaire owner of
the Independent and Evening
Standard in a dramatic raid yesterday.
Around 30 Russian police carrying
Uzis and clad in balaclavas terrified
staff as they demanded access to docu-
ments. Tycoon and former KGB spy
Alexander Lebedev was in the offices
of his National Reserve Bank when
police investigators arrived.
Lebedev has ruffled feathers in the
Kremlin in recent years by funding an
opposition newspaper and standing
against government candidates in elec-
tions
However, a spokesman for Lebedev
said he did not believe the raid was
political. He said: “This is known as a
mask show in Russia: there are 20 or
Times digital sales
may be £6m a year
MEDIA
▲
BY STEVE DINNEEN
THE Times newspaper yesterday
announced it has taken 105,000 “digi-
tal sales” of its newspaper since it
erected a controversial paywall in
July.
The number includes a series of
heavily discounted “early adopter”
offers and day passes, as well as iPad
and monthly subscription sales.
A further 100,000 existing sub-
scribers to the print edition of the
Times newspaper have activated
their free digital account, taking its
total digital readership to over
200,000.
The numbers released did not
break down how often or for how
long users stayed on the site. It also
failed to flag up individual users who
bought multiple day passes or sub-
scription options.
Sources close to the firm said
around 50,000 of users pay for either
DIGITAL SALES FOR NEWSPAPERS
30 people in masks and carrying auto-
matic weapons” .
High-profile raids by heavily armed
agents in masks sometimes signal the
onset of an attack on the business
empires of Russian businessmen who
have fallen out of favour with the
Kremlin.
The spokesman said Lebedev was
still present at the offices near the
Kremlin but refused to speculate on
what the raid could be linked to.
A Moscow police spokesman con-
firmed that agents were at the bank’s
offices but gave no further details.
Lebedev is worth $2bn (£1.25bn) and
is the world’s 488th richest person,
according to the latest global rich list
published by Forbes magazine.
Together with former Soviet leader
Mikhail Gorbachev, Lebedev is co-
owner of the Russian opposition news-
paper Novaya Gazeta.
a monthly subscription at £8.66 a
month or a subscription to the iPad
application at £9.99 a month.
This would generate revenue for
digital services, including the mini-
mal amount taken in through casual
users, at around £6m a year.
There are no figures for how many
trialists subsequently bought a sub-
scription to the site but the source
said the “vast majority” renew sub-
scriptions, adding the firm is “very
happy” with its conversion rate of
casual users.
However, News International, the
Times’ parent company, declined to
comment on the level of churn the
digital edition has experienced.
Analysts have suggested the drop in
advertising revenue could be as much
as £10m. However, sources close to
News International argue this may be
partially offset by higher rates charged
for more detailed data on its users.
Rates and bookings are also likely to
pick up as advertisers get a clearer pic-
105,000 200,000
total digital sales total digital
for the Times subscriptions
website
20m
unique users to
Times Online
before the paywall
News 19
Jailed Yukos oil
tycoon rails
against Kremlin
▲
COURTS
JAILED former oil tycoon Mikhail
Khodorkovsky used his closing argu-
ment at his second trial yesterday to
raise his profile as a political prisoner,
saying he would sacrifice his life for
the rule of law in Russia.
Khodorkovsky said he was
“ashamed” of Russia, a country where
“a person who collides with ‘the sys-
tem’ has no rights whatsoever”.
“If I have to (die in prison), I will not
hesitate. The things I believe in are
worth dying for,” Khodorkovsky told a
packed courtroom.
Russia’s most high profile prisoner
is facing six more years behind bars in
his second trial, meaning he would
serve a total of 14 years in a case that
the West has been watching to gauge
President Dmitry Medvedev’s com-
mitment to the rule of law.
In the second trial, the former
Yukos oil company chief is accused of
stealing $27bn (£16.9bn) worth of oil
from his firm. The verdict is due to be
@
Police raided the Moscow bank while Lebedev was present Picture: REUTERS handed down on 15 December.
@
ture of subscriber numbers.
Before the paywall went up Times
Online had a monthly unique reader-
ship of around 20m.
Numis analyst Lorna Tilbian said
she was “very encouraged” by the fig-
ures. She said: “This is good news for
News International. The sales are
being driven by high margin iPad
@
users and I expect the trend to contin-
ue. It won’t be long before other
papers follow suit – where Murdoch
goes others soon follow.”
News Corp chief executive James
Murdoch said he is “excited by the
progress we have made in a short
space of time.”
The Times is the first mainstream
UK newspaper to adopt a paywall for
its website. The Financial Times and
Wall Street Journal both operate prof-
itable paywalls.
The FT last week reported its digital
digital subscriptions had increased
50 per cent year-on-year to more than
180,00.
50,000
total monthly and
iPad subscribers
0 1m
,0 00
18 digital
digital MORE NEWS
subscriptions ONLINE
subscriptions to the Wall Street
to the FT Journal www.cityam.com
 20 Interview
The commercial property king who
says the City is ready for take-off
Real estate deals are
beginning to be cut
in London and the
Land Securities chief
is leading the pack
L
and Securities’ chief executive leaps
from behind his desk, bounding
across his seventh floor office over-
looking Trafalgar Square as he wel-
comes City A.M. – after years of stagnation,
the country’s biggest property developer is
on the move again – and it certainly seems
to have put a spring in Francis Salway’s
step.
Last week, the FTSE 100 firm opened its
£540m City shopping complex One New
Change, as well as restarting its £500m
prestige tower on 20 Fenchurch Street
(dubbed the Walkie Talkie) with joint ven-
ture partner Canary Wharf. In June it sold
its Oxford Street Park House office and
apartment building to Barwa, a Qatari-
backed property business for £250m, who
will take ownership of the development
when it is completed in 2012.
Land Securities, which owns 29 retail
parks across the country and a raft of
London offices with a combined value of
£9.5bn (with £5.3bn of this in the capital),
wants to put the three years of pain due to
the financial crisis and the resulting
slump in commercial property behind it.
“London offices are through their low
period in the economic cycle, since the
spring rents have started to rise,” says the
Land Securities boss.
A tall, thin yet deeply enthusiastic man,
Salway is perched on one side of a meeting
table in his office. Beside him is the City
A.M. award he picked up the night before
at our awards celebration at the Grange St
Paul’s Hotel; his prize was for leading the
best property firm in the country.
He has a slightly professorial air, and
indeed, while studying for professional
exams he wrote a book on land values, The
Depreciation of Commercial Property. It
was published in 1986 and remains
required reading among developers.
He explains that a number of factors
have come together to reverse the tum-
bling rents that have been a feature of
recent years. One element is timing. He
says: “In the late 1980s boom, a lot of com-
panies signed a lot of 25-year leases, and in
the late 1990s expansion a lot of 15-year
CV | FRANCIS SALWAY
Age: 53
Work: Trainee surveyor at Richard Ellis;
investment director at Standard Life; Land
Securities chief operating officer and
chief executive of the development divi-
sion; now group chief executive
Education: Rugby School; Christ’s College,
Cambridge, where he read land economy;
College of Estate Management in Reading
Family: Married, two teenage children
Lives: Tunbridge Wells, Kent
Hobbies: Walking, climbing, tennis. Likes
to set himself a big challenge every year.
In June, he climbed Mount Kilimanjaro,
Kenya, with his wife.
leases were signed. We know that they will
come up for renewal in the next five years
or so.”
He adds that a lot of firms that had been
putting off moving for the last two years
now feel more confident about the econo-
my, and are beginning to make plans. He
says: “A big company like a lender, an insur-
er or a forex trading business, with about
2,000 staff, looks at moving three or four
years before their lease is up.” All of which
means that demand is recovering.
Over the last year, he says, City rents
have moved up from around £45 per sq ft
to £50-plus per sq ft. Salway also says that
institutions “are looking to invest in com-
mercial property again” because of the low
yields on offer from government gilts due
to historically low Bank interest rates and
quantitative easing.
All of this helps to explain the number
of projects that are being completed and in
particular the developments that have
been taken off ice.
The aim of Salway’s One New Change
shopping centre, located opposite St Paul’s,
and which boasts more than 60 shopping
and eating outlets, was to build the first
strong, 7/7 retail centre in the Square Mile.
Salway says: “Retailers have struggled to
get their bigger outlets into the City. In
other developments retailing has often
been an afterthought.”
The key market for the centre is the
City’s 340,000 workers “as well as the
amount of tourists we saw during our
research phase coming over the wobbly
[Millennium] bridge from the Tate Modern
to St Paul’s,” says the developer.
Some observers wonder whether New
Change’s seven-day shopping will also hit
rival outlets in the West End or Islington.
Salway says this might be the case but that
this is very much a “secondary market” for
the centre.
The change in the weather for commer-
cial property has breathed new life not
only into Land Securities’ Walkie Talkie,
but rival British Land’s Cheesegrater sky-
WORDS BY ROGER BAIRD
Land Securities’ chief scraper, which was also restarted last
executive Francis month. The 150m-high, 690,000 sq ft
Salway standing next Walkie Talkie will be in competition with
to a scale model of the Cheesegrater for clients. Firms like
the Walkie Talkie, on Chicago insurer Aon, Schroders, Bank of
the seventh floor of America Merrill Lynch and Bloomberg are
the firm’s all understood to be looking for new prop-
headquarters on The erties in London.
Strand Salway will not confirm names but says
that “our sales teams are already having
Picture: those conversations”. But he does not
Micha Theiner expect any prelet deals to be announced
/City A.M. until 18 months before the tower is due to
open in 2014. By the time the Walkie Talkie
is built he expects space in it to be selling
at around £60 per sq ft.
The developer says: “As firms come out
of their old buildings they want to move
into new offices that are more efficient,
that will be able to attract good quality
staff, and will say something about that
company as a brand. We design buildings
with flair that capture the imagination.
When I show people around our buildings
I can see that look on their faces.”
Both British Land and Land Securities
sensibly reannounced these tempo-setting
deals as a joint venture with a cash-rich for-
eign investor rather than as the sole devel-
oper in charge of the project relying on
bank loans.
“London has Land Securities has gone into partner-
ship with rival Canary Wharf Group to
become build the Walkie Talkie, but behind this
firm the China Investment Corporation,
enormously Qatar Holdings and Morgan Stanley Real
Estate all have a stake in the building.
attractive Critics argue that although property
developers’ say the crunch may be easing,
to foreign they still cannot convince banks of that.
Salway denies that the developer could
investors not get funding – it has £2.4bn in cash and
bank debt at hand, he says – but argues
over the that he wants to fund other London offices
and retail outlets outside the capital and
last 10 to that this is the best way to use its
resources. Land Securities will still retain a
15 years.” 50 per cent stake in the tower.
The developer says: “It is true that
CITYA.M. 3 NOVEMBER 2010
ANALYSIS l Land Securities
700 p 671.00
2 Nov
680
640
600
2 Aug 20 Aug 10 Sep 30 Sep 20 Oct
London has become enormously attractive
to foreign investors over the last 10 to 15
years. They like it because it is a global
financial centre, they like its reliable legal
system. But they are on the whole looking
for a partner with local expertise. Some
foreign investors will be quite active and
set up their own teams here. Others will be
more passive.”
Although the developer employs just
700 full-time staff, when it has a full roster
of projects its funding provides work for a
supply workforce of 10,000. Many other
people work indirectly for it in places such
as One New Change.
Land Securities returned to profit in
May when a rise in asset values helped
push it to a pre-tax profit of £1.1bn, from a
loss of £4.8bn the year before and a £973m
loss in 2008.
Salway was under intense investor pres-
sure to turn around the firm 18 months’
ago. It was said that chairman Alison
Carnwath gave him six months to improve
things (she later said this was exaggerated).
But whatever happened, it certainly
worked. The developer responded by cut-
ting costs and selling off its outsourcing
unit Trillium to Telereal for £750m in
2009, until the market began to turn.
Salway says: “The decline in capital values
was the sharpest and steepest in our indus-
try since records began in the 1920s. That
put pressure on everyone in this sector.”
During the recession capital values fell
44 per cent from their peak in June 2007 to
their trough in July 2009. Even though
prices have risen since then, they remain
roughly 35 per cent down on what prices
were in the summer three years ago.
But the market is moving again. And
investors are again interested in the story
commercial property has to tell. And that
means Salway and his team can begin to
get back to what they came into this indus-
try for – to cut deals and put up new build-
ings that capture tenants’ and the public’s
imagination.
And that, at least, is progress.
CITYA.M. 3 NOVEMBER 2010
Construction loses
momentum to fall
to eight-month low
UK ECONOMY
▲
BY MATTHEW WEST
ACTIVITY in the construction sector
slowed more than expected in October
to its weakest level in eight months, a
closely-watched survey showed yester-
day suggesting one of the key areas of
recent UK economic growth could be
faltering.
The Markit/Chartered Institute of
Purchasing and Supply construction
purchasing managers index fell to
51.6 in October from 53.8 in
September, against expectations for a
more modest easing to 53.0. But still
remained above the all-important 50
mark, which denotes expansion,
rather than contraction.
Construction contributed about a
quarter to the 0.8 per cent growth
recorded between July and September
and around half of the 1.2 per cent
NYSE Euronext profit
off as trading slumps
FINANCIAL MARKETS
▲
BY HARRY BANKS
NYSE Euronext quarterly profit
dropped 12 per cent on a global slow-
down in share trading, but the results
were better than expected and the
trans-Atlantic exchange operator said
it would continue its joint-venture
approach to any new swaps ventures.
Management stressed that trading
was unusually quiet in the third quar-
ter and said this was unlikely to con-
tinue into next year, when the
company’s US clearinghouse for
Treasury and interest-rate futures is
expected to launch.
Equites trading and listings rev-
enue dropped nine per cent from a
Two arrested after German
and UK insider trading probe
REGULATION
▲
BY HARRY BANKS
TWO people have been arrested in
London on suspicion of insider trading
after investigators raided two address-
es in the UK and one in Germany, the
City watchdog said yesterday.
The Financial Services Authority
(FSA) said that a 37-year-old profession-
al man and a 28-year-old woman had
been arrested after the joint operation
with the police and prosecuting
authority in the central German state
of Hesse. “No further details can be
confirmed at this time,” the FSA said
growth in the second quarter,
although it makes up only six per
cent of total output.
“The survey indicates that con-
struction activity is losing momen-
tum and the economy will not be able
to rely on a significant growth contri-
bution from the sector going for-
ward,” said Howard Archer,
economist at IHS Global Insight.
The survey showed activity in the
housing and civil engineering sectors
fell in October, although commercial
construction increased significantly.
New orders continued to rise, albeit
at the slowest pace in eight months,
and firms cut jobs for the fourth
month running even though busi-
nesses remained optimistic about the
prospects for the coming 12 months.
The construction sector was respon-
sible for a quarter of the 0.8 per cent
GDP growth in the third quarter.
year earlier, while derivatives revenue
was off five per cent.
The weakness reflected the slowest
US stock-trading period since the sec-
ond quarter of 2008 – just before the
financial crisis – as well as intense
competition from broker-run alterna-
tive trading venues in both Europe
and the United States .
“It’s hard for us to imagine that
people will just continue to stay out
of the listed equity and derivative
markets to the degree they have in
the last few months,” NYSE Euronext
chief executive Duncan Niederauer
said on a conference call with ana-
lysts and media.
“We’re cautiously optimistic that
2011 will look a lot brighter.”
in a brief statement. “The arrests are
not linked to any other ongoing insid-
er dealing investigation.”
The Frankfurt prosecutor’s office
declined to comment.
The man, who was authorised by
the FSA, is likely to have been working
in the financial services sector and
have been aware of the relevant laws
and regulations governing insider
dealing, one source familiar with the
arrests said. The raids, in the early
hours of Tuesday, were carried out in
London and in Koenigstein, near the
German city of Frankfurt.
The FSA, which lost an insider deal-
News 21
SUGAR HITS NEW 30-YEAR PEAK
Pace of staff
recruitment
slows down
▲
UK ECONOMY
STAFF appointments rose at the weak-
est rate for 14 months in October,
with the pace of recruitment slowing
in both permanent and temporary
staff placings.
The Recruitment and Employment
Confederation (REC) and KPMG
Report on Jobs – published today –
found overall demand for staff was
reported to have increased at the
weakest rate for a year in October,
with recruitment consultants sig-
nalling a small rise in the availability
of candidates to fill permanent vacan-
cies for the first time in four months
in October. Temporary staff availabili-
ty increased at the fastest rate in seven
months, according to the survey.
“This confirms that the private sec-
SUGAR is trading at its highest level for three decades, raising fears about global food tor’s ability to compensate for
price inflation. The soft commodity yesterday surpassed the 29-year high it hit in planned job losses in the public sector
February this year, on concern about low crop yields in Brazil and restricted exports hangs very much in the balance,” said
from India. Raw sugar futures topped 30.6 cents per pound yesterday before settling Kevin Green, chief executive of the
@
lower. Prices have now risen by a quarter in the first half of October. Picture: REX REC.
@
NYSE Euronext confirmed that its
co-owned US clearinghouse, called
New York Portfolio Clearing, is expect-
ed to launch in the first quarter of
2011.
That, along with plans to self-clear
shares and derivatives in Paris and
London, should help the company
compete to clear over-the-counter
@
swaps over the next 12 to 18 months,
Niederauer said.
The company will likely partner
with big market participants in any
new swaps trading ventures, he said,
pointing to “semi-mutualised” ven-
tures it has entered into in the past
with big broker dealers. “You can safe-
ly assume we're already having con-
versations around that vein,” he said.
ing case in June, is keen to keep up the
pressure on market abuse as it pre-
pares to fight high-profile cases in
court next year as part of a quest to
clean up London and prove its mettle
as a prosecutor.
The regulator has secured six prison
sentences for insider dealing to date,
although two were suspended and for-
mer Cazenove partner Malcolm
Calvert – one of its highest-profile
scalps – was released after serving just MORE NEWS
seven months in jail.
Seven other suspects have yet to be
ONLINE
charged. They include senior execu- www.cityam.com
tives at DeutscheBank and Exane.
 22 News
Airlines trade
group wary of
quick changes
▲
AVIATION
BY JEREMY HAZLEHURST
GOVERNMENTS should not rush to
implement new security measures
after bombs were found on UPS
planes last week, says the head of the
International Air Transport
Association (Iata), the airlines trade
group.
Speaking at a security conference
in Frankfurt, Iata’s head Giovanni
Bisignani said: “Effective solutions
are not developed unilaterally or in
haste.”
He insisted that airline security has
improved dramatically in recent
years.
“We are much more secure than in
2001, but there is room for improve-
ment,” he added. “The events in
Yemen have put cargo security at the
top of our agenda.”
Another Iata spokesman cautioned
against “knee-jerk reactions” to the
plot which could harm the air indus-
try. Iata said improvements were
needed, but that any response had to
be measured.
Among the recommendations that
Iata makes for improving cargo secu-
rity are: shifting the focus for airline
security from finding bombs to intel-
ligence-gathering; using more elec-
tronic screening for freight to make
monitoring easier; and finding new
“government-certified technology” to
screen items of cargo.
“There is some promising technolo-
gy but it is taking far too long to move
from the laboratory to the airport,”
said Bisignani.
The man who heads up America’s
Transportation Security
Administration, John Pistole, echoed
Bisignani’s sentiments in comments
he made at the security conference
and suggested a calm approach.
“Security cannot bring business to a
standstill,” he said. “We must strike
that balance. The US government
understands this well.”
Airlines carried 26 million tonnes
of freight in 2009 and that is set to
increase rapidly over the next few
years.
CITYA.M. 3 NOVEMBER 2010
MasterCard
BEST OF THE BROKERS
MEARS
ANALYSIS l Mears
310 p 291.00
2 Nov
Altium rates the housing repair firm a
“hold” with a target price of 270p. The bro-
sees quarterly
290
270
ker has downgraded its 2010 pre-tax profit
forecasts by £0.6m, or two per cent, due to
costs linked to small contract wins in the
wake of Connaught’s collapse. The firm’s
social housing pipeline has slipped slightly
profits jump
RETAIL
▲
250 to £2.8bn, however, and the broker has
reduced its revenue forecasts. MASTERCARD announced third quar-
ter net profit of $518m (£323m) yester-
2 Aug 20 Aug 10 Sep 30 Sep 20 Oct
day, up 14.6 per cent on a year earlier
as a result of increased global card
ANALYSIS l Sab Miller SAB MILLER activity.
,100 p 2,045.00 UBS rates the brewer a “buy” with an It said net revenue for the third
2 Nov upgraded target price of £22.20 ahead of
quarter was $1.4bn, a 4.7 per cent
the firm’s half-year results in two weeks’ increase on last year. Meanwhile gross
dollar volume, or spending on
2,00 time. The broker expects to see strong MasterCard branded cards, grew 8.5
organic growth in the next six months, but per cent from a year ago. Processed
has reduced its earnings per share fore- transactions increased 0.6 per cent,
,900 and cross-border volumes climbed 15
casts for 2011 and 2012 by 2.4 per cent
and 1.5 per cent respectively due to weaker per cent, it said. Total operating costs
also declined by 4.1 per cent, to
emerging markets sales. $662m in the quarter.
2 Aug 20 Aug 10 Sep 30 Sep 20 Oct Ajay Banga, president and chief
executive of MasterCard said:
ANALYSIS l Royal Bank of Scotland ROYAL BANK OF SCOTLAND “Consumers and businesses around
Nomura has a “reduce” rating on the bank the world continue to recognise the
54 p
benefits of electronic payments and
2,450.00 with a target price of 41p. Analysts see the MasterCard remains at the heart of
2 Nov bank as a beneficiary of the recovery in UK
this evolution.
50 banking, though Lloyds and Barclays are “Our year-to-date net income is up
viewed as a better bet in the sector. over 22 per cent, aided by strong vol-
ume growth from markets outside of
Nomura expects a 10 per cent jump in rev- the US”
46
enues to £7.8bn in the bank’s quarterly MasterCard said it was continuing
results on Friday, and that its core tier one to expand into new markets particu-
capital ratio will remain stable at 10.5 per larly emerging markets such as China
2 Aug 20 Aug 10 Sep 30 Sep 20 Oct cent. where it had reached a memoran-
dum of understanding with China
To appear in Best of the Brokers email your research to notes@cityam.com Union Pay and Singtel one of the
largest mobile operators in Asia.
CITYA.M. 3 NOVEMBER 2010 News 23

