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Date: 14 July 2012
Time: 10.15 15.30
Fears for US
economy as
orders drop
US MANUFACTURING output fell
for the first time in three years,
industry data showed yesterday,
raising fears that Europes
recession is hitting Americans
economic recovery.
The Institute for Supply
Managements purchasing
managers index (PMI) collapsed
to 49.7 in June from 53.5 in May,
its lowest score since 2009.
The drop in the new orders
index from 60.1 to 47.8 in just a
month suggests severe future
deterioration. A score below 50
indicates a fall in activity.
Paul Dales at Capital Economics
said: The plunge is clearly the
biggest sign yet that the US is
catching the slowdown well
underway in Europe and China.
But a reading of below 47.0 is
required for another recession
the index is still consistent with
an economy growing at an
annualised rate of a little below
one per cent.
Ian Shepherdson at HFE went
further: The recession/growth
boundary for the ISM is about
44. He added: The downshift in
the new orders index is only one-
tenth less than the plunge after
9/11.
The dollar depreciated against
the yen to 79.42 on the
announcement, but
rose on the euro to
0.79, as these
gloomy
manufacturing
figures were
outweighed by
worries about
the ongoing
Eurozone debt
crisis.
Andrew Tyrie will lead the joint committee probe
DAVID Cameron yesterday announced
two wide-ranging inquiries into the
banking system, pledging to probe the
culture and standards of the industry
and bring those responsible for fixing
the Libor interest rate to justice.
The British people want to see
bankers who acted improperly pun-
ished, Cameron told the House of
Commons.
The news came soon after the UKs
fraud squad confirmed that it is con-
sidering whether it can pursue crimi-
nal prosecutions against those
involved in the rate fixing scandal.
Under the governments plans
Andrew Tyrie MP will lead a joint com-
mittee of both Houses of Parliament to
investigate the culture of British bank-
ing and ask whether existing criminal
and civil sanctions work as deterrents.
It is expected to complete its report
by Christmas and its recommenda-
tions will be included in the forthcom-
ing Banking Reform Bill.
This committee will be able to take
evidence under oath, it will have full
access to papers and officials and min-
isters including ministers and spe-
cial advisers from the last government
and it will be given all the resources
it needs to do its job properly,
Cameron said.
Separately Martin Wheatley, current
head of financial conduct at the
Financial Services Authority (FSA), will
lead an independent review of the
Libor interest rate, investigating the
need for greater transparency in sub-
mitting and compiling the daily rate.
He is expected to produce his find-
ings by September, in time for the
results to influence the forthcoming
Financial Services Bill.
The FSA will also work with the
Serious Fraud Office (SFO) to review
evidence of rate fixing, with a deci-
sion on whether criminal charges can
be brought under existing laws due by
the end of the month.
However, Cameron yesterday resis-
ted opposition calls for a full-blown
public investigation similar to the
Leveson inquiry into media ethics.
This is the right approach because
it will be able to start immediately, it
will be accountable to this House and
it will get to the truth quickly, so we
can make sure this can never happen
again, he said.
The decision to allow the inquiry
access to former officials raises the
prospect of Labours Ed Balls and Ed
Miliband, both Treasury ministers in
the last government, being called to
appear in front of the committee.
Labour is pressing for a fully inde-
pendent rather than parliamentary
inquiry into the broader banking sec-
tor, with plans to raise the partys
objections in the House this week.
Meanwhile chancellor George
Osborne suggested that prosecutions
of bankers were a possibility, urging
regulators to use every legal option
available to punish those who
abused the Libor rate.
The Treasury also confirmed that
the proceeds of the record-breaking
59.5m FSA fine on Barclays will be
paid to the Exchequer for the benefit
of taxpayers. Until now money given
to the FSA was used to subsidise levies
paid by other financial firms.
BY BEN SOUTHWOOD
FTSE 100 L5,640.64 +69.49 DOW n12,871.39 -8.70 NASDAQL2,951.23 +16.18 /$ 1.57 unc / L1.25 +0.01 /$ n1.26 -0.01
MORE: Page 4-5, Page 17
L L
ALLISTER HEATH: Page 2
L L
WE REVIEW NORTH ROADS
DANISH DELIGHTS
See Page 20
www.cityam.com FREE ISSUE 1,665 TUESDAY 3 JULY 2012
THE NEXT SCANDINAVIAN HIT
BY JAMES WATERSON
BANKSGOUNDER
THE MICROSCOPE
Certified Distribution
30/04/12 till 27/05/12 is 132,076
LONDON2012
days to go
24
nJoint committee of MPs and
peers to investigate bank sector
nRegulator Martin Wheatley to
lead government review of Libor
nFraud squad is looking into
launching criminal prosecutions
The FSAs Martin Wheatley is looking into Libor David Greens SFO may bring prosecutions
BUSINESS WITH PERSONALITY
Growth under
Obama has
been patchy
MORE: Page 7
L L
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
IN BRIEF
Investors urged to clean up firms
nThe government has done all it can to
give shareholders power over
executives and boost transparency in
big firms, and it is now down to
investors to improve the way businesses
are run and make Britains banks safe
again, business secretary Vince Cable
told the Association of British Insurers
last night. If the prevailing culture is to
change, there can be no substitute for
leadership from companies themselves
and their owners whether on diversity,
directors pay, or the pursuit of long-run
returns rather than short term rewards,
said Cable. That depends on investor
action, not apathy.
Webb calls for pension certainty
n Pensions minister Steve Webb will
today call for better certainty in pension
planning. Claiming people want clarity
about what their pension income might
be, Webb said earlier: With the dawn
of automatic enrolment the market is
growing so now is the time for
pensions industry to look at the market
gap in relation to affordable guarantees
and provide the products consumers are
seeking. The industry needs to move
fast on this or be left behind.
Administration for Julian Graves
n High street health food shop Julian
Graves yesterday collapsed into
administration after four years of losses.
Owned by the same company as
Holland and Barrett, Julian Graves
stores will continue to operate while its
financial situation is assessed. The 189-
strong chain said no redundancies are
currently proposed and its 755 staff will
be paid as normal.
Fitch: Banking union may
fail without big changes
EUROZONE plans for a union-wide
banking union need major improve-
ments if they are to work effectively,
or even succeed in being implement-
ed at all, credit ratings agency Fitch
warned yesterday.
Political leaders want to create a
single banking supervisor, probably
under the European Central Bank
(ECB), with the aim of breaking the
damaging link between banks and
their national governments.
European Commission president
Jose Manuel Barroso believes the
plan will boost financial stability
and help stop any future repeat of
the current crisis.
Fitch analysts praised the idea, say-
ing the ECBs guidance could help
reinforce financial stability in the
sector, and it could ensure a con-
sistent application of the rule book
and a co-ordinated regulatory
response in times of financial crisis.
But the agency said the plan must
be taken much further to have any
chance of succeeding.
Many important details of the
planned reforms are still missing,
said managing director Bridget
Gandy.
There is still some risk it wont
happen.
The research note pointed to the
lack of detail on how the union
Heatwave threatens US harvest
An intense heatwave is threatening havoc
with this years US grain harvest, burning
up hopes of blockbuster yields and
sending prices soaring. Even a modest
reduction in crops could send ripples
through global food commodities markets,
as the US is the worlds top exporter of
corn, soyabeans and wheat, and stocks of
the first two are relatively low.
Total finds gas in Azerbaijan
Total, the French oil group, confirmed it
had discovered huge reserves of natural
gas in the Caspian Sea, underscoring
Azerbaijans status as a potentially key
source of future gas supplies to Europe.
Total said well results at its Absheron
discovery offshore Azerbaijan indicated
gas resources of 150bn to 300bn cubic
metres, or 5tn-10tn cubic feet. The upper
end of the estimate is nearly four times
the UKs annual gas consumption.
Dubai to refit QE2 as hotel
Dubai plans to refit the Queen Elizabeth 2
as a 300-room hotel, ending five years of
uncertainty over the fate of the historic
cruise liner. Since it was retired in late
2008 it has become a Dubai landmark.
Harry Potter firm buys Swiss rival
Bloomsbury Publishing said yesterday that
it would pay 1.7m over three years to buy
Applied Visual Arts Publishing, a Swiss-
based publisher of textbooks for design
and film students.
Airbus takes on rival
Europes biggest aircraft manufacturer is
about to park in Boeings back yard after
announcing that it will build its first
assembly factory in the United States.
Airbus will spend $600 million on a new
facility in Mobile, Alabama, that will create
more than 1,000 jobs.
Ulster Bank still hit by crisis
Up to 100,000 customers of Ulster Bank
are still unable to access their money, as
the IT crisis that crippled the RBS network
stretched into its fourteenth day.
Microsoft to take $6.2bn writedown
Microsoft is to take a $6.2bn (3.95bn)
writedown to reflect the slump in value of
its online services division. The charge
reflects a writedown related to 2007
acquisition of aQuantive, a digital
advertising firm aimed at helping
Microsoft compete against Google and
others.
Anglo American warns on revenue
Anglo American Platinum said yesterday
that earnings for the first half of the year
could be down as much as 20 per cent
from the year before, hit by lower prices
and a drop in sales.
Micron to acquire Elpida Memory
Micron Technology agreed to acquire
troubled Japanese rival Elpida Memory for
about $2.5bn, as the US memory maker
bulks up to compete against rivals in
South Korea and Taiwan. The deal would
make Micron number two in the market for
memory chips, second only to Samsung.
PRIME Minister David Cameron
came under attack from all sides
yesterday over his apparent
dithering about Britains future in
the European Union.
On Friday he appeared to have
ruled out a referendum on the
subject but said during the
weekend that the words Europe
and referendum could go
together.
Yesterday he told parliament:
Just as I believe that it would be
wrong to have an immediate in-
out referendum, so it would be
also be wrong to rule out any type
of referendum for the future.
Far from ruling out a
referendum for the future, as a
fresh deal in Europe becomes
clear, we should consider how best
to get the fresh consent of the
British people.
Cameron faced heckling from
Labour leader Ed Miliband, who
said: Three days, three positions,
first it was no, then it was yes,
then it was maybe.
But Cameron also faces a
groundswell of dissent from fellow
Tories with more than 100
signing a letter calling for
legislation for a referendum after
the planned 2015 polls.
Meanwhile Liberal Democrat
Vince Cable derided the whole
debate as horribly irrelevant.
Cameron called
to account over
his stance on EU
EC president Jose Manuel Barroso believes a banking union could reduce some uncertainty
2
NEWS
BY JENNY FORSYTH
BY TIM WALLACE
To contact the newsdesk email news@cityam.com
W
E should be grateful for
small mercies: yesterdays
announcements from the
government concerning the
banking crisis were half good. It is
excellent news that the authorities
have become more serious in their
determination to prosecute wrong-
doing criminally. Fines are not
enough; we need to see tough jail
sentences for those who break the
rules and a change in the law if
necessary to achieve that. The probe
into the despicable and disgraceful
Libor affair also makes sense it will
be speedy and to the point.
But Im not sold on the parliamen-
tary inquiry. Rather than relying on
endless, energy-sapping and hugely
time-consuming investigations partly
designed to make politicians feel good
about themselves, the authorities
should focus on their core purpose:
EDITORS
LETTER
ALLISTER HEATH
We should prosecute criminals, not set up endless inquiries
TUESDAY 3 JULY 2012
fighting fraud and rule-breaking
wherever it occurs. Andrew Tyrie, the
excellent chairman of the Treasury
Select Committee, will undoubtedly
do a good job trying to investigate
what really happened and who in the
City, the Bank of England, the
Treasury and government agencies
knew what was going on why does
he need another committee? I hope
hell prove me wrong.
It is also laughable nonsense to
assume that wrong-doing only hap-
pens in finance. GlaxoSmithKline yes-
terday settled a US fraud case in
return for a $3bn fine far more than
what Barclays had to pay. Fraud and
dishonesty happen in all realms of
human action, public and private.
Their occurrence shouldnt be exag-
gerated the vast majority of people
are honest the vast majority of the
time but neither should anybody
pretend that human beings are
angels. Wrong-doers should be prose-
cuted, regardless of industry. That is
the governments job.
MANUFACTURING IN CRISIS
It is easy to become obsessed with the
banking scandal but the state of the
world economy is an equally pressing
issue. Yesterdays US ISM manufactur-
ing survey revealed the first contrac-
tion for three years in that key part of
the worlds biggest economy. America
ated begin to hinder, rather than
help, the recovery. The authorities in
Beijing may well be at that stage.
Many countries are still suffering
from the need to liquidate bad invest-
ments made during the bubble days;
others are either deleveraging or
accumulating debt at a slower rate to
avoid bankruptcy; and the Eurozone
itself is in terminal decline, with its
latest summit another wasted oppor-
tunity. The tragedy is that the authori-
ties seem to have only one answer: to
print even more money. But that can-
not be the solution. The UK in particu-
lar should be focusing on
much-needed supply-side reforms.
Holding inquiries into banks is all well
and good but it wont do anything to
pull us out of recession.
is not yet in a double-dip but this is a
deeply worrying development, with
potentially far-reaching repercus-
sions. Barack Obama will be hoping
that the trend reverses itself: the US
electorate doesnt look kindly upon
presidents seeking re-election when
the economy is shrinking.
The UK manufacturing sector is also
continuing to contract, albeit at a
slower rate. The Eurozone is, of
course, in crisis; even Germanys man-
ufacturing sector is shrinking. China
too is in negative territory (on the
HSBC measure, rather the less reli-
able official statistic, which still
shows a tiny amount of expansion).