Champion Trader - Day 2

How it stands at 5.30pm after the second day of trading in our search
for the best trader. Don’t worry you can still enter and it’s free with a
Portugal to cut spending
further after budget deal
£10,000 prize pot.

User Name Account Value % Difference

1 fivericket £32,181.32 222%

opposition Social Democrats (PSD). committed itself to presenting meas-

▲
WORLD ECONOMY
2 urosbric3 £31,739.10 217% BY HARRY BANKS This created a gap of €500m (£438m) ures that reduce primary public
in the budget bill, which must be spending to counterbalance the
PORTUGAL’S government will cut closed to meet next year’s deficit tar- €500m”.
3 urosfrantar2 £31,659.10 216% 2011 spending further to ensure it get of 4.6 per cent of GDP. Socrates would not say what part of
meets its budget deficit target after a “This will be achieved via a generic the sum will be saved via spending
deal with the opposition to pass an reduction in various sectors of public cuts, but his remarks suggested non-
4 ___________ £29,710.00 197% austere 2011 budget, Prime Minister spending and an increase in non-tax tax revenue will account for a small
Jose Socrates said yesterday. revenues,” Socrates said during the share, as proposed measures on that
The deal hammered out last Friday presentation of the bill in parliament. front include a tender of mini-power
5 Gekko1981 £27,352.50 173% included concessions by both the PSD leader Pedro Passos Coelho plant concessions and better manage-
minority government and the main said earlier the government “has ment of state property.

6 shifangge14 £23,497.74 135%

7 Andyroden £22,215.24 122%

8 smiley_dave £20,293.13 103%

9 renoraines £18,800.00 88%

10 alonsove £18,092.60 81%

To register and the full standings, visit www.intertrader.com/champion
24 News
CITY MOVES | WHO’S SWITCHING JOBS
Ernst & Young
The accountancy firm has hired Samantha
Keen to join its restructuring practice as a part-
ner, working with the liquidations and strategic
exit routes (LASER) team.
Keen has over 18 years of experience in the
insolvency and restructuring arena, and has
recently focused on advising clients about sol-
vent reorganisation and legal entity rationalisa-
tion issues.
She joins EY from Grant Thornton.
White from Threadneedle Asset
Premier Asset Management Management as a senior investment
The asset manager has hired Chris manager.
To appear in CITYMOVES please email your career
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
updates and pictures to citymoves@cityam.com
Edited by Victoria Bates
White will take over the firm’s
Premier income, alpha income and
monthly income funds from the begin-
ning of December.
He has been a director at
Threadneedle since 2002, and prior to
that managed the LMI UK equity
income and monthly income funds at
Legg Mason.
Marsh
The insurance group has hired Cath
Whitaker as a senior vice president in
the international division of its global
market relationship management team.
Whitaker joins from Willis, where
in association with
she was most recently acting managing
director of its strategic carrier relation-
ships.
Kinsey Allen
The executive search firm has taken on
Isabella Trupke to lead its legal and
compliance business across continental
Europe.
Trupke, who originally qualified as a
barrister in the UK, will focus on senior
hires in the European financial services
sector, having spent the past four years
in Frankfurt, recruiting senior legal and
compliance figures in the banking and
financial services industry.
Oracle snaps
up Art Tech
in a $1bn deal
▲
TECHNOLOGY
BY HARRY BANKS
ORACLE plans to buy e-commerce
software company Art Technology
Group for $1bn in cash to compete
with other large technology vendors
like IBM which have been expanding
their software lineups.
Oracle’s $6-per-share bid,
announced yesterday, represents a 46
per cent premium over ATG’s close of
$4.10 on Nasdaq.
Analysts said the acquisition, due
to close early next year, was a good
move for Oracle as it boosted its com-
petitive position against
Salesforce.com, as well as
International Business Machine (IBM).
“It’s a nice, safe acquisition for
Oracle,” said Avian Securities analyst
Jeff Gaggin, adding that the deal will
expand Oracle’s retail software port-
folio, which includes Retek, a retail
software company it acquired in
2005.
Large technology companies like
Oracle, IBM, and Hewlett-Packard
have recently been stepping up acqui-
sitions of niche technology compa-
Dell purchases US cloud
computing firm Boomi
▲
TECHNOLOGY
DELL will buy US cloud-computing
services company Boomi to shore up
its ability to provide software over
computer networks.
The world’s second-largest PC
maker did not disclose terms of the
deal for Boomi, which counts
Salesforce.com among its clients and
helps integrate so-called cloud-based
applications and smooth data trans-
fers between programs.
Boomi raised $4m (£2.5m) in 2008
in an initial round of institutional
funding led by venture capital firm
FirstMark Capital. The company is
CITYA.M. 3 NOVEMBER 2010
Bluefin Advisory Services
Bluefin, a subsidiary of Axa UK, has
hired Mark Bondi as a senior technical
adviser in the technical team in its cor-
porate consulting business.
Bondi joins from Heath Lambert,
where he held a similar position.
Mitie
The FTSE 250 outsourcing specialist
has appointed Katherine Thomas as its
new group HR director, overseeing
57,000 employees. She will also join the
firm’s executive board.
Thomas, 44, was previously group
talent and leadership director at BT.
+44 (0)20 7557 7245
morganmckinley.com
nies to diversify their product portfo-
lios, aiming to become one-stop shops
for storage, security and a wide range
of software.
Dell, the world’s second-largest PC
maker, yesterday announced it was
buying a private cloud-computing
company called Boomi.
In September, Dell lost out to HP in
a bidding war for data storage compa-
ny 3PAR.
Oracle’s latest move may also help
the company expand sales to retailers
trying to launch e-commerce services.
More than 1,000 companies use ATG
software to help with online cus-
tomer transactions on mobile devices
and in stores.
ATG’s customers include Best Buy
Co, AT&T and Vodafone Group. It
competes with Amazon.com and GSI
Commerce.
Oracle’s vast sales force would also
likely help boost ATG’s market reach.
ATG, which is based in Cambridge
Massachusetts, had sales of $50.3m in
the third quarter, up 16 per cent from
$43.4m a year earlier. The offer values
ATG at around four times expected
sales for 2011.
based in Berwyn, Pennsylvania, and
was founded in 2000.
Privately held Boomi was men-
tioned as a potential acquisition tar-
get after Dell rival IBM bought Cast
Iron Systems earlier this year.
Dell has been on the acquisition
trail, but lost out recently in a bid-
ding battle with larger rival Hewlett-
Packard for high-end storage maker
3PAR. Chief executive officer Michael
Dell had said at an industry event in
Hong Kong that the company would
announce a cloud-computing acquisi-
tion on Tuesday, spurring a round of
market speculation on potential tar-
gets.
 Markets&Investment
25

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 . . . . . . . . . . . . . . . . . . . . . . . .305.10 +0.90 305.90 246.90 COLT Group . . . . . . . . . . . . . . . .121.00 –0.30 144.20 107.70 Jupiter Fnd Mgmt . . . . . . . . . . . .281.00 +0.70 294.00 180.00 Sage . . . . . . . . . . . . . . . . . . . . . .275.30 +5.20 286.80 208.20
3i Infrastructure . . . . . . . . . . . . . 113.60 +0.20 115.00 97.00 Compass . . . . . . . . . . . . . . . . . .528.50 +8.50 574.50 384.80 Kazakhmys . . . . . . . . . . . . . . . .1386.00 +47.00 1634.00 955.50 Sainsbury(J) . . . . . . . . . . . . . . . .390.20 +1.00 397.00 307.60
A.B. Foods . . . . . . . . . . . . . . . .1061.00 +13.00 1096.00 790.00 Cookson . . . . . . . . . . . . . . . . . . .546.00 +20.00 616.00 347.60 Kesa Electricals . . . . . . . . . . . . .158.80 +0.20 172.40 98.45 Schroders . . . . . . . . . . . . . . . . .1572.00 –5.00 1598.00 1056.00
Aberdeen Asset Man . . . . . . . . . .174.60 –3.50 181.10 111.00 Croda Intl . . . . . . . . . . . . . . . . .1437.00 –2.00 1540.00 735.00 Kingfisher . . . . . . . . . . . . . . . . . .238.90* +3.20 255.00 196.50 Schroders N/V. . . . . . . . . . . . . .1237.00 –19.00 1276.00 864.00
Admiral. . . . . . . . . . . . . . . . . . .1627.00 +16.00 1695.00 1003.00 Daily Mail ‘A’ . . . . . . . . . . . . . . . .560.00 +15.50 564.50 381.00 Ladbrokes . . . . . . . . . . . . . . . . .133.30* –0.20 164.60 114.60 Scot. & Sthrn Energy. . . . . . . . .1162.00 +2.00 1206.00 1006.00
Aegis . . . . . . . . . . . . . . . . . . . . .129.10 +2.10 137.30 103.10 Davis Service . . . . . . . . . . . . . . .423.60 +6.10 442.30 356.00 Lamprell . . . . . . . . . . . . . . . . . . .363.00 +3.90 386.80 157.30
Afren . . . . . . . . . . . . . . . . . . . . .131.30 +1.40 135.90 77.00 Debenhams . . . . . . . . . . . . . . . . .76.50 +1.50 90.00 51.95 Lancashire Hldgs . . . . . . . . . . . .570.00 –2.00 585.00 416.70 Scottish Mortgage. . . . . . . . . . . .670.50 +8.00 673.00 475.00
African Barr Gold . . . . . . . . . . . .537.50 –2.50 685.00 520.50 Derwent London . . . . . . . . . . . .1525.00* –11.00 1633.00 1179.00 Land Securities . . . . . . . . . . . . . .671.00 –3.00 743.50 543.00 SEGRO . . . . . . . . . . . . . . . . . . . .295.40 +1.30 389.30 244.00
Aggreko . . . . . . . . . . . . . . . . . .1541.00 –22.00 1698.00 727.50 Dexion Absolute . . . . . . . . . . . . .137.00 +0.30 148.00 131.20 Legal & General . . . . . . . . . . . . . .99.75 –0.45 107.50 69.05 Serco . . . . . . . . . . . . . . . . . . . . .565.50 –21.50 656.50 491.20
Alliance Trust . . . . . . . . . . . . . . .352.90* +2.30 354.70 292.80 Diageo . . . . . . . . . . . . . . . . . . . 1166.00 +8.00 1240.00 978.00 Lloyds Banking Gp . . . . . . . . . . . .67.39 –2.21 79.15 45.30 Severn Trent . . . . . . . . . . . . . . .1431.00 +10.00 1436.00 939.50
AMEC . . . . . . . . . . . . . . . . . . . .1084.00 +7.00 1095.00 728.00 Dixons Retail . . . . . . . . . . . . . . . .26.75 +0.29 39.75 23.07 Logica . . . . . . . . . . . . . . . . . . . .133.20 +2.20 149.10 100.80 Shaftesbury . . . . . . . . . . . . . . . .447.50 +1.10 465.00 348.00
Amlin . . . . . . . . . . . . . . . . . . . . .413.80 +2.20 437.60 352.10 Domino’s Pizza . . . . . . . . . . . . . .493.90 +8.90 495.00 278.20 London Stk Exchange . . . . . . . . .743.50 +1.00 938.50 540.50 Shire. . . . . . . . . . . . . . . . . . . . .1491.00 +11.00 1532.00 1049.00
Anglo American . . . . . . . . . . . .2923.50 +53.00 3015.50 2199.00 Drax . . . . . . . . . . . . . . . . . . . . . .382.10 +2.50 478.00 321.50 Lonmin . . . . . . . . . . . . . . . . . . .1788.00 +31.00 2198.00 1344.00 Smith & Nephew . . . . . . . . . . . . .550.50* +0.50 700.50 528.50
Antofagasta . . . . . . . . . . . . . . .1384.00 +43.00 1388.00 755.50 Dunelm . . . . . . . . . . . . . . . . . . . .491.00 +5.00 505.00 319.40 Man . . . . . . . . . . . . . . . . . . . . . .258.30 –0.50 373.60 199.60 Smith(Ds) . . . . . . . . . . . . . . . . . .174.40 +1.40 179.80 103.00
Aquarius Platinum . . . . . . . . . . .373.40 +3.60 490.00 211.50 Easyjet . . . . . . . . . . . . . . . . . . . .457.30 +3.40 499.90 339.80 Marks & Spencer. . . . . . . . . . . . .427.50 +7.50 431.40 321.90 Smiths . . . . . . . . . . . . . . . . . . .1222.00* –10.00 1297.00 885.00
ARM Holdings . . . . . . . . . . . . . . .355.60 –4.30 419.50 145.80 Edinburgh Inv Tst . . . . . . . . . . . .449.00 +5.50 450.00 338.00 Meggitt . . . . . . . . . . . . . . . . . . . .334.40 +0.40 336.70 230.50 SOCO Intl . . . . . . . . . . . . . . . . . .323.10 +5.50 510.00 287.40
Ashmore . . . . . . . . . . . . . . . . . . .383.70 +1.50 400.50 215.00 Electrocomponents . . . . . . . . . . .250.40 +3.40 251.30 144.80 Melrose . . . . . . . . . . . . . . . . . . .290.70 +9.50 302.00 160.00 Spectris . . . . . . . . . . . . . . . . . . 1132.00* +14.00 1146.00 653.00
Ashtead . . . . . . . . . . . . . . . . . . .128.30 +4.30 131.20 61.25 EnQuest . . . . . . . . . . . . . . . . . . .136.40 +7.20 136.40 87.35 Mercantile IT . . . . . . . . . . . . . . . .999.50* +12.50 1002.00 822.50
Astrazeneca . . . . . . . . . . . . . . .3144.00 +32.00 3389.50 2668.00 Essar Energy . . . . . . . . . . . . . . .535.00 +2.00 553.50 358.50 Michael Page Intl. . . . . . . . . . . . .487.20 –2.60 495.40 317.20 Spirax-Sarco Eng . . . . . . . . . . .1811.00* –11.00 1888.00 1060.00
Atkins(Ws) . . . . . . . . . . . . . . . . .775.00 +12.00 801.00 532.50 Eurasian Nat Res . . . . . . . . . . . .888.00 +8.50 1276.00 801.00 Micro Focus . . . . . . . . . . . . . . . .371.90 –2.80 550.00 272.20 Spirent Comms . . . . . . . . . . . . . .141.70 –0.20 148.20 89.70
Autonomy Corp . . . . . . . . . . . .1477.00 +24.00 2012.00 1278.00 Euromoney Inst Inv . . . . . . . . . . .655.00 +0.50 656.00 372.00 Millen & Copthorne . . . . . . . . . . .547.50 — 574.50 321.40 Sports Direct Intl . . . . . . . . . . . . .143.10 +1.50 154.30 89.85
Aveva . . . . . . . . . . . . . . . . . . . .1489.00 –15.00 1519.00 856.50 Experian . . . . . . . . . . . . . . . . . . .742.00 +3.00 745.50 553.50 Misys . . . . . . . . . . . . . . . . . . . . .286.10 +0.10 298.00 196.60 SSL Intl . . . . . . . . . . . . . . . . . . . 1161.00 –1.00 1190.00 616.00
Aviva . . . . . . . . . . . . . . . . . . . . .402.30* +4.70 428.70 290.20 Ferrexpo . . . . . . . . . . . . . . . . . . .335.40 +0.40 396.20 142.60 Mitchells & Butlers . . . . . . . . . . .326.40 –0.50 343.90 228.60 St James’s Place . . . . . . . . . . . . .263.90 –9.10 298.00 203.40
Babcock International . . . . . . . . .577.00 –2.00 660.50 489.00 FirstGroup . . . . . . . . . . . . . . . . .405.20 –2.00 428.40 331.20 MITIE . . . . . . . . . . . . . . . . . . . . .202.00 +2.00 248.60 187.60 Stagecoach. . . . . . . . . . . . . . . . .216.10 +1.90 221.50 137.00
BAE Systems . . . . . . . . . . . . . . .353.50* +0.40 389.90 288.10 Foreign & Col Inv Tst. . . . . . . . . .294.80 +2.00 299.60 248.70 Mondi . . . . . . . . . . . . . . . . . . . . .524.00 +11.00 562.00 304.70 Standard Chartered . . . . . . . . . .1813.50 +21.00 1897.44 1316.50
Balfour Beatty . . . . . . . . . . . . . . .276.60* +1.80 304.80 228.60 Fresnillo . . . . . . . . . . . . . . . . . .1272.00 +15.00 1333.00 647.00 Monks Inv Tst . . . . . . . . . . . . . . .338.40 +4.40 340.10 265.00 Standard Life . . . . . . . . . . . . . . .229.00* +2.80 238.00 170.00
Barclays . . . . . . . . . . . . . . . . . . .275.05 +1.50 394.25 253.40 G4S . . . . . . . . . . . . . . . . . . . . . .260.40 –0.60 285.70 238.70 Morrison Wm . . . . . . . . . . . . . . .291.80* +1.20 307.10 255.00 SuperGrp . . . . . . . . . . . . . . . . . 1158.00 –2.00 1312.00 499.00
Barratt Development . . . . . . . . . . .78.85 +2.60 149.90 75.50 Genesis Emerging Mkts Fd . . . . .526.00 +7.50 540.50 370.00 Murray Intl Tst . . . . . . . . . . . . . . .903.00* +4.00 938.50 720.00 TalkTalk . . . . . . . . . . . . . . . . . . .135.40 +0.60 153.80 106.60
BBA Aviation . . . . . . . . . . . . . . .202.70 +2.90 220.00 145.90 GKN . . . . . . . . . . . . . . . . . . . . . .174.30 –3.50 188.40 100.40 National Express. . . . . . . . . . . . .259.60 +6.10 261.30 155.86 Talvivaara Mining . . . . . . . . . . . .566.50 +1.50 572.00 341.40
Berkeley . . . . . . . . . . . . . . . . . . .839.00 +8.50 917.50 735.00 GlaxoSmithKline . . . . . . . . . . . .1220.50* –3.50 1347.00 1088.00 National Grid . . . . . . . . . . . . . . .594.00 +4.00 607.65 474.80 Tate & Lyle . . . . . . . . . . . . . . . . .494.20 –5.80 526.50 388.00
BG . . . . . . . . . . . . . . . . . . . . . .1252.00 +41.50 1254.50 966.90 Great Portland Estates . . . . . . . .346.20 +2.10 368.60 236.60 Next . . . . . . . . . . . . . . . . . . . . .2229.00 –10.00 2361.00 1761.00
BHP Billiton . . . . . . . . . . . . . . .2277.00 +42.00 2346.00 1618.50 Greene King . . . . . . . . . . . . . . . .421.00 –0.10 484.00 372.50 Northumbrian Water . . . . . . . . . .361.50 +3.70 361.90 228.00 Taylor Wimpey . . . . . . . . . . . . . . .23.84 +0.92 46.34 22.12
BlackRock Mining . . . . . . . . . . . .691.50 +15.00 695.00 475.00 Halfords . . . . . . . . . . . . . . . . . . .420.60 –2.80 562.50 370.10 Ocado Grp . . . . . . . . . . . . . . . . .142.00 +1.00 169.00 120.90 Telecity . . . . . . . . . . . . . . . . . . . .492.00 –5.00 546.00 323.50
BlueBay . . . . . . . . . . . . . . . . . . .489.20 +0.30 495.00 251.00 Halma . . . . . . . . . . . . . . . . . . . . .331.70 +2.00 345.50 218.40 Old Mutual . . . . . . . . . . . . . . . . .130.40* +1.00 146.90 95.30 Templeton Emrg Mkts . . . . . . . . .651.00 +1.50 673.00 455.00
Bluecrest Allblue GBP . . . . . . . . .173.50 — 174.00 151.00 Hammerson . . . . . . . . . . . . . . . .419.00 +2.10 460.30 332.20 Partygaming . . . . . . . . . . . . . . . .239.00 –13.50 339.70 205.80 Tesco . . . . . . . . . . . . . . . . . . . . .431.80* +3.30 454.90 368.40
Booker . . . . . . . . . . . . . . . . . . . . .55.20* +0.10 55.45 37.50 Hargreaves Lansdown . . . . . . . .481.00 +8.30 485.40 259.40 Pearson . . . . . . . . . . . . . . . . . . .971.00 +13.00 1069.00 812.00 Thomas Cook . . . . . . . . . . . . . . .180.80 –0.90 277.20 167.50
BP . . . . . . . . . . . . . . . . . . . . . . .431.65 +7.65 658.20 296.00 Hays . . . . . . . . . . . . . . . . . . . . . . 113.30* –0.50 125.30 82.50 Pennon . . . . . . . . . . . . . . . . . . . .626.50 –1.00 633.50 440.40 Travis Perkins . . . . . . . . . . . . . . .843.00* +3.00 915.00 647.50
Brit Insurance . . . . . . . . . . . . . .1045.00 — 1052.00 709.00 Henderson . . . . . . . . . . . . . . . . .134.40 +1.20 157.80 112.10 Persimmon . . . . . . . . . . . . . . . . .343.00 +3.40 520.00 335.90 TUI Travel . . . . . . . . . . . . . . . . . .208.80 –2.30 313.90 189.20
British Airways . . . . . . . . . . . . . .273.00 +4.90 290.00 172.40 Heritage Oil. . . . . . . . . . . . . . . . .348.00 +3.00 585.00 295.90 Petrofac . . . . . . . . . . . . . . . . . .1479.00 +3.00 1507.00 900.00 Tullett Prebon . . . . . . . . . . . . . . .397.30* +3.40 427.00 261.20
British Amer. Tob . . . . . . . . . . .2445.00 +52.00 2490.50 1832.00 Hikma Pharma . . . . . . . . . . . . . .778.00 –17.50 813.00 452.20 Petropavlovsk . . . . . . . . . . . . . . .939.00 –38.50 1370.00 834.00 Tullow Oil . . . . . . . . . . . . . . . . .1219.00* +48.00 1375.00 979.50
British Empire Tst . . . . . . . . . . . .488.90 +3.80 490.60 338.50 Hiscox . . . . . . . . . . . . . . . . . . . .347.70 –7.80 371.60 299.60 Phoenix Group . . . . . . . . . . . . . .678.00 +18.00 775.00 550.50 UK Commercial Prop. . . . . . . . . . .79.00 +0.05 84.90 71.00
British Land . . . . . . . . . . . . . . . . 511.00* +4.00 516.50 416.00 Hochschild Mining . . . . . . . . . . .495.00 +9.10 522.00 220.00 Premier Farnell . . . . . . . . . . . . . .279.40 +3.00 284.90 140.60 Ultra Electronics . . . . . . . . . . . .1895.00 +2.00 1903.00 1198.00
Britvic. . . . . . . . . . . . . . . . . . . . .484.00 +3.00 518.00 341.50 Home Retail . . . . . . . . . . . . . . . .216.90 –0.10 326.30 201.70 Premier Oil . . . . . . . . . . . . . . . .1685.00 +35.00 1717.00 984.00 Unilever . . . . . . . . . . . . . . . . . .1822.00 +18.00 2024.00 1662.00
Brown(N.) . . . . . . . . . . . . . . . . . .296.40 +2.30 308.00 204.80 Homeserve . . . . . . . . . . . . . . . . .438.00 –7.40 502.00 422.00 Provident Financial . . . . . . . . . . .783.50 –5.00 983.50 760.50
BSkyB . . . . . . . . . . . . . . . . . . . .710.00* +1.00 732.00 521.00 HSBC Hldgs . . . . . . . . . . . . . . . .657.90 +2.70 766.80 595.20 Prudential . . . . . . . . . . . . . . . . . .623.00 –4.00 665.00 475.70 United Utilities . . . . . . . . . . . . . .618.00 +6.00 621.00 429.20
BT . . . . . . . . . . . . . . . . . . . . . . .156.50 +0.80 159.00 108.40 Hunting . . . . . . . . . . . . . . . . . . .633.00* –3.50 661.00 429.10 PZ Cussons . . . . . . . . . . . . . . . .401.50 +2.60 404.90 231.70 Utd Business Media . . . . . . . . . .670.50 +7.00 692.00 408.30
BTG . . . . . . . . . . . . . . . . . . . . . .258.90 +8.90 264.60 150.00 ICAP . . . . . . . . . . . . . . . . . . . . . .465.40 +3.30 485.20 291.70 Qinetiq . . . . . . . . . . . . . . . . . . . . 111.80 +0.60 179.10 96.00 Vedanta Resources . . . . . . . . . .2052.00 –10.00 2967.00 1795.00
Bunzl . . . . . . . . . . . . . . . . . . . . .745.00 +2.00 784.50 614.00 IG . . . . . . . . . . . . . . . . . . . . . . . .531.50 +1.50 560.00 293.30 Randgold Resources. . . . . . . . .5920.00 +65.00 6755.00 3976.00 Victrex . . . . . . . . . . . . . . . . . . .1270.00 –11.00 1355.00 743.50
Burberry . . . . . . . . . . . . . . . . . .1026.00 +13.00 1065.00 525.00 Imagination Tech Gp . . . . . . . . . .427.00 –7.20 445.00 193.70 Reckitt Benckiser . . . . . . . . . . .3557.00 +32.00 3667.00 2982.00 Vodafone . . . . . . . . . . . . . . . . . .172.80 +2.20 174.20 126.50
Cable & Wire Comms . . . . . . . . . .53.80 +0.75 150.00 51.95 IMI . . . . . . . . . . . . . . . . . . . . . . .814.00 +20.00 837.50 410.00 Reed Elsevier . . . . . . . . . . . . . . .537.00 –1.00 566.00 454.60 Weir . . . . . . . . . . . . . . . . . . . . .1582.00* +45.00 1652.00 639.00
Cable & Wire Wwide . . . . . . . . . . .71.45 +1.20 94.80 60.05 Imperial Tobacco. . . . . . . . . . . .2035.00 +38.00 2159.00 1728.00 Regus . . . . . . . . . . . . . . . . . . . . . .82.25 –1.35 125.50 64.05 Wellstream Hldgs . . . . . . . . . . . .739.00 –0.50 810.00 429.70
Cairn Energy. . . . . . . . . . . . . . . .386.30 +1.10 497.60 306.80 Inchcape. . . . . . . . . . . . . . . . . . .346.60 –0.40 358.00 235.00 Renishaw . . . . . . . . . . . . . . . . . 1182.00 +27.00 1250.00 479.00 WH Smith . . . . . . . . . . . . . . . . . .486.20 +4.90 551.00 392.20
Caledonia Invs . . . . . . . . . . . . .1783.00 +14.00 1804.00 1496.00 Informa . . . . . . . . . . . . . . . . . . . .445.00 +4.00 445.70 263.30 Rentokil Initial . . . . . . . . . . . . . . .100.00 +1.70 140.20 91.15 Whitbread . . . . . . . . . . . . . . . . .1726.00* +18.00 1753.00 1215.00
Capita . . . . . . . . . . . . . . . . . . . . .759.50 –9.50 829.50 693.00 Inmarsat . . . . . . . . . . . . . . . . . . .652.00 +2.00 831.00 552.00 Resolution . . . . . . . . . . . . . . . . .258.10 –1.90 280.50 220.10 William Hill . . . . . . . . . . . . . . . . .162.90* +0.30 217.80 158.00
Capital & Counties . . . . . . . . . . .153.80 +2.80 153.80 99.60 Intercontl Hotels . . . . . . . . . . . .1206.00 — 1244.00 770.00 Rexam . . . . . . . . . . . . . . . . . . . .325.30 +1.70 348.80 271.40 Witan Inv Tst . . . . . . . . . . . . . . . .481.50 +3.40 492.00 396.30
Capital Shopping Centres . . . . . .380.20* +0.30 523.50 300.10 Intermediate Capital . . . . . . . . . .324.70 +1.30 331.50 233.50 Rightmove . . . . . . . . . . . . . . . . .786.00* –1.50 830.00 456.90
Carillion . . . . . . . . . . . . . . . . . . .345.00* — 361.90 272.00 Intertek . . . . . . . . . . . . . . . . . . .1888.00 +12.00 1926.00 1136.00 Rio Tinto . . . . . . . . . . . . . . . . . .4142.00 +62.00 4251.50 2672.50 Wolseley . . . . . . . . . . . . . . . . . .1730.00 +63.00 1742.00 1155.00
Carnival . . . . . . . . . . . . . . . . . .2742.00 +42.00 2937.00 1876.00 Intl Personal Fin . . . . . . . . . . . . .312.00 +0.30 324.50 181.40 RIT Capital Partners . . . . . . . . .1138.00 +1.00 1215.00 940.00 Wood Group (John). . . . . . . . . . .441.00 +4.80 452.90 279.60
Catlin . . . . . . . . . . . . . . . . . . . . .354.70 +3.50 394.60 303.20 Intl Power . . . . . . . . . . . . . . . . . .416.60 +0.60 423.40 248.20 Rolls Royce . . . . . . . . . . . . . . . .653.00* –1.00 661.50 434.50 WPP . . . . . . . . . . . . . . . . . . . . . .735.50* +0.50 748.50 534.00
Centamin Egypt . . . . . . . . . . . . .172.20 +0.60 194.40 103.50 Invensys . . . . . . . . . . . . . . . . . . .292.20 –0.40 350.30 224.90 Rotork . . . . . . . . . . . . . . . . . . .1728.00 +38.00 1906.00 1101.00 Xstrata . . . . . . . . . . . . . . . . . . .1295.00 +40.50 1349.00 832.50
Centrica . . . . . . . . . . . . . . . . . . .328.70* +0.70 347.00 239.70 Investec . . . . . . . . . . . . . . . . . . .504.50 +5.60 565.00 411.50 Royal Bank Of Scot . . . . . . . . . . . .45.43 –0.15 58.95 28.25 LONDON TOP 250 BY MARKET CAPITALISATION
Charter Intl . . . . . . . . . . . . . . . . .739.00 –2.00 855.50 563.50 ITV . . . . . . . . . . . . . . . . . . . . . . . .68.60 +0.10 71.75 41.46 Royal Dutch Shell A . . . . . . . . .2100.50 +57.00 2106.50 1621.00
Chemring . . . . . . . . . . . . . . . . .2998.00 –24.00 3711.00 2551.00 Jardine Lloyd Thompson. . . . . . .588.50 –4.00 604.50 420.70 Royal Dutch Shell B . . . . . . . . .2064.50 +49.00 2071.00 1550.00 * Ex-Dividend † Suspended
Close Bros . . . . . . . . . . . . . . . . .789.50* +10.50 803.50 657.00 Johnson Matthey . . . . . . . . . . .1932.00 +15.00 1957.00 1397.00 RSA Insurance . . . . . . . . . . . . . .132.30* +2.40 137.40 114.10
Cobham . . . . . . . . . . . . . . . . . . .233.80* –1.00 278.60 205.50 JPMorgan Emerg Mkts . . . . . . . .603.00* +3.00 618.00 443.00 SABMiller . . . . . . . . . . . . . . . . .2045.00 +11.00 2103.00 1571.00 www.interactivedata.com