The problems facing the Chinese
economy are perhaps the most worry-
ing of all: like other economies, it too
has pump-primed growth in recent
years. At some point, however, stimuli
cease working and the distortions cre-
could work, as the plan does not men-
tion any deposit protection scheme or
resolution mechanisms.
But the proposals also fail to explain
how a single regulator can govern the
very varied banking systems across
the EU.
Co-operative banks in France, the
Netherlands and Germany often
mutually support each other
investors in one can be fully liable for
the actions of another, said Gandy.
Regulators will have to work out
how to take these structures into
account.
Similarly, they will have to work out
risks in each bank, and in different
systems when they work on very dif-
ferent models for example, there is
not really a retail mortgage market in
Germany, which means banks face
very different risks to those in other
countries.
Fitch analysts also backed plans to
use the bailout funds to recapitalise
troubled banks directly, rather than
adding to sovereigns debts, saying the
plan could greatly improve the func-
tioning of Economic and Monetary
Union.
The new jobs website for London professionals
CITYAMCAREERS.com
WHAT THE OTHER PAPERS SAY THIS MORNING
FACEBOOK executives have
reportedly binned any ideas of
switching the stocks listing to the
NYSE after Nasdaq glitches botched
the social networking giants IPO.
Facebook, which was hit by a
flurry of lawsuits and complaints
from investors claiming they lost
millions of dollars when the long-
awaited shares hit the market on 18
May, is understood to have pointed
the finger at Nasdaq.
The tech-favourite bourse last
month apologised for its role in the
trading glitches, offering $40m
worth of compensation to
disgruntled investors. Nasdaq chief
executive Robert Greifeld admitted
it was not our finest hour.
Facebook shares closed yesterday
at $30.77 a drop of 19 per cent on
the $38 float price after sinking as
low as $25.52 last month.
While its $16bn IPO made this
years second quarter the strongest
period on record by dollars raised,
the number of flotations was
severely affected by Facebooks
disappointing debut.
The number of deals halved to 11
in the quarter, compared to the
same period last year, according to
data from NVCA and Thomson
Reuters.
Facebook said
to stick with
Nasdaq listing
BY LAUREN DAVIDSON
GLAXOSMITHKLINE has agreed to
plead guilty to misdemeanor
criminal charges and pay $3bn
(1.bn) to settle the largest case of
healthcare fraud in US history.
The settlement includes $1bn in
criminal fines and $2bn in civil
fines in connection with the sale
of the drug companys Paxil,
Wellbutrin and Avandia products,
according to filings in federal
court yesterday.
The agreement, which still needs
court approval, would resolve
allegations that the London-listed
drugmaker broke US laws in the
marketing of several
pharmaceuticals.
Deputy US attorney general
James Cole said at a news
conference in Washington that the
settlement is unprecedented in
both size and scope.
As part of the deal, Glaxo agreed
to strict oversight of its sales force
Glaxo will pay
$3bn to settle
US fraud case
BY HARRY BANKS
by the US government to prevent
the use of kickbacks or other
prohibited practices. GSK said in a
statement it would pay the fines
through existing cash resources.
The firm announced a $3bn charge
in November related to legal claims.
Chief executive Andrew Witty
said GSKs US unit has
fundamentally changed our
procedures for compliance,
marketing and selling. When
necessary, we have removed
employees who have engaged in
misconduct.
Ernst & Young names
19 to join partnership
AUDITOR Ernst & Young yesterday
named the 19 new admissions that
will join its partnership this week,
bringing the total number of new
partners recruited to the firms UK
and Ireland offices to 43 over the
past year.
Across Ernst & Youngs entire
Europe, Middle East, India and
Africa operations 187 employees
have joined the partnership,
contributing to a global total of 548.
The new recruits, who work
BY ELIZABETH FOURNIER
across seven of the firms offices,
have been pulled from all four of
EYs business sectors advisory,
assurance, tax and transactions.
They are, in advisory: Gerald
Chappell, Daniel Hall, Craig Hoggett,
Fabian Wong and Susan Thomas, in
assurance: Steven Rob, Manprit
Dosanjh, Anup Sodhi, Doug
Johnston, Steve Lunn and Rebecca
Farmer, in transaction advisory: Chris
Lowe, Joe OConnor, Jon Clark, Luke
Reeve, Mathieu Roland-Billecart and
Sam Woodward, and in tax: Salim
Amersi and Stewart Mathieson.
MAGIC CIRCLE law firm Allen &
Overy will this morning announce
a rise in both turnover and profits,
despite a slowdown in the firms
growth since its last update.
Turnover at the firm is up six per
cent to 1.18bn, while profits
before tax have risen seven per cent
to hit 486m.
But the figures mark a slowdown
from A&Os half-year figures,
which saw revenues ahead by 11
per cent in the six months to
November.
Managing partner Wim
Allen & Overy builds revenues
and profits but growth slows
BY ELIZABETH FOURNIER
Dejonghe warned at the time that
economic headwinds meant the
firm was unlikely to match that
pace of growth for the rest of the
year.
Yesterday he said: Despite the
downturn we have continued to
invest in our people, practice
groups and locations, adding three
further offices in key growth
markets during the last 12
months... Were confident that our
ongoing investment in our global
coverage will continue to pay
dividends.
Profit per equity partner for the
full year remained flat at 1.1m,
while staff costs rose to 446.8m.
GOOGLE has outlined a
settlement proposal to soothe
antitrust concerns, the European
Commission confirmed
yesterday.
Submitted just before Europes
deadline, a letter was sent by
Google executive chairman Eric
Schmidt to European
Commission competition chief
Joaquin Almunia.
The tech giant was in May
presented with a list of four
objectionable areas where its
practices may be considered as
abuse of its dominant position.
Google outlines deal to placate
EUs worries over competition
BY LAUREN DAVIDSON
This followed an 18-month
investigation into the internet
company after competitors
accused Google of fixing search
results in its own favour.
Schmidts letter, the content of
which is confidential, is an
attempt to prevent a fine which
could be up to 10 per cent of
Googles global revenues, which
were $37.9bn (24.1bn) last year.
Europes second highest court
last week upheld a multi-million
fine that will see Microsoft pay
860m (689.4m) after failing to
allow its competitors access to
information on reasonable
terms.
BANKERS are the least trusted
professionals in Britain, according to
a new poll that highlights the
damage to the industrys reputation
in the wake of the Libor scandal and
RBSs disastrous computer glitch.
In a list of jobs ranging from
doctors to politicians, bankers were
seen as the least likely to tell the
truth, said the ITV/ComRes poll,
conducted from 29 June to 1 July.