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FTSE lifted more than one per cent on US stocks up as elections

the back of strong corporate earnings and a Fed decision loom
$500bn in Treasury debt over the tion.” Reserve to stimulate the economy.

THELONDON coming months to spur a flagging

economy.
The FTSE 100 closed up 62.81
Energy stocks added the most
points to the index after strong earn-
ings from BP, up 1.8 per cent, and BG
THENEW YORK Most polls show Republicans
regaining control of the House of
Representatives, while President
REPORT points, or 1.1 per cent, at 5,757.43. The
index has risen 1.4 per cent this week
ahead of the Fed meeting.
Group up 3.4 per cent.
Oil explorer Tullow Oil climbed 4.1
per cent, helped by crude rising as
REPORT Barack Obama’s Democrats could be
left with a narrow majority in the
Senate. A divided Congress is typically

S
TRONG corporate earnings “(Equities) are well placed. Yields the dollar sagged on QE hopes. seen as bullish for stocks as it makes

U
hoisted Britain’s top shares by on equities are very high and not just Miners, which were higher on S stocks rose yesterday on the passing new laws harder and lessens
more than one per cent on yes- dividend but earnings yields as well,” Monday after stronger-than-expected expectation the midterm elec- uncertainty for business. McCain said
terday, led by energy stocks after said Mark Slater, chief investment Chinese manufacturing data, were in tion and a Federal Reserve deci- that if Republicans regain control
BP and BG Group results and ahead of officer of Slater Investments. demand once again as a weaker dol- sion would create a more there could be further stock gains.
the outcome of the eagerly awaited “If you invert the price earnings of lar supported metals prices. business-friendly environment, The Dow Jones industrial average
US Federal Reserve policy meeting. your average FTSE 100 company you Antofagasta put on 3.2 per cent, though many traders forecast a selloff was up 64.10 points, or 0.58 per cent,
At the two-day meet in Washington are getting somewhere between an 8 with the Chilean copper miner due to in the days ahead. at 11,188.72. The Standard & Poor’s
which started yesterday, the Fed will and 10 per cent earnings yield, you’re report production figures tomorrow. The S&P 500 index has risen almost 500 Index was up 9.19 points, or 0.78
consider the prospect of further not going to get that on a prime prop- BHP Billiton added 1.9 per cent with 14 per cent since September on specu- per cent, at 1,193.57. The Nasdaq
quantitative easing. Markets are pric- erty or any kind of bond and you have traders citing market talk that its bid lation of Republican congressional Composite Index was up 28.68 points,
ing in a commitment to buy at least got some protection against infla- for Potash had been rejected. gains and measures by the Federal or 1.14 per cent, at 2,533.52.60
 26 Markets & Investment | Foreign Exchange CITYA.M. 3 NOVEMBER 2010

QE2 MAY GIVE

US DOLLAR A Norwegian krone will
RELIEF RALLY
BORIS SCHLOSSBERG
eventually strengthen
DIRECTOR OF CURRENCY RESEARCH, GFT
It’s bearish now but
A
S THE currency world turns its attention
to today’s FOMC statement, which is
expected to reveal the terms of its QE2
be ready for it to turn,
programme, it may be useful to ask why
do US monetary officials insist on quantitative
writes Jessica Mead
easing in the first place? After all, most econo-

mists agree that this round of asset purchases
is unlikely to have much of a positive impact on
overall demand. Japan’s experiment with QE
failed to stimulate its economy and many
believe the US experience will also disappoint.
Yet Ben Bernanke and the FOMC are likely
to proceed with their plan not because they
are wild eyed optimists but because they
believe that the US political situation is in dis-
array as it suffers from complete absence of
leadership. With Congress and the president
at a stalemate, the US economy could quickly
become vulnerable to a double-dip recession
as paralysis in Washington translates into eco-
nomic inertia. Above all Bernanke is a student
of the Great Depression and he is familiar with
1936 when FDR curtailed spending only to
watch the US economy come to a grinding
halt for the second time in that decade. He is
desperate to avoid another credit crunch and
the possible failure of more financial institu-
tions. Therefore QE2 will be put in place as the
Fed assumes responsibility for ensuring banks
stay solvent while Congress debates politics.
For the currency market the only question
about QE that remains open is how much?
Dollar bears argue that the Fed will announce
a program of $500bn or more, but I believe
the US monetary authorities will be a lot more
cautious in their approach and will contain
purchases to no more than $100-$200bn ini-
tially. If the Fed is much more parsimonious
than the market anticipates, the dollar could
see a relief rally. But given the overall negative
sentiment towards the dollar, any pop could
be short lived unless US economic data starts
to show a considerable improvement.
Boris Schlossberg and Kathy Lien are direc-
tors of currency research at GFT. Read com-
mentary at www.GFTUK.com/commentary or
e-mail borisandkathy@gftuk.com.
N
OT even a strong fiscal position and
exposure to the commodity story
through being an oil exporter can
discourage the bears from selling
the Norwegian krone at the moment.
Against the single currency, the
Norwegian krone has weakened by 4.46
per cent since the start of September and
6.5 per cent since mid-May, erasing all the
gains it made in the first five months of
the year.
Last week’s announcement from the
central bank will have done nothing to
discourage the bears either. The Norges
Bank kept interest rates on hold at 2 per
cent and said that expected rate rises have
been deferred. Its members see the krone
as strong – it is currently trading at 8.1491
krone to the euro – suggesting that they
see no reason to tighten for now, especial-
ly since it has the highest policy rate of its
major Western European peers.
During the Norges Bank meeting, euro-
krone traded close to the top of its range
but the 8.18kr area seems to offer strong
resistance for now, according to Saxo
Bank’s John Hardy. Nonetheless, he adds
that a break of this level could trigger a
sizeable follow-up move higher for a time
before the market finds value in the There are no still
Norwegian krone again. Therefore, in waters for Norway’s
spite of the recent weakening in the cur- krona
rency, there is still room for FX traders to Picture: GETTY
short the krone at its current level.
BEARISH MOMENTUM more bullish about the prospects for the FX traders should be waiting for the sen-
BNP Paribas’ FX analysts also expect the Norwegian krone. Societe Generale’s head timent to change and then buy krone.
krone’s bearish momentum to continue of foreign exchange Kit Juckes argues that
and for the currency to remain under sell- although a dovish Norges Bank spiked the ANALYSIS l Euro-Norwegian krone over
ing pressure: “The Norwegian krone has wheels of the Norwegian krone, upbeat 8.20 Kr the past three months
been on the back foot since the Norges energy prices, rising PMIs and tightening
Bank downgrade to inflation and implied labour conditions suggest that the sell-off 8.15
rate forecasts. Euro-krone should trade in will quickly reverse. 8.10
a higher 8.20kr-8.30kr range while dollar- SocGen forecasts euro-krone to fall to
8.05
krone has scope to move up to 6kr in the 7.90kr by March and then to stabilise at
coming week.” They also think that the US 7.80kr until at least the end of next year. 8
Federal Open Market Committee decision And despite BNP Paribas’ bearish outlook
– which is widely expected to announce a for the Norwegian krone, its forecast is for 7.95
second round of quantitative easing – will the krone to strengthen to 7.50kr by the 7.90
weigh on the krone. end of next year and to 7.10kr by the
However, some currency analysts are fourth quarter of 2013. 9 Aug 23 sep 6 Sep 20 Sep 4 Oct 18 Oct

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CITYA.M. 3 NOVEMBER 2010 Investment | Foreign Exchange 27

THE
Australia looks TIPSTER
STERLING

fantastic. Time COULD FACE

WEAKNESS

U
K CONSTRUCTION data came in weaker
than expected on Tuesday and the recent

to get out then sterling-euro strength was reversed.

Considering that the bulk of the GDP
number was heavily dependent on construction
figures, analysts fear that the next release of
GDP data may come in weaker. If this is the case
sterling-euro could face further weakness.
Capital CFDs quotes €1.1430-€1.1433.
The dollar down under is probably as strong After recently recommending a sell of US
dollar-Canadian dollar at Ca$1.0350, the pair
as it is going to get, writes Daniel Knowles slid to Ca$1.0087 and seems to be destined for
parity again. Traders could look to hold shorts
until Ca$1.0010 and then reversing to a long

I
N AUSTRALIA, it is summer in more
ways than one. The Fed might be gear-
ing up the printing presses again for
winter, but down under the economy
is actually booming. In a move unseen any-
where else in the developed world, the
Reserve Bank of Australia (RBA) decided on
Monday night to increase interest rates by
25 basis points, up to 4.75 per cent. As a
result, the Australian dollar is now worth
more than the greenback. That’s a heady
altitude for a small currency to live at,
however. Can the Aussie keep climbing, or
must it now begin a graceful descent?
Certainly things look good at the
moment. Buoyant commodity prices have
pushed up Australian terms of trade to a
level last seen in the 1950s. Thanks mostly
to Chinese demand for raw materials,
Australia actually managed to avoid slip-
ping into recession. Now it is looking posi-
tively bouncy. Glenn Stevens, the governor
of the RBA, said in a statement that he
believes that there is only a “modest
amount of spare capacity” left in the
Australian economy, citing low unemploy-
ment levels as evidence. That hints that
further increases in the interest rate may
still be to come.
Unsurprisingly then, many traders are
looking very bullish. Michael Derks, chief
strategist at FxPro, says that it was mostly
“sticker shock” holding the Aussie below
parity. Given time, that level could well
become ordinary, especially if Chinese and
Indian demand for commodities like iron
ore and coal continues to grow. With
encouraging data out yesterday for indus-
trial production in China and the US, that
seems entirely plausible.
Stephen Gallo, of Schneider Foreign
Exchange, thinks that is a mistake, howev-
er. In his analysis, global imbalances, and
in particular an overly weak Chinese ren-
minbi, are driving up commodity prices in
a way that isn’t really sustainable.
According to Gallo, growth in Chinese
manufacturing will eventually have to
decelerate. That will in turn lessen
demand for raw materials and so push the
Australian dollar back down again. Given
that, forex traders might be wise to take a
short position, at least in the medium
term.
Much depends on what the Federal
Reserve does later today. If it chooses to
expand the money supply particularly
aggressively, then probably the Aussie will
climb further against the dollar, as traders
seek respite in commodities and higher
yield currencies. However, most of the
impact of quantitative easing is likely to be
already priced into the Aussie.
Because of that, it might be a good time
for forex traders already long on the Aussie
to take profits and get out. For six months
position with a view to first retaking the
Ca$1.0200 level and then back to Ca$1.0350.
Spread Co offers a spread on US dollar-
Canadian dollar of Ca$1.0084-Ca$1.0088.
Australian dollar-US dollar continues to
find support after the surprise move by the
Reserve Bank of Australia earlier in the week.
Although this isn’t the first time the pair has
been past parity, the key is now the sustainabili-
ty of the move. The US Federal Reserve has
been expected to announce more QE for some
time and so it has already been priced in by the
market. Therefore, any delay or shortfall in the
or so, traders have flocked to Australia like Buoyant demand for plan could see the Aussie unwinding from these
birds flying south for winter. Probably, minerals has been record highs. IG Index offers $1.0007-$1.0009.
they will stay for a while, but no one is real- driving Australian Dollar-yen appears to be trying to form
ly sure. Given the chance of something growth another bottom in the ¥80.50 area and it
going wrong, especially to commodity Picture: GETTY almost met the wall of sell orders from
prices, why risk hanging on? Japanese exporters at ¥81 as it rallied strong-
ly yesterday. The Bank of Japan has moved a
ANALYSIS l Commodity prices have driven the Australian dollar meeting forward to this Thursday and Friday,
1.00 US$ 1,500
so it will be one to watch closely to see its
Australian dollar-US dollar exchange rate (LHS) reaction to the Federal Open Markets
UBS Bloomberg commodity price index (RHS) Committee meeting. Spread Co is offering a
0.95 1,400
spread on dollar-yen of ¥80.79-¥80.72.
The pound has been flirting around the
0.90 1,300 $1.6000 level which has not been seen since
February. It has been forming an upward
channel since September, but can this contin-
0.85 1,200 ue if the Fed hits the printing presses.
Spreadex offers a spot price of $1.6024-
Source: Bloomberg
$1.6027 on sterling-dollar.
Dec Feb Apr Jun Aug Oct Donata Huggins

FOREX ANALYST PICKS

FOREX STRATEGIST FOREX STRATEGIST FOREX STRATEGIST
JOEL KRUGER JOHN KICKLIGHTER ILYA SPIVAK

My pick: Buy dollar-yen at ¥79.50
Expertise: Classic technical analysis
Average time frame of trades: 1 month-12 months
This market has been under intense pressure for several months, with the
price dropping to fresh multi-year lows and now quickly closing in on a
retest of the 1995 record lows by ¥79.75. Despite the severely oversold
technical studies, we can not rule out a test and break below the critical
barriers by ¥79.75. But any further declines below there should be limit-
ed, with the greater risk then for a major upside correction back in favor
of the US dollar. Target ¥100 and place a stop at ¥73.50.
My pick: Long dollar-Swiss franc above SFr1.00 post Fed announcement
Expertise: Fundamental and technical analysis with risk management
Average time frame of trades: 1 day-1 week
Timing is ticking until to tonight’s Federal Open Markets Committee
(FOMC) decision. With that in mind, my carryover euro-US dollar short
has been taken off after hitting its first target, while the second half was
out at breakeven on a trailed stop. Heading into the Fed, my favorite setup
is actually the lesser followed dollar-Swiss franc. A move above SFR1.00
after the release will be my trigger with a stop and a first target both 100
points away.
My pick: Short euro-dollar above $1.3840
Expertise: Global macro
Average time frame of trades: 1 week-6 months
Euro-dollar is carving out a rare but potent bearish diamond top forma-
tion below $1.42, which has been both a significant upside and downside
barrier since the second half of 2008. Risk-reward considerations look
favourable to enter short above $1.3840 and as close as possible to
$1.40, targeting a move to August’s swing top at $1.3338. A stop-loss will
be activated on a daily close above $1.4085. An entry above $1.3888
allows for a stop on a close above $1.4162, the 15 October wick high.
 28 Investment | Fund Management CITYA.M. 3 NOVEMBER 2010

US equities will regain their appeal

But avoid the large been so unattractive. First, performance in
North American investment companies is
cap stocks if you’re slightly below the average investment com-
pany over a number of years. Second, the
looking for alpha, S&P 500 is one of the most difficult mar-
kets for an active fund manager to outper-
writes Jessica Mead form because the market is very efficient at
pricing in any relevant news. Third, the out-
look for the US economy has been gllomy
in recent months.

M
ARKETS have certainly been
focused on the United States in
recent months in anticipation of
further quantitative easing from
the Federal Reserve and in the run-up to
yesterday’s mid-terms. But despite their
interest in events in the US, investors have
not been putting money into US equities.
According to data from the Investment
Management Association (IMA), North
America was the worst selling net retail sec-
tor in August, with net sales of -£93m.
Funds under management in the North
American sector have actually dipped
slightly over the past decade.
Separate data from the Association of
Investment Companies (AIC), which repre-
sents the closed-ended investment compa-
ny industry, showed that assets under
management of North American-focused
funds totalled just over £1bn.
There are three reasons why the US has
But should investors be reconsidering
renewing their love affair with the world’s
largest stock market? A number of US equi-
ty fund managers can certainly see the
light at the end of the tunnel and have
become more optimistic about the
prospects for US equities. Many companies
currently have low valuations and there-
fore, as confidence returns and markets
improve, they could prove good long-term
investments.
David McCraw, manager of Aberdeen’s US equities won’t be he adds. He also dismisses fears about the the mid caps, according to Shaw. Not only
Edinburgh US Tracker Trust, says that valu- the ugly duckling of economy, arguing that these concerns are do you get the liquidity that is present in
ations have not looked this attractive in the stock markets for already priced in and that market investors the large caps, but you also get the entre-
recent memory, with the S&P 500 trading much longer should be looking forwards not backwards. preneurial spirit of the small caps. This cor-
at just over 12 times projected earnings for Indeed, as the US economy recovers from relates with the data in the table below – of
the next year. Over the previous eight earn- Picture: GETTY recession, smaller cap stocks may be a bet- the top 10 funds, seven are in the mid-cap
ings cycles, the average actual earnings fig- ter way for investors to get direct exposure category.
ure has been 15 times. “We believe those to growth because the large caps are more While you can’t afford to ignore the
levels are achievable again. Given this, and multinational, says Marc Shaw, portfolio world’s largest stock market, you might be
the size and scale of the US economy, manager of the JPMorgan US Smaller better off avoiding its largest constituents
investors should not ignore the country,” Companies fund. and focusing on the small and mid-cap
But the real sweet spot for US equities is focused funds.

IN FOCUS | NORTH AMERICAN EQUITIES SECTOR SOURCE:MORNINGSTAR

UK REGISTERED 2/11/07 RANK LATEST DOMICILE PORTFOLIO MANAGEMENT
INVESTMENT FUNDS: – PORTFOLIO MANAGER GROUP
NORTH AMERICA 2/11/10 SIZE (£M)
% CHG
TOP 10
MS INVF US Advantage A 33.4 1 283.9 LUX Jason Yeung Morgan Stanley Investment Funds
Vanguard US Opportunities Inst USD 31.35 2 293.07 IRE Howard Schow Vanguard Group (Ireland) Limited
Threadneedle(Lux) US Equities AU 30.59 3 230.39 LUX Charlie Macquaker Threadneedle Asset Management Ltd.
Findlay Park American Smlr Coms USD 29.88 4 N/S IRE Charles Park Findlay Park Investment
Management Ltd
GAM North American Growth Inc 28.63 5 78.34 UK Gordon Grender GAM Sterling Management Limited
BGF US Small & MidCap Opps A2 USD 24.49 6 289.18 LUX Thomas Callan Blackrock (Luxembourg) S.A.
UBS (Lux) EF Mid Caps USA USD P 21.86 7 87.8 LUX Management Team UBS Equity Fund Management Company
S.A.
Schroder US Mid Cap Acc 21.57 8 605.81 UK Jenny Jones Schroder Unit Trusts (UK)
Robeco US Premium Equities D USD 21.18 9 2,296.26 LUX Duilio Ramallo Robeco Luxembourg S.A.
Schroder ISF US Sm & MdCp Eq A USD 19.47 10 1,400.28 LUX Jenny Jones Schroder Investment Mgmt
(Luxembourg)
BOTTOM 10
AEGON American Equity A -17.35 227 20.2 UK Ian Cooke AEGON Fund Management (UK) Ltd
Nordea-1 North American Value BP -17.4 228 271.66 LUX Gregg Powers Nordea Investment Funds S.A.
Janus US Twenty A GBP Dis -18.64 229 563.25 UK Ron Sachs Janus Capital Funds
Franklin Mutual Shares A Acc -21.65 230 14.42 UK Peter Langerman Franklin Templeton Investments (UK)
SGAM Fund Eqs US Focused A -22.02 231 6.32 LUX Thomas Mc Kissick Société Générale Asset Management
GLG North American Equity M -25.6 232 2.12 IRE Noam Gottesman GLG Partners UK Limited
LM Capital Mgmt Value A Inc (A) $ 26.89 233 336.82 IRE Mary Gay Legg Mason Global Funds plc (Dublin)
Brandes US Equities A USD -27.27 234 21.95 IRE Brad Chapman Brandes Investment Funds P.L.C.
Legg Mason US Equity A -29.87 235 102.47 UK Mary Gay Legg Mason Funds ICVC
LM Capital Mgmt Gr A Inc (A) $ -29.93 236 33.71 IRE Robert Hagstrom Legg Mason Global Funds plc (Dublin)
Mean/Count 2.4 238.82

IN FOCUS | US EQUITY FUNDS

Of the 236 funds in the North American equity sector that have a track record of at least three years, Morningstar data
shows that the average performance over the past three years is just 2.4 per cent, highlighting just how difficult a bench-
mark the S&P 500 is to beat. The average size of assets under management is £238.82m. The majority of funds in the
top 10 are mid cap-focused while nine out of the bottom 10 are large cap funds. Two of the funds in the top 10 have
funds under management in excess of £1bn.