Just 10 per cent of respondents
trust bankers to tell the truth, while
78 per cent do not. Only 10 per cent
said they trust politicians, while 77
per cent do not.
Bankers least
trusted in UK
BY JENNY FORSYTH
TUESDAY 3 JULY 2012
3
NEWS
cityam.com
Managing partner Wim Dejonghe said the firm would continue to invest globally
GlaxoSmithKline PLC
26Jun 27Jun 28Jun 29Jun 2Jul
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1,472.00
2Jul
G
E
T
T
Y
G
E
T
T
Y
BARCLAYS yesterday promised to hold
an independent audit of its business
practices following its record-break-
ing 290m fine for abuse of the Libor
interest rate.
Pledging that all findings will be
made publicly available, Barclays said
it will undertake a root and branch
review of all of the past practices that
have been revealed as flawed since the
credit crisis started.
The review will be led by a third
party and will report to senior inde-
pendent director Sir Michael Rake
tipped to take over as chairman on a
temporary basis and will result in a
new mandatory code of conduct that
will be applied across the whole of the
banking group.
The announcement was made
BY JAMES WATERSON
alongside official confirmation that
Marcus Agius has resigned as chair-
man after six years at the helm.
Yesterday Agius said he welcomed
the inquiry: This exercise will be part
of a broader programme of activity
intended to restore Barclays reputa-
tion and we will establish a zero toler-
ance policy for any actions that harm
the reputation of the bank.
Paul Tucker could be called
before MPs over Libor scandal
TOP Bank of England
policymaker Paul Tucker could
face a grilling from MPs over his
relationship with embattled
Barclays chief executive Bob
Diamond, if members of the
influential Treasury Select
Committee (TSC) get their way.
It is highly likely we will want
to cross-examine top officials
from the Bank of England, as
well as the Financial Services
Authority, TSC member David
Ruffley told City A.M.
Tucker met with Diamond and
other senior Barclays staff at the
time when the bank was
manipulating Libor and the
Bank of England has been forced
to deny he told them to submit
the false interest rate readings.
It is nonsense to suggest that
the Bank of England was aware
of any impropriety in the setting
of Libor, said a spokesman.
TSC member John Mann
believes Barclays implicated the
Bank of England in the scandal
purely in order to create a
distraction to take some
pressure off Bob Diamond ahead
of tomorrows TSC hearing.
But Mann is seeking evidence
he has asked the Bank for
transcripts of the conversations
and copies of emails. If it turns
out they did collude with this,
the entire senior level of the
Bank of England would need to
resign and some should face
prosecution, he told City A.M.
However, the TSC must act
fast it has two weeks before par-
liaments summer holiday puts
its investigations on hold.
Ruffley and Mann also believe
there is a clear case for Diamond
to give back his bonuses from the
years of manipulation.
I would be very surprised if
shareholders dont want to
revisit bonuses when the bank
has admitted wrongdoing and
been fined, said Ruffley.
BY TIM WALLACE
Barclays PLC
26Jun 27Jun 28Jun 29Jun 2Jul
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BARCLAYS chief executive Bob
Diamond yesterday tried to put to
bed any rumours that he might be
leaving the bank after it was
shamed with a 290m fine for
fixing the Libor interest rate.
In a memo issued to staff, the
Barclays chief executive said: I
understand why the reaction has
been severe. No one is more sorry,
disappointed and angry about
Bob Diamond says sorry to staff
for reputational damage to bank
BY LAUREN DAVIDSON these events than I am.
I am disappointed because
many of these behaviours
happened on my watch. It is my
responsibility to make sure that it
cannot happen again, he said.
In a sign that he is not prepared
to leave, he added: We can and
will restore Barclays reputation.
Rejecting the notion that the
Libor scandal is indicative of the
culture at Barclays generally,
Diamond said: I love Barclays.
TUESDAY 3 JULY 2012
4
CITY SCANDAL
cityam.com
Diamond implied he will not be leaving Barclays and vowed to restore its reputation
BARCLAYS record fine for rigging
Libor interest rates should be a
watershed moment for the wider
financial industry to clean up its act
and restore public trust, the head of
enforcement at the City watchdog
said yesterday.
The Libor penalty and last weeks
news that the UKs top four banks
mis-sold interest rate swaps to small
businesses compounds the
stereotype of a sector that cannot be
trusted and left to its own devices,
said the FSAs Tracey McDermott.
Instead, it sells products to the
wrong people at the wrong time in
the wrong way. To change things in
the future, to restore that trust and
confidence... requires tough action
from the regulator but its not our
job alone, McDermott told an FSA
conference.
She also said Barclays was not an
isolated case in the Libor debacle.
McDermott said wave after wave
of mis-selling scandals meant the
role of regulators must be rethought
and warned firms which fail to
improve despite repeated requests.
Regulator says
fine will not be
isolated case
BY CITY A.M.REPORTER
BEING dragged into the Libor
fixing scandal has done no
favours for Paul Tuckers
ambitions of becoming the
next governor of the Bank
of England.
Current Bank chief
Mervyn King is due to step
down in the summer of
2013, and Tucker has long
been expected to have his
hat in the ring to
replace him.
With a
career
history of
banking
supervision, Tucker is seen as
the Old Ladys eyes and ears in
the City. With his
proximity to core
financial sector
issues, crises such as
the Libor fixing
scandal pose a threat
to Tuckers reputation
especially if hes
dragged through the
mud.
The Banks remit
is set to expand
beyond
anything
that could
have been imagined prior to the
credit crunch and global
economic crisis. When the new
regulatory Financial Policy
Committee (FPC) began its foetal
development in February last
year, Tucker was among the first
names on the team sheet. As
deputy governor responsible for
financial stability, he also has
respected roles on the Basel
Committee and the G20s
Financial Stability Board.
Such credentials rank him
highly yet this focus on
banking could prove to be a
double edged sword. Julian Harris
PROFILE: DEPUTY BANK GOVERNOR PAUL TUCKER
John Mann will grill Diamond tomorrow David Ruffley expects to question Tucker
Barclays to hold
internal review
of its practices
EasyJet founder Sir Stelios Haji-Ioannou called Sir Mike Rake the dog that didnt bark
TUESDAY 3 JULY 2012
5
CITY SCANDAL
cityam.com
W
HENEVER a banking
scandal breaks in the City,
be it rogue trade
allegations at UBS, a
massive trading loss at JP Morgan or
the current Libor interest rates
scandal, the first concern is for the
reputation of the industry as a
whole. But, investment bankers
being possibly the most competitive
bunch on the universe, the
conversation very rapidly turns to
what sort of an advantage one group
can take from anothers woes.
The current turmoil surrounding
Barclays and its chief executive Bob
Diamond is no different. Within
hours of the news about the Libor
scandal being made public, bankers
were casting an eye at the clients of
Barclays investment bank.
The rise of Barclays investment
banking arm in the advisory sector
of mergers and acquisitions and
equity capital markets has been one
of the most significant investment
banking developments of the last
few years.
Barclays was the only UK-based
bank to get an advisory role on the
Facebook float; the bank is
constantly pitching to be broker to
FTSE 100 companies and has won
quite a few of them, such as IAG, the
parent of British Airways; and it even
muscled in as an adviser to the years
largest merger of the year, the on-off
deal between Glencore and Xstrata.
In terms of recruiting, it has hired
some of the biggest names in the
London market, such as former Bank
of America Merrill Lynch stars Mark
Astaire, soon to arrive, and Richard
Taylor, now the banks head of
investment banking, UK & Ireland;
Jim Renwick, once of UBS; and
Alisdair Gayne from Morgan Stanley.
In reality, as much as the more
established investment banks might
scoff, it is in danger of being a real
threat in advisory.
There is widespread belief in the
market that the driving force behind
the march of the investment banks
equity business (it has for a long
time been a force in debt and fixed
interest) is the personality and
ambition of Bob Diamond.
With the purchase of Lehmans US
business and the constant hiring
elsewhere in the group, Diamond
has thrown the banks weight
behind this initiative even when
investment banking has been seen as
unfashionable, risky and at a time
when business volumes are at a low
ebb. One rival said yesterday: Weve
lost a couple of pitches recently to
Barclays and on both occasions the
potential client said that Bob was all
over them, telling them what
Barclays could do for them in terms
of lending and other services.
In other words, Diamond is
absolutely wedded to the idea of the
integrated investment bank, using
relationships in one arm to foster
business in another.
This being the world that it is, and
with Barclay Capital standing
around fifth place in most league
tables when it wasnt even in the top
ten a few years ago, rival investment
bankers are hoping that even if
Diamond isnt forced out over the
Libor scandal he will be sufficiently
weakened to slow his groups
relentless pursuit of a top table place
in the world of investment banking.
INSIDE
TRACK
DAVID HELLIER
Why rivals are banking on Diamonds downfall
EASYJET founder Sir Stelios Haji-
Ioannou yesterday weighed in to the
furore surrounding the Barclays
Libor-fixing scandal, calling for the
head of Sir Mike Rake.
Rake, the Barclays senior independ-
ent director who was yesterday pro-
moted to deputy chairman, also
serves as chairman of EasyJet.
As Mike Rake is chairman of the
relevant audit sub-committee and a
member of the risk management
and corporate governance sub-com-
mittees [at Barclays], detection and
exposure of these wrongdoings were
ultimately his responsibility, said
Haji-Ioannou, calling Rake the dog
that didnt bark.
Haji-Ioannou also accused Rake of
having his finger in too many pies,
and used the opportunity to suggest
he retire from his EasyJet duties.
The Greek Cypriot tycoon claimed
BY LAUREN DAVIDSON
that Rake had promised him in
2009 before becoming EasyJet
chairman that he would scale back
his other City commitments to focus
on EasyJet and BT, the telecoms giant
where he is also chair.
Yet three years on he still clings on
to four big jobs including Barclays,
which has just become more time
consuming, and US-based McGraw
Hill, added Haji-Ioannou.
The EasyJet founder alleged former
KPMG International chairman Rakes
work at EasyJet stands as a landmark
conflict of interest, citing examples
where KPMG and BT have benefited
from deals with the low cost airline.
EasyJets biggest investor continued
called for Rake to stand down from
EasyJet, adding in a statement: We
will consider using our right as a
major shareholder to call an extraor-
dinary general meeting with Mike
Rakes removal from office as the sole
item of business.
Sir Stelios calls
for Rakes head
over the fiasco
COMMODITY trading giant Louis
Dreyfus has been sued by a former
senior trader at rival Glencore,
who alleges that Dreyfus illegally
cornered the cotton market last
year as prices tumbled from
record highs.
The trader, Mark Allen, accused
Dreyfus of violating antitrust law
BY CITY A.M. REPORTER
by artificially inflating prices of
Intercontinental Exchange cotton
futures contracts expiring in May
2011 and July 2011.
Other defendants include
Dreyfuss Allenberg Cotton and
Term Commodities units, and
several individuals including
Allenbergs chief executive, Joseph
Nicosia, collectively seen as the
biggest cotton traders globally.
Cotton lawsuit hits Louis Dreyfus
david.hellier@cityam.com
Follow me on Twitter: @hellierd
RUSSIA
51
INDIA
55
GLOBAL
48.9
TURKEY
51.4
UK
48.6
USA
49.7
CHINA
48.2 S. KOREA
49.4
TAIWAN
49.2
EUROZONE
45.1
MANUFACTURERS in the UK were
hit less hard last month than in
May, though they remained in
decline, according to Markit/CIPS
data released yesterday.
The purchasing managers index
for the UK went up to 48.6, from
Mays three-year low of 45.9, but it
remains below the no-change level
of 50, showing a continued fall in
business activity in the sector.
Economist Howard Archer at
IHS Global Insight said: UK
manufacturers clearly face a very
challenging domestic and
international environment.
Domestic demand is handicapped
by a squeeze on consumers
purchasing power [and] tighter
public spending.
Eurozone weakness is limiting
demand for UK manufactured
goods, while exporters have had
to cope with sterling hitting a 33-
month high in May, he added.
Input prices dived, falling at the
fastest pace in three years.
Analysts believe this was mainly
driven by an easing in global oil
prices in the last quarter.
...but UK avoids the worst as decline continues
EUROZONE manufacturing was ham-
mered again by political and finan-
cial worries last month, according to
survey data released by Markit yester-
day.
The overall purchasing managers
index (PMI) remained at 45.1 for the
Eurozone in June, slightly up from
the preliminary estimate of 44.8, fol-
lowing the same pace of decline in
May.
The index records firms views on
manufacturing conditions values
above 50 show rising output, whereas
values below 50 signify declining
activity in the sector.
European companies are reducing
inventories and staffing levels as pro-
duction and new orders fall, said
Berenberg Banks Christian Schulz.
Chris Williamson, chief economist
at Markit, warned the situation may
worsen further in coming months.
BY BEN SOUTHWOOD
Companies biggest fear is slumping
demand, hit by heightened uncertain-
ty, he said.
Spains PMI crashed to a 37-month
low of 41.1, while Germanys hit a
three-year low of 45. Greece, Italy and
France all saw heavy declines, with
PMIs of 40.1, 44.6 and 45.2 respectively.
Overall, only Ireland saw a meaning-
fully positive value, hitting a 14-
month high of 53.1. Austria posted
50.1, indicating very slight growth.
Governor King calls for proactive
Bank as QE bloats balance sheet
BANK of England governor Sir
Mervyn King has said it must
continue to pilot the economy
through tough times, as the Banks
annual report revealed a 315.5bn
balance sheet caused largely by
quantitative easing (QE).