FUND MANAGEMENT NEWS

BY DONATA HUGGINS
RENAISSANCE UNVEILS THREE NEW UCITS FUNDS
Renaissance Asset Managers, the emerging and frontier
markets investment firm, launched three new Ucits
funds offering international institutions exposure to fast
growing emerging market asset classes. The Emerging
Europe Long Short Equity and Emerging Europe Equity
Fund were launched last week while it is anticpated that
the Russia Debt Fund will be launched on 8 November.
This follows last month’s launches of Sub-Saharan and
Pan-African Funds. The Emerging Europe funds will be
run by chief investment officer Plamen Monovski while
the Russia Debt Fund will be managed by Elena Kolchina.
BOLTON FUND TO MAKE SHARES LESS EXPENSIVE
Anthony Bolton’s Fidelity China Special Situation Fund has
been so popular that the board is considering ways to
make the shares cheaper. Unusually for an investment
trust, shares are now trading at a 12 per cent premium
over the value of its holdings, which could deter would-be
investors. Bolton released a statement earlier this week
saying that the board was studying ways to satisfy the
“consistently high” levels of demand for the fund’s shares.
When the fund was initially launched in April, it received
less interest than had been expected, raising only £460m
compared to the cap of £650m that was set.
 City Focus
Regulatory revamp must not
erode UK’s good reputation
The government
should be careful if it
changes a system
that attracts business
CHARLES WHIDDINGTON
A
T the CBI last week the business
secretary Vince Cable fleshed out
some earlier comments made by
David Cameron on the future
direction of competition policy in the UK.
The merger of the OFT and the
Competition Commission has already
been floated, but in his speech the busi-
ness secretary raised three more specific
issues: an apparent difficulty in the pros-
ecution of antitrust cases; a paucity of
market investigation cases; and a query
over the effectiveness of dividing up com-
petition enforcement among a number of
sector-specific regulators.
Competition policy does appear in need
of a tune-up. In recent years the OFT has
focused on a few significant case prosecu-
tions, perhaps believing that the publicity
increases awareness and acts as a deter-
rent. As a result, the number of cases
taken by the OFT has been lower than
anticipated – only 22 infringement deci-
sions in the first 10 years of the
Competition Act.
It has also taken a number of non-
infringement decisions. Two features
have arisen from the OFT’s policy choices:
the length of time taken to adopt deci-
sions, and the unexpectedly high number
of appeals involving case closures.
Both have implications for resourcing of
the regulator in terms of staff and time.
The case closure challenges, additionally,
impact on the regulator’s willingness to
close a case and also on its use of competi-
tion powers in the first place. Some have
said that sector regulators with specialist
knowledge would be better placed to
enforce the competition rules in their sec-
tor. This has not been borne out by experi-
BRIEFS | LEGAL NEWS
PARTNERS FACE PROCEEDINGS
Former partners at Halliwells, which
collapsed this summer, could face
legal action. Joint administrators
Dermot Power and Shay Bannon
sent what has been dubbed a “letter
of death” to ex-partners, saying that
they could face proceedings related to
claims including unpaid capital con-
tributions and breach of duty. The
administrators are investigating vari-
ous aspects of the way Halliwells was
run, including capital payments
made by members of the LLP, and
decisions the board made about refi-
nancing and potential mergers.
| Law
ence. Over the last 10 years there have
been only two infringement decisions
taken by sector regulators.
If the government’s emerging plans
seek to accelerate the processing and
also increase the number of prosecu-
tions, then it is vital that they do not
erode the reputation for quality, rigour
and impartiality which the existing sys-
tem has earned. In itself this forms part
of the attraction of the UK as a market
for business.
The headline comparison of UK
enforcement with larger numbers of
investigations in France and Germany
does not in itself mean either that UK
businesses are more competition-compli-
ant, or that processes on the continent
are necessarily less rigorous.
This is not to say that efficiencies can’t
be achieved. The merger of the OFT with
the Competition Commission is one pro-
posal which could create greater efficien-
cies by removing the need for the
Commission to start all over again when a
case is referred to it.
Removing or limiting concurrent pow-
ers could also improve efficiency and
CHILDCARE AT FRESHFIELDS
Magic Circle firm Freshfields
Bruckhaus Deringer has launched a
new employee benefits scheme for
City staff with private provider My
Family Care. The firm can help with
caring for children, elderly relatives
or other dependents, as well as
school holiday cover. Global HR part-
ner Caroline Stroud said: “The pace
of modern life’s putting ever more
strain on professionals who try to
juggle a successful and rewarding
career with spending quality time
with family and friends.” Employees
are entitled to 10 sessions a year.
HACKING WORK:
THE BIG NEW IDEA
REVIEWED IN
CAREERS TOMORROW
The new system remove the risk (inherent in concurrency)
shouldn’t hold of inconsistent decision-making. It would
us back also be worth considering giving the regu-
lator a greater margin of economic discre-
Picture: GETTY tion in coming to its decisions, which
might raise the bar a bit for appeals and
offer more encouragement to the regula-
tor to take on cases in the first place.
However, in the current fiscal condi-
tions the OFT would also need to change
its priorities. Also, parts of its current
workload could be transferred elsewhere.
For example, the concerns about the OFT
being properly equipped to handle crimi-
nal competition prosecutions have re-sur-
faced in light of the failed prosecutions in
the BA case. Such cases could instead be
passed to the Serious Fraud Office.
Over the coming months the govern-
ment will bring forward more detailed
proposals which it will consult on in the
New Year. The challenge will be to ensure
that the shake up in competition investi-
gations does not compromise the UK’s
attractiveness to business.
Charles Whiddington is partner and head of
Competition & EU Regulatory at Field Fisher
Waterhouse LLP
PII CHANGES URGED
The private indemnity insurance
(PII) system should be reformed, says
a report commissioned by the
Solicitors Regulation Authority
(SRA). The single renewal date for all
law firms to renew their PII should
be scrapped, said the report, which
went on to say that there should be
a review of conveyancing practices,
as it accounts for 50 per cent of PII
claims. The report, which was car-
ried out by consultant Charles River
Associates, recommended that the
assigned risks pool and open market
model are retained.
29
Employment
change would
hit workers
PAUL MADER
L
ORD Young of Graffham confirmed this
week that the government is considering
increasing the qualifying period for claim-
ing unfair dismissal from one year to two.
The last change to the qualifying period was in
1999 when it was changed from two years to
one, so this looks like a backwards step. In fact,
some favour that the time-period is removed
altogether, arguing that it should never be per-
missible to unfairly dismiss someone, however
long they have been employed for.
From an employer’s perspective the news is
good: it means that employers will in effect
have two years to get rid of someone easily.
That said, employers are used to the one year
threshold and a year should really be enough
time to evaluate an employee.
Where it will really help employers is in
redundancy situations where they currently
need to show that certain procedures have
been followed to defeat an unfair dismissal
claim – consultation, consideration of suitable
alternative employment, fair and objective
selection. This will now be easier to prove.
For employees, the new regime will add to
uncertainty for anyone with less than two
years’ service and will mean that people can
be dismissed more easily for a greater period
of time. In redundancy situations they have
less times to argue about the procedures fol-
lowed. Furthermore, employers are often will-
ing to add a little on to the statutory
redundancy payment, partly because they
may feel it right or generous to do so but also
partly because doing so makes it less likely
that employees will challenge the procedures.
When it is harder to pursue cases, employers
will be less likely to do this.
More generally in 2009/2010 there were
nearly 400,000 tribunal claims, nearly 15 per
cent of which were unfair dismissal claims. If
the threshold changes, the number of unfair
dismissal claims is likely to decrease. But it
seems likely that the number of other claims –
discrimination and, in particular, whistle blow-
ing and age related discrimination – will
increase as dismissed employees will look
around for other bases on which to claim. This
change could hit employees hard.
Paul Mader is head of the employment depart-
ment at Dawsons LLP
CONTROVERSY AT SJ BERWIN
City firm SJ Berwin is facing prob-
lems following a divisive election
for managing partner. The eventual
winner, Rob Day, took over the posi-
tion on Monday, but his supporters
stand accused of aggressive tactics
in drumming up votes when it
emerged that his rival Perry Yam
had more supporters than they
expected. SJ Berwin is currently in
the process of negotiating a merger
with American firm Proskauer Rose
which is thought to have proved
unpopular with some partners in
the British firm.
 Lifestyle
30 CITYA.M. 3 NOVEMBER 2010

| Motors WORDS BY
RYAN BORROFF

The future has a whole new sound

Silence is not a safe option, so acoustic

experts are embracing a new challenge

W
HATEVER your view on electric
and hybrid cars, driving around
the city in one of them in near
silence is something that takes a
lot of getting used to for some drivers.
Spare a thought for pedestrians too, partic-
ularly those with sight problems. Traffic,
in the absence of engine noise, is a poten-
tially frightening, even dangerous
proposition.
If you’ve dreamt of living in a city devoid
of car noise as we all pootle about in our
silent milk-float-like vehicles then you’re
going to be disappointed. Research in the
US has shown that a hybrid or electric vehi-
cle is twice as likely to be involved in a
pedestrian accident than a car with a con-
ventional combustion engine, particularly
when slowing or stopping, backing up, or
entering or leaving a parking space. Which
is why carmakers – and companies like
acoustic experts Harman Kardon – are
busy developing sound systems for cars
like this Toyota Prius.
Which is why I find myself driving
around Crouch End in a hybrid Toyota
Prius that sounds like a Cylon spaceship
one minute and an American V8 the next.
The car looks just like any other Prius,
except this one is a demonstrator for a new
electronic sound system that warns people
of your otherwise silent presence by syn-
thesizing sound to speakers located on the
inside and (crucially) the outside of the car.
The effect is surprisingly easy to live with,
if unusual.
The system works by placing sensors on
the throttle and braking pedals. A synthe-
sizer then transforms these inputs into
“engine” sounds that are then transmitted
The test sound system via a speaker at the front of the car – for
in this Prius uses pedestrians to hear – and inside the cabin
sensors on the to give the driver feedback too. It’s tai-
throttle and brakes. lorable so this car can switch the sound it
makes from the American V8 to a V6 and a
V12 engine, not to mention a couple of
futuristic sounds which have more in com-
mon with a light saber than a combustion
engine. In Crouch End at least, it would
seem that the V8 blends in to the other
traffic noise rather more than the futuris-
tic spaceship sound, if the looks from pass-
ing pedestrians are anything to go by.
Without realising it, all of us have come
to rely on the volume and pitch that a car
makes to work out how far away it is when
we’re walking. At higher speeds pedestri-
ans can hear HEVs (hybrid electric vehicles)
thanks to road and tyre noise, but up to
around 30mph, people are going to need
electronic help to replace the mechanical
noises that conventional cars make.
At the moment it looks like legislation
will most likely call for HEVs to electroni-
cally recreate the sound of a combustion
engine because that’s the sound people are
already used to. But in theory driving
around a hybrid or electric car equipped
with such a system could mean a car could
sound like almost anything. Fancy a car
that sound likes a Zen garden wind chime,
the Starship Enterprise, or waves crashing?
Entirely doable. Fortunately such sounds
will be limited by what carmakers deem
appropriate and the boundaries set by leg-
islation, so you’ll have to keep them to the
inside. Which must be a much better
option than a cacophony of branded
engine noises blaring out at a crossroads
like disparate Crazy Frog ringtones.

CAR TALK BY RYAN BORROFF

RARE VIEW OF PAGANI ZONDA CINQUE ROADSTER
Fancy a sneak peak at a car that’s rarer than hen’s teeth? The new
£1.3m special edition Pagani Zonda Cinque Roadster – the last of only
five built – will be displayed at this year’s Prestige & Performance
Motor Show. The roadster has a 678hp Mercedes AMG V12 engine, a
carbon-titanium chassis and a removable roof, and is capable of 0-62
mph in just 3.4 seconds. www.mphshow.co.uk.
TOYOTA CELEBRATES PRIUS WITH SPECIAL EDITION
Toyota has just announced a new special edition model to celebrate 10
years of its 70.6mpg, 92g/km CO2 hybrid Prius. New skirts, 17-inch
multi-spoke alloys, rear privacy glass and embossed black leather
upholstery all add up to a sharper-looking car. Available in white or
black pearlescent paint, production is limited to just 1,000 vehicles at
£26,150 each.
FERRARI THEME PARK IN ABU DHABI
People are crazy about Ferrari in the Middle East, which is why the
company decided to locate the world’s first theme park devoted to the
Prancing Horse there. Ferrari World Abu Dhabi is aimed at families and
includes a F1 simulator, racing schools for kids and an F1 roller coaster
that makes you feel like a Formula One driver by accelerating up to
149mph and pulling 1.7 Gs. www.ferrariworldabudhabi.com.
CITYA.M. 3 NOVEMBER 2010 Lifestyle | TV& Games 31

BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5 TV PICK

TERRESTRIAL
6pm BBC News
6.30pm BBC London News
7pm The One Show
7.30pm Wallace & Gromit’s
World of Invention; BBC News
8pm Jimmy’s Food Factory
8.30pm Nigel Slater’s Simple
Suppers
9pm CHOICE The Apprentice
10pm BBC News
10.25pm Regional News 10.35pm
The National Lottery Draws
10.45pm Film 2010 with Claudia
Winkleman: National Lottery
Update 11.25pm FILM Wonder
Boys: 2000; Weatherview 1.15am
Sign Zone: Country Tracks 2.10am
Watchdog 3.10am MasterChef: The
Professionals 3.40am Restoration
Roadshow 4.10am-6am BBC News
6pm Eggheads
6.30pm Strictly Come Dancing
– It Takes Two
7pm Escape to the Country:
A couple search for a property
in Stowmarket, Suffolk.
8pm Natural World: New
series. The lives of bottlenose
dolphins in Shark Bay, Western
Australia.
9pm Horizon: Asteroids – The
Good, the Bad and the Ugly
10pm The Apprentice: You’re
Fired!
10.30pm Newsnight; Weather
11.20pm Whites
11.50pm Harry & Paul
12.20am BBC News
4am-6am BBC Learning Zone
6pm London Tonight
6.30pm ITV News
7pm Emmerdale: Eve comes to
terms with being Carl’s mistress.
7.30pm Live UEFA Champions
League: Chelsea v Spartak
Moscow (Kick-off 7.45pm).
10pm ITV News at Ten
10.30pm London News
10.35pm UEFA Champions
League: Extra Time: Action
from the matchday four
fixtures.
12.35am The Zone; ITV News
Headlines
2.35am FILM Thirteen: Drama,
starring Holly Hunter. 2003. 4.15am
The Jeremy Kyle Show 5.10am-
5.30am ITV Nightscreen
6pm The Simpsons 6pm Home and Away
6.30pm Hollyoaks 6.25pm Live from Studio Five
7pm Channel 4 News 7pm Five News at 7
7.55pm 4thought.tv 7.30pm Highland Emergency;
8pm CHOICE Animal Five News Update
Madhouse 8pm Cowboy Builders; Five
9pm Grand Designs News at 9
10pm Rude Tube: Total Stunts 9pm NCIS: Two bodies are
11.05pm The Event found at a building site on a
12.05am Music on 4: On Track Navy base.
12.20am JD Set Birthday 10pm CHOICE Law & Order: THE APPRENTICE
12.35am Strummerville Criminal Intent BBC1, 9PM
Alan Sugar challenges the remaining
Sessions 10.55pm Law & Order
12.50am FILM Dumb and Dumberer: 11.55pm Poker contestants to open fashion shops in the
When Harry Met Lloyd: 2003. 2.15am 12.50am SuperCasino Trafford Centre in Manchester, featuring
Whatever Turns You On 2.25am 4am House Doctor 4.25am Brian clothes by up-and-coming designers.
Studio 60 on the Sunset Strip 3.15am Sewell’s Grand Tour 5.10am
ER 4am Afterworld 4.30am Hill Michaela’s Wild Challenge 5.35am-
Street Blues 5.15am-6am Countdown 6am Michaela’s Wild Challenge

SKY SPORTS 1 12am European Tour Weekly LIVING Desperate Housewives 11pm 3am World War Two: The
SATELLITE & CABLE

7pm Sky Sports News at
Seven 7.30pm Soccer Special
10pm You’re on Sky Sports!
11.30pm FIFA Futbol Mundial
12am Total Rugby 12.30am
UEFA Champions League Goals
1.30am FIFA Futbol Mundial
2am You’re on Sky Sports!
3.30am UEFA Champions
League Goals 4.30am FIFA
Futbol Mundial 5am-6am
Transworld Sport
SKY SPORTS 2
6pm Champions League Pre-
Game Show 7.30pm Live UEFA
Champions League 10pm
UEFA Champions League Goals
11pm Watersports World
12am International Cricket
2am-4am Poker Million
SKY SPORTS 3
7pm Champions Tour Golf
8pm International Cricket
10pm Ladies European Tour
Golf 11pm Golfing World
12.30am Inside the PGA Tour
1am Champions Tour Golf 2am
Ladies European Tour Golf 3am
European Tour Weekly 3.30am
Inside the PGA Tour 4am-8am
Live World Golf Championship
BRITISH EUROSPORT
6.45pm US Tour Golf 7.45pm
European Tour Golf 8.15pm
Golf Club: Magazine for golf
enthusiasts. 8.20pm Sailing
8.50pm Yacht Club 8.55pm
Wednesday Selection 9.15pm
Eurogoals Flash 9.30pm-
12.30am Live Rowing
ESPN
5.30pm NHRA Drag Racing
8.30pm French Top 14 Rugby
Union: Highlights from the
French top flight. 9pm NBA
Tonight Roundtable 9.30pm 30
for 30 10.30pm Poker
11.30pm Live NHL Ice Hockey
2am Press Pass 2010 2.30am-
5am Live NBA Basketball
7pm CSI: Miami 8pm Psychic
Sally: On the Road 9pm Ghost
Whisperer 10pm Criminal
Minds 12am CSI: Crime Scene
Investigation 3am America’s
Next Top Model 3.50am
Charmed 4.40am CSI: Crime
Scene Investigation 5.30am-
6am Home Shopping
BBC THREE
7pm Great Movie Mistakes
8pm Don’t Tell the Bride 9pm
FILM Eight Below 2006.
10.50pm Family Guy 11.40pm
Lip Service 12.40am One Non
Blonde Down Under 1.10am
Russell Howard’s Good News
1.40am Great Movie Mistakes
2.40am Lip Service 3.35am
One Non Blonde Down Under
4.05am-5.05am Don’t Tell the
Bride
E4
7pm Hollyoaks 7.30pm Friends
9pm Ugly Betty 10pm
FILM Riding in Cars with Boys Complete History 3.50am
2001. 1.30am RuPaul’s Drag Treasure Quest 4.40am Days
Race 2.15am Scrubs 3.10am That Shook the World 5.30am-
Glee 3.55am Reno 911! 6am How Does That Work?
4.15am Switched 4.35am
Accidentally on Purpose DISCOVERY HOME & ANIMAL MADHOUSE
4.55am-6am Switched HEALTH CHANNEL 4, 8PM
7pm From Here to Maternity New series. Exploring ailments and
HISTORY 8pm 10 Years Younger 9pm conditions that affect all creatures —
7pm How the Earth Was Made A&E 10pm Hospital Sydney from pets to livestock and zoo animals
8pm Mega Movers 9pm Ax 11pm The Trauma Team 12am — as four vets treat those most in need.
Men 10pm 102 Minutes that A&E 1am Hospital Sydney
Changed America 12.10am 2am The Trauma Team 3am 10
9/11: In Memoriam New York Years Younger 4am Bringing
City 1.30am Vanishings 2am Home Baby 5am-6am Test
Evolve 3am Mega Disasters Tube Babies
4am-5am Ancient Discoveries
SKY1
DISCOVERY 7.30pm The Middle 8pm Fat
8pm How Do They Do It? Families 9pm Bones 10pm Lie
8.30pm How It’s Made 9pm to Me 11pm FILM Training Day
The Truth Behind 10pm Trawler 2001. 1.20am Road Wars LAW & ORDER: CRIMINAL INTENT
Wars 11pm Frontline Battle 2.10am Ross Kemp on Gangs CHANNEL 5, 10PM
Machines with Mike Brewer 3am Oops TV 3.30am Lost Goren and Eames discover a strange
12am Deadliest Catch 1am 4.20am Sell Me the Answer link between three murder victims – all
Bear Grylls: Born Survivor 2am 5.10am-6am Are You Smarter have children who have been selected
Chris Barrie’s Massive Machines Than a 10 Year Old? to go on the waiting list for pre-school.

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

QUICK CROSSWORD
    

SUDOKU KAKURO
14 17 16 16 17 18 10 
16 12 16
23 10   
45
Place the numbers from 1 to 9 in each empty cell so that each  
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 13 5
11 10 13
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 6 11 8
  
above or to the left of it. 21 21
You can only use the digits 1-9 24 35  
    and you must not use the
9
6 5   
same digit twice in a block. 17 15 32 33 3
    The same digit may occur 34 19 
14
   more than once in a row or
column, but it must be in a
11
13
9
7
7
   
9 28
  separate block.
15 8 5 
45
   14 4 6
 

  ACROSS DOWN
1 Natives of Bern, eg (5) 1 Zodiacal sign of
  
    WORDWHEEL N I
3
7
8
More pleasant (5)
Airborne soldier (4)
Donates (5)
the archer (11)
2 Endearing (5)
3 Short sleep (3)
Using only the letters in the Wordwheel, you have 10 Juan ___, former 4 Extreme anger (3)
    ten minutes to find as many words as possible,
C T president of Argentina (5) 5 Of the heart (7)
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters S 11
13
Head of corn (3)
Shelled, aquatic reptile (6)
6 Cultural rebirth
from the 14th to

LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
S E 15 Roman numeral
for eight (4)
the middle of the
17th centuries (11)
SOLUTIONS KAKURO is at least one nine-letter word in the wheel.
I T 16
18
Consume food (3)
European mountain
9 Cut-price event (4)
12 Respond to a
QUICK CROSSWORD 8 9 3 6
range (4) stimulus (5)

% $ 6 , & 5 ( 3 / <
3 1 5 6 2 1 3 5 SUDOKU         
19 Flower, the source
of saffron (6)
14 Full to
satisfaction (7)
9 3 4 2 1 7 9         
$ : + 1 (
2 7 9 1 3 4 8 6 21 Toy which can be 17 Ancient city in
7 2 $ 6 + 7 5 $ <         
7 $ / / 2 : $ 9 9 8 7 5 9 8 made to spin (3) Asia Minor (4)
        
/ / 6 $ 7 , 5 ( 4 8 1 5 22 Paragon (5) 20 Drama set to
        
( : ( 5 *
( 1 , * 0 $
/ ( 6
*
6
$
3 2 4 1 1
9 5 6 8 1 4
3
2 7
WORDWHEEL         
25
26
Ache, long (5)
Affectedly dainty
music (5)
23 Pointed tool
$ 2 $ ( 5 , $ /         
6 . $ 7 , 1 * 0 $ 8 7 9 8 6 8 2 The nine-letter word or refined (4) for marking
7 3 9 5 2 1 6 3         
( ( , ( '
was AMENDMENT         
27 Inhaled the odour of (5) surfaces (3)
$ 1 2 ' ( 6 , 1 8 6 1 7 4 9
28 Ancient tale (5) 24 Allow (3)
 Sport
32 CITYA.M. 3 NOVEMBER 2010

Results
BASEBALL
MLB—World Series: Texas Rangers 1 San Francisco Giants 3
(San Francisco Giants wins best of seven series by 4-1).
Benfica ...........................(3)
Hapoel Tel-Aviv........(0)
P
GROUP B
4 Lyon........................................(0) 3
0 Schalke 04........................(0) 0
W D L F A GD Pts
Man Utd
Valencia
Rangers
P W D L F A GD Pts
4 3 1 0 5
4 2 1 1 8
4 1 2 1 2
0
2
4 -2 5
5 10
6 7
Stare back at
the haka, says
FOOTBALL Lyon 4 3 0 1 9 5 4 9
Bursaspor 4 0 0 4 0 9 -9 0
UEFA CHAMPIONS LEAGUE GROUP A Schalke 04 4 2 1 1 5 2 3 7 GROUP D
Tottenham....................(1) 3 Inter Milan .......................(0) 1 Benfica 4 2 0 2 6 7 -1 6 FC Copenhagen.........(1) 1 Barcelona...........................(1) 1
Van der Vaart 18 Eto’o 80 Rubin Kazan ...............(0) 0 Panathinaikos.................(0) 0
Hapoel Tel-Aviv 4 0 1 3 2 8 -6 1 P W D L F A GD Pts
Crouch 61
GROUP C Barcelona 4 2 2 0 9 3 6 8
Pavlyuchenko 89 Att: 36,310 FC Copenhagen 4 2 1 1 4 3 1 7
Werder Bremen.......(0) 0 FC Twente..........................(0) 2 Bursaspor ....................(0) 0 Man Utd ..............................(0) 3
Rubin Kazan 4 0 3 1 1 2 -1 3

Maori Hape
P W D L F A GD Pts Fletcher 48, Obertan 73
Panathinaikos 4 0 2 2 1 7 -6 2
Tottenham 4 2 1 1 12 8 4 7 Att: 25,000 Bebe 77
Inter Milan 4 2 1 1 11 8 3 7 Valencia .........................(1) 3 Rangers...............................(0) 0 TENNIS
FC Twente 4 1 2 1 6 7 -1 5 Soldado 34, 71 ATP VALENCIA OPEN (Spain)—11st rnd: (1) Andy Murray
Werder Bremen 4 0 2 2 3 9 -6 2 Costa 90 Att: 25,000 (GB) bt Feliciano Lopez (Spa) 6-3 7-6 (7-1).
SPORTS EDITOR FRANK DALLERES email sport@cityam.com

▲
RUGBY UNION accept the challenge. I know the cam-
BY FRANK DALLERES eras will be on me but I am not going
to do anything stupid or jump out
ENGLAND centre Shontayne Hape and start doing the haka back. It is a
knows more about the haka than challenge we will accept as a team.”

TARRANT’S
most and is urging his team-mates to
stare right back when New Zealand
perform their war dance at
Twickenham on Saturday.
Auckland-born Hape took part in
Hape, of Maori descent, switched
nationalities in 2009 after qualifying
on residency grounds and, having
made his England debut in Sydney in
June, is eager to cement his place at

CHRISTMAS
the haka himself when representing
his native country at rugby league,
before switching codes and joining
Bath in 2008, but will face it for the
first time when he lines up against
inside centre against his former com-
patriots.
“I am proud of where I come from
but ultimately life leads everyone in
different directions and now I am rep-

MUSIC
the All Blacks in the first autumn
international.
Former England hooker Richard
Cockerill famously responded to the
pre-match ceremony by squaring up
to New Zealand’s Norm Hewitt at Old
resenting England,” he added. “This is
an opportunity I am relishing. To be
given the opportunity to play against
my country of birth, who are the No1
team at the moment, there is no bet-
ter challenge.”

QUIZ Trafford in 1997. That retort is now

forbidden by world chiefs the IRB, but
Hape has insider knowledge of how to
handle the haka.
“The haka is something I have been
thinking of,” said Hape, who was yes-
Have a Christmas party terday named in a side that features
just one change from the victory over
with us – come and join Australia.
“I have done it before, but if I give
Chris Tarrant for a fun any advice to my team-mates it will be
to stand tall, stare them back in the
¿OOHGHYHQLQJRIPXVLF eyes and let them know we will
PD\KHPDQGVLQJLQJ
MATCH FACTS | ENGLAND V NEW ZEALAND
Tuesday 30 November l England team: B Foden
(Northampton); M Cueto (Sale), M Tindall
6.45pm - 11pm (Gloucester), S Hape (Bath), C Ashton
(Northampton); T Flood (Leicester), B
Youngs (Leicester); A Sheridan (Sale), S
Thompson (Leeds), D Cole (Leicester), C
7KH 1XUVHU\ 3DYLOLRQ Lawes (Northampton), T Palmer (Stade
Francais), T Croft (Leicester), L Moody
Lord’s Cricket Ground (Bath, capt), N Easter (Harlequins).
London Replacements: D Hartley (Northampton),
D Wilson (Bath), D Attwood (Gloucester),
H Fourie (Leeds), D Care (Harlequins), C
Hodgson (Sale), D Armitage (London
7HDP HQWU\ IRU  SHRSOH Irish).
LV … SHU WHDP LQFOXGLQJ l Captain Lewis Moody and winger
Mark Cueto (right) are the only survivors
two-course dinner from the England team beaten 19-6 by
the All Blacks last November.
The 28-year-old is part of an
unchanged back division that
includes Leicester’s Toby Flood at fly-
half and his club colleague Ben
Youngs at scrum half.
The return of Sale prop Andrew
Sheridan to the front row, in place of
Wasps’ Tim Payne, is the only change
to Martin Johnson’s side.
Bath flanker Lewis Moody is fit
enough to retain the captaincy,
despite suffering permanent damage
to his sight last month.
l England are out
to end an eight-
match losing
streak against
New Zealand
which dates back
to June 2003,
when Sir Clive
Woodward’s soon to
be world champions
won 15-13, courtesy of
Jonny Wilkinson’s four
penalties and a drop goal.
l New Zealand may have
lost to Australia last weekend
but before that had won 15
Tests in a row, and remain the No1
ranked team in the world.