Writing in the report, released
yesterday, King defended the
Banks loose monetary policy and
new credit boosting policy, named
the Extended Collateral Term Repo
facility. Our rapid progress in
taking on new responsibilities
shows that we are ready for the
challenges ahead, King said, also
BY JULIAN HARRIS
referring to the Banks
impending new regulatory
powers. We must play a
central role in
implementing the reforms
that are necessary to
prevent such a costly
financial crisis from
happening again.
In a bid to boost
the economy, the
Bank has
expanded its QE
programme over
the last year.
From the end of
February 2011 to 29 February
2012, the Banks balance sheet
rose from 229.6bn to 315.5bn.
The report also revealed that
King was paid 307,792, slightly
down on 2010-11. Deputy
governors Charlie Bean
and Paul Tucker were
paid 260,401 and
263,020 respectively.
The data reflects a pay
freeze taken by staff at
the Bank, though the
pair saw their pension
pots boosted. The
Bank put 1.04m into
Beans pension and 1.35m
into that of Tucker.
Eurozone PMI
99 98 00 01 02 03 04 05 06 07 08 09 10 11 12
65
60
55
50
45
40
35
30
year
Source: Markit
50 = no change
TUESDAY 3 JULY 2012
7
ECONOMIC CRISIS
cityam.com
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ricii !iuss
Kings pay was revealed
MANUFACTURING IS BEING HIT ACROSS THE WORLD
Countries ranked by Manufacturing PMI
Germany 45.0 36-month low
Italy 44.6 2-month low
Spain 41.1 37-month low
Greece 40.1 4-month low
Netherlands 48.9 2-month high
France 45.2 2-month high
China 48.2 7-month low
USA 49.7* 24-month low*
Manufacturing PMI in Europe
65
60
55
50
45
40
35
2010 2011 2012
Germany
France
Italy
Spain
Netherlands
Greece
Ireland
*
*Institute of Supply
Management (ISM) data
SHOULD THE BANK OF ENGLAND
CUT INTEREST RATES?
Interviews by Polly Young and Jamie Sutherland
These views are those of the individuals above andnot necessarily those of their company
Rates are low as they are right now so I
dont know what effect cutting them
again would actually have. I dont think it will
increase consumer borrowing any more. Much more
is dependent on banks willingness to lend.
DIEGO SHIN
K&L GATES

CITYVIEWS
I cant see the benefit in cutting them
more as they are next to nothing any-
way. I think people are cautious at the moment
theyve got their money stashed under their beds
and that is where they are going to keep it.
TIM MILLS
FIDELITY

I think on balance they should keep the


interest rates where they are. I dont
think it will stimulate spending at all. Its not sud-
denly going to pour money into peoples pockets,
unless mortgage rates come down on the back of it.
PHILIP WASLING
ADM INVESTOR SERVICES

Manufacturers
report gloomy
EU conditions
IN BRIEF
House prices soar in London
nHouse prices in London rocketed by
7.7 per cent in the year to May, the
Land Registry said yesterday far
outperforming the 0.4 per cent rise
seen across the UK. The most
expensive property sold in May went
for 18.5m in central London; the
cheapest recent property was sold in
Oldham for just 10,000, in April 2012.
London remains the powerhouse of
the UKs housing market, said Peter
Rollings of Marsh & Parsons.
Euro woes prompt asset juggling
nBNP Paribas is considering
relocating some international
activities to deposit-rich markets like
Belgium, according to a spokeswoman
for the bank, as BNP and other French
banks scramble to fill funding gaps on
their balance sheet. By moving assets
around its international chessboard,
BNP would likely be able to reduce its
own intra-group lending lines to euro
area troublespots like Italy and Spain.
World Bank could aid euro area
nThe new head of the World Bank
said yesterday that he was open to the
possibility of the development lender
advising troubled developed nations
like Greece, a major shift for an
institution that has focused on the
worlds poor. As American Jim Yong
Kim took the reins of the World Bank,
he said his priority was to protect
developing countries at a pivotal
moment for a world economy that
appears to be losing steam rapidly.
A EUROZONE rescue plan devised
at last weeks crunch summit has
been thrown into doubt, after the
Finnish government said it would
block the move along with the
Dutch authorities.
Leaders from the single currency
area had announced that rescue
funds could be used in a flexible
and efficient manner to mitigate
pressure on troubled states
believed to be a reference to pur-
chasing of bonds on the secondary
market.
But yesterday in Helsinki the
Finnish government told its parlia-
ment that it would seek to prevent
the European Stability Mechanism
(ESM) the planned new bailout
fund from being used to hoover
up debt.
Meanwhile a spokesman from the
Dutch finance ministry reiterated
that his government also did not
like the bond purchasing plan.
The Prime Minister said last
Finns and Dutch
cast doubts on
Eurozone deal
BY JULIAN HARRIS
Friday he is not in favour of buying
up bonds it will be expensive and
can only be done if there is unanim-
ity [among member states], the
spokesman, Niels Redeker, warned.
That means the Netherlands
would need to vote in favour.
However, a get-out clause in the
ESMs rules could allow the meas-
ure to be waved through, even if
Finnish and Dutch opposition per-
sists. If the European Central Bank
and European Commission feel the
Eurozone is under threat, they can
action the rescue fund on the basis
of an 85 per cent majority vote.
Finland, which enjoys stronger
public finances than most other
Eurozone states, has proved a lead-
ing cynic against a range of short-
term measures to bail out indebted
member states.
Meanwhile, Germanys constitu-
tional court yesterday announced
that it would begin a hearing on 10
July to determine whether the
countrys involvement in the ESM is
permitted by its constitution.
THE GREEK government should stop
wasting time and money trying to
renegotiate its bailout deal, and
focus on implementing reforms to
get its economy back on a path to
growth, a top European Central
Bank (ECB) official said yesterday.
Prime Minister Antonis Samaras
wants to ease some of the tough
austerity conditions attached to the
130bn (104.3bn) bailout, due to
the weak state of the economy.
But ECB executive board member
BY TIM WALLACE
Jrg Asmussen rejected the idea that
a slower readjustment would help,
arguing the deal is good for Greece.
The fiscal measures under the
programme have been designed to
gradually restore the sustainability
of public finances, he claimed.
If Greece were on its own, the
adjustment would have to be much
faster and more drastic, given that
the sovereign has lost access to
financial markets. So the
programme is actually helping
support the Greek peoples standard
of living.
JOBLESSNESS in the Eurozone rose
to a new record high in May,
pushed up by lay-offs in France,
Spain and even stable Austria, as
the two-and-a-half year debt crisis
continued to eat away at the
currency blocs fragile economy.