'UHVVWRLPSUHVV SPORT | IN BRIEF

&DOO020 7821 2828 to book tickets Murray breezes through in Spain Woods targets Nicklaus record
TENNIS: Britain’s Andy Murray complet-
RUHPDLOHYHQWV#ORUGVWDYHUQHUVRUJ ed the first stage of the defence of his
Valencia Open title with a straight sets
win over Spain’s Feliciano Lopez. Top
seed Murray was on court for one hour
and 27 minutes, eventually winning 6-3
7-6 (7-1) and securing a place in round
two where he will face Argentine Juan
Monaco. The Scot converted what would
Registered Charity No. 306054
be his only break point of the first set to
move 3-1 in front, and went on to see out
the set in comprehensive fashion. He lost
his serve midway through the second set
but recovered to win it on a tie break.
GOLF: Deposed world No1 Tiger Woods
has set his sites on overhauling Jack
Nicklaus’s Major record. Woods’ 281-
week reign as the sport’s top dog was
ended by England’s Lee Westwood last
weekend. The American is on 14 Major
titles, four behind the legendary Nicklaus,
and hopes 2011 will see him edge closer
to the Golden Bear’s record. He said: “It’s
the highest benchmark there is. It took
Jack over 20 years and I’m only 34. I
have a lot of great years ahead of me. It’s
a matter of just being confident and get-
ting better.”
CITYA.M. 3 NOVEMBER 2010 33

Ponting’s a
Hape (centre) was
born in New
Zealand but is now
an England star.

Picture: GETTY
defeat away
from sack
CRICKET

▲
FORMER England captain Michael
Vaughan has warned Australia skip-
per Ricky Ponting it will be a case of
three strikes and you’re out if he fails
to regain the Ashes this winter.
Ponting’s position is already the
subject of intense scrutiny following
the recent drawn series in England
against Pakistan and last month’s
defeat in India.
And Vaughan, who outwitted
Ponting when England won back the
Ashes in 2005, says the pugnacious
Tasmanian should expect to be out of
a job if he suffers a third defeat
against the old enemy.
“If he loses the series he will go,”
said Vaughan. “He has lost the Ashes
twice and hasn’t won an Ashes in
England either.
“He has a phenomenal record but
now he has a team that is almost back
in the ranks of normal cricket teams.
He will have to be at his best, both as a
captain and as a batsman to put
England under pressure.”
 34 Sport | Football
Fletcher and
Nani injuries
mar United
Turkey blitz
BURSASPOR
MANCHESTER UTD
0
3 champs Inter
▲
CHAMPIONS LEAGUE
BY JAMES GOLDMAN
MANCHESTER UNITED need just a
point from their remaining two group
games to ensure a place in the compe-
tition’s last 16 after their hammering
of Bursaspor.
Following a goalless but entertain-
ing first half United struck three times
after the break through Darren
Fletcher, the influential Gabriel
Obertan and substitute Bebe as the
Turkish champions were swatted aside
with the minimum of fuss
Fletcher, who broke the deadlock
two minutes after the restart, was
forced off just past the hour mark with
an ankle knock, while star winger
Nani lasted just 29 minutes having
aggravated his groin.
And both will miss Saturday’s
Premier League clash against Wolves
at Old Trafford.
United manager Sir Alex Ferguson
said: “Unfortunately, Nani has a groin
injury and is deffinitely out for
Saturday.
“I think Darren will be out as well,
so that part has been disappointing.”
Bebe scored United’s third goal. Picture: PA
Ferguson gave rare starts to
Frenchman Obertan and England
Under-21 defender Chris Smalling,
while £7m signing Bebe impressed
with a cameo from the bench, and the
Scot was delighted with the contribu-
tion of his younger players.
“They did very well, I’m very pleased
with them,” he said. “They’re young
players and getting experience tonight
was as important as anything, but they
played well too.
“Gabriel’s had a couple of injuries,
but he’s only 20 and he’s developing
very well. He’s much stronger now and
he is a real good talent. His goal
tonight showed tha.t”
The United boss added: “We got one
early in the second half, which makes
a difference.
“From that point on basically we
were in control of the match, though
they had a couple of half-chances and
you can never be sure, but the second
goal killed the match.”
GROUP C
TEAM PLD W D L F A PTS
Man United 4 3 1 0 5 0 10
Valencia 4 2 1 1 8 2 7
Rangers 4 1 2 1 2 4 5
Bursaspor 4 0 0 4 0 9 0
Wonder night
for Spurs as
Bale destroys
TOTTENHAM 3 A lively start got the goal it prom-
INTER MILAN 1 touch to release Van der Vaart and the
▲
CHAMPIONS LEAGUE
BY FRANK DALLERES
TOTTENHAM manager Harry
Redknapp joked that man of the
moment Gareth Bale must be on
drugs after the winger ran European
champions Inter Milan ragged for the
second time in a fortnight.
Bale utterly terrorised arguably the
world’s best right-back, Maicon, laying
goals on a plate for Peter Crouch and
Roman Pavlyuchenko as Spurs enjoyed
one of the most memorable victories
in their history.
Playmaker Rafael van der Vaart also
struck as the north Londoners
avenged last month’s 4-3 defeat at the
San Siro but, as so often in recent
weeks, it was Bale, scorer of a hat-trick
in Italy, who shone brightest.
“He was amazing,” said Redknapp.
“They’re just doing some drug testing
now – the dope testers are here – and I
hope they’re testing him. Amazing.
“It’s not just his pace, he can run all
day, and keep running. He’s got the
ability to cross, his left-foot is great on
the run, he can shoot, dribble, head it,
he’s got everything.”
Bale’s virtuoso display saw him cut
through Inter’s rearguard at will and
put Spurs top of Group A.
“Tonight he’s up against Maicon,
one of the best defenders in the world,
and he’s killed him,” added team-mate
Ancelotti’s side could clinch a last-16 place
tonight at Stamford Bridge. Picture: PA
CITYA.M. 3 NOVEMBER 2010
Van der Vaart. “To everyone, the whole
club, we need to keep this guy.”
ised after 18 minutes when Luka
Modric showed trickery and a deft
Dutchman lashed low past stand-in
goalkeeper Luca Castellazzi. Bale then
took centre stage, setting up Crouch
for a volley the England forward
should have converted and then, after
the break, hooking an improvised
overhead volley inches wide.
Crouch did better on 61 minutes,
however, when Bale hared down the
left and produced a pinpoint low cross
that demanded to be finished. Inter
threatened to stage a late comeback in
the 80th minute when the livewire
Samuel Eto’o made space to whip a
low shot into Carlo Cudicini’s far cor-
ner. But with seconds left Bale
crowned a dazzling night by bursting
through Inter’s defence and sliding WHAT NOW | WILL SPURS QUALIFY?
the perfect ball to Pavlyuchenko.
Tottenham have a superb chance of
reaching the last 16 of the Champions
Redknapp dodges League after last night’s stunning win.
Victory in their next fixture, at home to
ref row reprimand bottom of the table Werder Bremen, will
see Spurs through provided Inter take at
least a point from their clash with Dutch
HARRY REDKNAPP has escaped pun- outfit FC Twente in Milan.
ishment for calling referee Mark
Clattenburg’s decision-making “scan-
dalous” in Saturday’s 2-0 defeat at
GROUP A
TEAM PLD W D L F A PTS
Manchester United. The Football
Association decided not to take for- Tottenham 4 2 1 1 12 8 7
mal action against the Spurs manag- Inter Milan 4 2 1 1 11 8 7
er, who was incensed by Nani’s FC Twente 4 1 2 1 6 7 5
second goal. Redknapp had threat-
W Bremen 4 0 2 2 3 9 2
ened to boycott media if punished.
Ancelotti dismisses talk of a
January bid for striker Torres
three games in Group F. A draw need to have a fantastic striker, like
CHELSEA against Spartak Moscow would be Fernando Torres. We can be competi-
enough to confirm their passage to tive in all competitions with this
the last 16, while victory would virtual- squad. The most important thing is to
SPARTAK MOSCOW ly assure them of top spot. avoid injury, when possible.”
Either way Ancelotti is confident Midfielder Frank Lampard is not
enough in his squad to dismiss quite fit enough to return tonight at
▲
CHAMPIONS LEAGUE rumours Chelsea could revive their Stamford Bridge but is in contention
BY FRANK DALLERES interest in Spain star Torres during the to face Liverpool on Sunday.
next transfer window.
CHELSEA manager Carlo Ancelotti has
ruled out a January bid for Liverpool
“I always said that Torres is not our
aim for the future because we have GROUP F
striker Fernando Torres as his side look trust in a lot of young players,” he said. TEAM PLD W D L F A PTS
to clinch their place in the knockout “We also have fantastic strikers in Chelsea 3 3 0 0 8 1 9
stages tonight. Didier Drogba, Nicolas Anelka and Spartak 3 2 0 1 4 2 6
The Blues have hardly struggled for Salomon Kalou and young players like
Marseille 3 1 0 2 1 3 3
goals this season, hitting eight on Daniel Sturridge and Gael Kakuta.
their way to maximum points from “So in this moment we don’t really Zilina 3 0 0 3 1 8 0
CITYA.M. 3 NOVEMBER 2010
Gareth Bale ter-
rorised Inter Milan
right-back Maicon,
considered the best in
Three more epic
the world.
Tottenham glory
Picture:
ACTION IMAGES
glory nights
Spurs had waited 22 games to get
the better of Arsenal and it proved
worth waiting for in the shape of a
5-1 Carling Cup victory in 2008.
Spurs and Anderlecht couldn’t be
separated in the 1984 Uefa Cup
final before goalkeeper Tony Parks
proved the hero in a shootout.
The original ‘glory glory’ night came
in 1961 when Spurs thumped
Gornik Zabre 8-1, Bobby Smith
scoring, having lost the first leg 4-2.
Wenger pleasantly surprised
by Wilshere’s rapid progress
SHAKHTAR DONETSK
ARSENAL
▲
CHAMPIONS LEAGUE
BY JAMES GOLDMAN
ARSENAL manager Arsene Wenger is
without his influential captain Cesc
Fabregas for this evening’s Group H
clash in Donetsk, but the Frenchman
is confident Jack Wilshere will prove a
more than capable deputy.
The 18-year-old prodigy signed a
Wilshere this week signed a new long-term deal at Arsenal. Picture: GETTY new long-term contract with the
Sport | Football
Welsh wizard has
proved to himself
he is world class
FOOTBALL COMMENT
TREVOR STEVEN
REMEMBER being told a few
I years ago by Brian Flynn, the
Wales Under-21 coach, about a
player he had called Gareth Bale.
He said this lad had five gears, maybe
even six, although the most people
usually saw was third. Well last night
we all saw Bale firing on all cylinders.
I don’t think I’ve seen anyone do
what he did for Tottenham last night
– he was that good. Against any
Champions League opponent that
would have been outstanding, but
against Brazil right-back Maicon, a
guy I have never seen embarrassed
before by anyone, it was phenomenal.
He has athleticism, confidence and
ability on the ball and has now
proved to himself he is a world-class
player capable of winning games at
the highest level. Spurs were solid all
over last night, but without him they
wouldn’t have played like they did.
SOARING
I particularly like his neatness and his
football brain. He has superb
awareness of opportuni-
ties and space,
switches from left
foot to right, and
showed that his
game is not just about
kicking it 20 yards and
running. Aaron
Lennon, on the
other flank, tried
that against Inter’s
left-back Cristian
Chivu but with-
out anywhere
near as much
north London club on Monday and
will deputise for Fabregas, whose trou-
blesome hamstring is not being risked
tonight ahead of Sunday’s Premier
League visit of Newcastle.
Wilshere has established himself as
a key component of Wenger’s midfield
this season and was the star of the
show a fortnight ago in the reverse fix-
ture, scoring his first Champions
League goal in the 5-1 rout.
“When Fabregas is not there you
have to share a little bit the decisive
passing, the building up of the game
between Nasri, Wilshere or Rosicky for
example, so that is the task we have,”
said Wenger.
“We have many creative players who
35
success.
What was so impressive was that
he didn’t have to dash all over the
pitch looking for the ball in different
positions. He hugged the left wing
and Inter knew exactly where he was
going to be – they just couldn’t do
anything to stop him.
It amazes me how far and fast he
can run, and for how long, and that
might be where he needs managing
by Harry Redknapp, to prevent him
burning out over a long season. His
confidence might also be soaring now
but he is bound to have an off day, so
Redknapp will be key there too.
EXPLOSION
What does the future hold for Bale?
Inter coach Rafael Benitez may well
rate him, and there would be no
shortage of interested clubs both at
home and in Europe, but I can only
see him joining Barcelona or Real
Madrid. A player couldn’t go wrong
by joining, say, Manchester United,
but the Spanish giants would surely
be keen, and who doesn’t want to
play for the most famous clubs in the
world?
For now, though, he is best off at
Tottenham. As long as they are play-
ing at Champions League level I think
it would be premature for him to
leave. He is only 21 and I think it
would be sensible for him
to get another season or
two of consistent per-
formances under his belt.
Redknapp said at the
start of the season that
Spurs weren’t far off the top
sides and I admit I doubted
that, but two key
things have hap-
pened for
them: Bale’s
explosion in
form and the signing of
Rafael van der Vaart (left). With that
kind of pace they’ll hurt anyone, and
I fancy them to retain their top four
place while taking a good shot at the
Champions League.
can create good passes and that’s what
I count on. Wilshere is not scared to
take the ball so he will have a part of it
to do.”
Wenger added: “I am very much sur-
prised [by Wilshere’s quick develop-
ment]. I didn’t expect that to happen
so quickly. You have to be open-mind-
ed in our job.”
GROUP H
TEAM PLD W D L F A PTS
Arsenal 3 3 0 0 14 2 9
Shakhtar 3 2 0 1 5 5 6
Braga 3 1 0 2 2 9 3
Partizan 3 0 0 3 1 6 0
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