Around 17.56m people were out
of work in the 17-nation euro area
in May, or 11.1 per cent of the
working population, a new high
since Eurozone records began in
1995, the EUs statistics office
Unemployment edges higher
across single currency area
BY CITY A.M. REPORTER Eurostat said yesterday.
Unemployment will continue to
rise until we see an improvement in
the economy, and that may not be
until next year, said Steen
Jakobsen of Saxobank. The next
few months are likely to constitute
a low in the growth cycle, he said,
predicting a contraction in output
in the next quarter.
Economists at ING see
unemployment reaching as high as
12 per cent if European
manufacturing does not stage a
recovery, they said yesterday.
TUESDAY 3 JULY 2012
9
ECONOMIC CRISIS
cityam.com
The Eurozone is experiencing a record level of joblessness
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ECB rejects Greeces
bailout negotiation
WEAK domestic demand is
prompting businesses to increasingly
look abroad for new sales, according
to figures released this morning by
the British Chambers of Commerce.
The service sector has reported its
highest level of forward-looking
export orders since the start of
2007 prior to the credit crunch
the Chambers (BCC) said today.
While domestic growth
continues to bump along the
bottom, the silver lining is an
increase in firms looking for export
opportunities, and in many cases,
Sluggish sales in the UK force
companies to turn to exports
BY JULIAN HARRIS
with countries outside Europe, said
BCC chief John Longworth. The BCC
consulted 7,805 firms, with the
balance of manufacturers reporting
higher exports growing seven points
to +31 per cent. The balance of
service sector firms showing higher
export activity rose eight points to
+24 per cent.
Yet UK domestic sales progress was
sluggish, the data showed. The
balances for both recorded sectors
stayed in positive territory, yet
slipped among factories (by three
points to plus nine per cent) and
services stagnated at +10 per cent.
FRANCE will have to find between
6bn and 10bn this year and a
massive 33bn in 2013 to meet its
European deficit targets, or risk
unnerving financial markets, the
state auditor told the new Socialist
government yesterday.
Responding to President Francois
Hollande's request for a thorough
review of state finances, the audit
said a revenue shortfall was
threatening deficit goals. While in
line with economists predictions,
the figures mean state spending
cuts are almost inevitable.
Frances audit
confirms hole
BY CITY A.M. REPORTER
FOREIGN exchange service Monex
Group yesterday planted its foot
firmly in Europe with the acquisition
of Schneider Foreign Exchange.
The $100m (63.7m) deal makes
Monex one of the largest deliverable
commercial FX specialists in the
world, turning over an annual
$125bn in currency transactions.
Schneider will be renamed Monex
Europe and will be the companys
headquarters on the continent, based
in London.
Monex adopts
Schneider as
European HQ
BY LAUREN DAVIDSON
SONY has spent $380m (242m) on
acquiring cloud-based gaming service
Gaikai, the troubled electronics giant
announced yesterday.
Gaikai, bought by Sonys video game
arm Sony Computer Entertainment
(SCE), allows users to play high-quality
games over a broadband connection
without the need for downloads or
powerful computers, since the games
are run on remote servers in the
cloud and are then streamed to a
device.
The Californian firms technology
could be used in Sonys upcoming
PlayStation 4 console, which is expect-
ed to be announced next year as Sony
presses on with its focus on gaming.
Gaikais service will allow demos
and older games to play on the new
console without downloads, Nick
Parker of tech research firm IHS
Screen Digest told City A.M.
The purchase is Sonys first acquisi-
tion under new chief executive Kazuo
Hirai, who replaced former boss Sir
Howard Stringer this year following a
3.5bn loss in the year to 31 March.
Hirai, SCEs former president, over-
saw the gaming arm of Sony becom-
Sony snaps up
cloud gaming
group Gaikai
BY JAMES TITCOMB ing one of its most profitable wings
while other areas slumped.
He slashed 10,000 jobs at the compa-
ny shortly after taking over the top job
in April and has promised to improve
earnings by focusing the company on
games and mobile devices.
By combining Gaikais resources
including its technological strength
and engineering talent with SCEs
extensive game platform knowledge
and experience, SCE will provide users
with unparalleled cloud entertain-
ment experiences, SCEs president
Andrew House said.
Gaikai was founded in 2008 and
counts Intel and Benchmark Capital,
one of Twitters first investors, among
its backers.
Games consoles meet a chainsaw massacre
W
HAT would you rather do:
harvest corn, or chainsaw a
zombie in the face? Thats
the question asked by the
Facebook app for Gaikai, the cloud
gaming company just bought for
$380m (242m) by Sony, which
clearly believes the chainsaw is
mightier than the scythe. Its
probably right, too. Just a few
minutes of experimenting is enough
to demonstrate that this technology
is a long way from the low-fi world
of Farmville, previous Facebook
favourite. Gaikais Facebook app
promises it will let you play AAA
games on your work computer, and
its not wrong. This remarkable
streaming technology threatens to
take a chainsaw not just to
workplace productivity, but to any
gaming company that doesnt keep
up.
Sony has triumphed in the battle
for Gaikai, which had previously
announced deals with rivals
Samsung and LG, but attention will
now turn to possible buyers of
OnLive, the original innovator of
streaming video games and
BOTTOM
LINE
MARC SIDWELL
Sony Corp
26Jun 27Jun 28Jun 29Jun 2Jul
1,140
1,120
1,100
1,080

1,117
2Jul
ADVERTISING giant WPP yesterday
snapped up South Korean media
planning agency Alchemedia for
an undisclosed sum.
Alchemedia has been valued at
around 10bn won (5.6m) and will
be absorbed into WPPs Korean
arm GroupM.
The purchase is the latest
purchase in Sir Martin Sorrells
shopping spree, following the
takeover of French consultancy
I&E and the 343m investment in
digital marketing agency AKQA
last month.
WPP expands
in South Korea
BY JAMES TITCOMB
COMMUNICATIONS firm Arqiva has
made an agreed 23.4m bid for Wi-Fi
operator Spectrum Interactive,
which would create one of the UKs
largest internet hotspot providers.
The deal is set to put Arqiva in
control of hotspots in over 2,100
locations. It will compete with the
likes of BT and Virgin Media,
although unlike its rivals it will
only sell its services to businesses.
Arqiva, which already owns 1,000
transmitter sites, said the deal
would allow it to bolster its fast-
growing mobile data business.
Arqiva set for
hotspot deal
BY JAMES TITCOMB
TUESDAY 3 JULY 2012
10
NEWS
cityam.com
brainchild of Steve Perlman, whose
accomplishments include Apples
QuickTime multimedia player, the
motion capture technology used in
Brad Pitts Benjamin Button movie
and an innovation incubator named
after an Ayn Rand hero: Rearden.
Perlman unveiled OnLive in 2009 to
a chorus of disbelief. An industry
built around rolling out ever-more-
powerful consoles to run the latest
games simply did not believe that
these graphic marvels could be
delivered over the internet onto any
device. But as yesterdays deal
demonstrates, that disruptive future
is rapidly arriving.
When you can stream games to
any device, it is more important than
ever to make a customers devices
talk to one another. Sonys previous
chief executive Howard Stringer
understood this when he proposed a
four screen strategy for the
technology giant: interaction across
computers, tablets, phones and
smart TVs. His successor Kazuo Hirai
has laid out his own path, but this
acquisition shows their common
ground. Streaming technology like
Gaikais brings games into the mix
with streaming music and films.
However, it also suggests that
anyone building plans around
dedicated games consoles, handheld
or otherwise, is standing on a
burning platform while a chainsaw
hurtles towards them.
Marc Sidwell is City A.M.s managing
editor.
CREDIT Suisse sold its seven per
cent stake in fund manager
Aberdeen Asset Management
yesterday as part of its efforts to
substantially increase its capital.
The Swiss bank planned to sell
80.4m shares for 245p to 255p
each, raising as much as 205m.
A source close to the deal
confirmed the shares were snapped
up in around 15 minutes during
late afternoon, mostly selling at the
top end of the price range a two
per cent discount on Aberdeens
260p closing price on Friday.
Its shares rose 1.9 per cent to
265p yesterday.
Credit Suisse
sells Aberdeen
BY LAUREN DAVIDSON
POUNDLAND has continued to
prosper in the economic downturn
as shoppers flock to the retailer in
search of bargains.
Europes biggest single price
discount retailer reported record
sales of 780m in the 53 weeks to
April a 21.6 per cent jump and a
22.2 per cent leap in earnings before
interest, tax, depreciation and
amortisation to 287.7m.
More than 4m bargain hunters a
week shopped at Poundland over the
period, pushing like-for-like sales 2.3
per cent higher. A third of shoppers
now visit budget retailers of some
kind, according to IGD.
Poundlands
in the money
BY JAMES TITCOMB
GLOBAL private equity firm
HarbourVest Partners said funds
under its management will buy
Conversus Capitals investment
portfolio for $1.4bn (900m).
Guernsey-based Conversus, a
publicly traded portfolio of third-
party private equity funds, said it
will appoint a liquidator to wind
up its operations after the closing
of the deal.
HarbourVest said the funds,
along with HarbourVest Global
Private Equity Limited, will buy
the entities that hold Conversus
private equity fund interests and
direct co-investments.
HarbourVest
buys portfolio
BY CITY A.M. REPORTER
TUESDAY 3 JULY 2012
11
NEWS
cityam.com
With growth at Serco largely emanating from emerging markets such as
Africa and Asia, a retreat from more pedestrian regions is understandable.
Despite the recent half year trading update, which placed greater
investor faith on the second half, consensus opinion remains favourable.
ANALYST VIEWS

Serco is looking to focus on its best growth opportunities. In the past


week, it has sold its technical services business to AMEC for 137m and the major-
ity of its operations in Germany for a nil consideration. The tidying up of
Sercos portfolio could lead to some small bolt-on acquisitions next.

There is nil consideration and the operations were break-even, so clear-


ly no impact on earnings. The removal of these low growth businesses will clear-
ly be helpful to organic growth. We are encouraged that Serco is showing
good capital disciplines.

WHAT DO YOU MAKE OF


SERCOS STRATEGY?
Interviews by John Dunne
KEITH BOWMAN HARGREAVES LANSDOWN

TONY SHEPARD CHARLES STANLEY

JO BRENT LIBERUM CAPITAL


OUTSOURCER Serco yesterday
announced that it was disposing of
the majority of its German interests
in pursuit of growth elsewhere.
The FTSE 100 company said the
local management team would take
over the German business.
Serco sees little chance to extend
revenues in Germany and is to focus
its efforts on other territories.
But the company said that it had
retained some contracts in the coun-
try including IT services to the
European Space Agency and facilities
management for State Street in
Europe.
Serco said that while the contracts
generate around 90m in revenue a
year, operating profits have hovered
around the break-even mark. There
was therefore no cash charge for the
handover.
The company said the provisional
value of net assets being disposed of
is approximately 25m, including
goodwill of around 22m. The provi-
sional accounting loss on disposal,
after costs of around 2m, is expected
BY JOHN DUNNE
to be around 27m, and a loan of
around 12m will be settled by Serco
within 18 months.
Chief executive Christopher Hyman
said: Our withdrawal from these
operations will allow Serco to focus
on selecting the best future opportu-
nities and continue to build a bal-
anced contract portfolio in markets
and geographies around the world,
where we can deliver economies of
scale to the greater benefit of cus-
tomers.
Serco Germany was originally estab-
lished in 1961 to provide installation
and support services for the German
air defence radar systems.
Serco Group PLC
26Jun 27Jun 28Jun 29Jun 2Jul
540
535
530
525
520
p
544.00
2Jul
APPLE has paid $60m (38m) to Proview Technology (Shenzhen) to end a dispute over
the iPad trademark in China that saw the worlds most valuable technology company
engaged in a protracted legal tussle with a near-bankrupt Chinese firm. The lawsuit had
hampered some sales and delayed the launch of the new iPad in China.
APPLE PAYS $60M TO SETTLE DISPUTE IN CHINA
Serco offloads
German unit to
look for growth
THE PROBLEMS of Libor
fixing havent prevented the
British Bankers Association
from working on other
issues.
Yesterday the industry
trade body launched the UK
Business Angels Association,
which will promote angel
investing in the UK, with Sir
Nigel Rudd as its new
chairman.
The new group will have a
dedicated team and will be
located within Pinners Hall,
home of the BBA.
Sir Nigel, of course, is well
known to the banking
industry having been a
director of whoops
Barclays Bank for 13 years,
latterly as deputy chairman.
Angela Knight was yesterday forced to cancel her industry bodys summer party
Got A Story? Email
thecapitalist@cityam.com
12
cityam.com
cityam.com/the-capitalist
With the Barclays interest rate scandal
being the story of the moment,
Andrew Tyries Treasury Select Committee is
busy preparing for an invasion of the worlds
media as well as the public when the banks
chief executive Bob Diamond comes before
it tomorrow.
Were making plans to make sure
that the sheer volume of people can
be accommodated, said a
spokesman. Were thinking of a
spillover room, as the DCMS
committee did with its phone
hacking report. As some have
said, the banking industry may
be reaching its Leveson
moment.
TUESDAY 3 JULY 2012
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YEARLY INCOME OF
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Capital is fully at risk. The Phoenix Income Autocall 8.8% is suitable for sophisticated retail and professional investors in the
UK, who have a good understanding of the underlying market and characteristics of the product. As the issuer, any failure
by Societe Generale Acceptance N.V. to make payments due may result in the loss of all or part of your investment. You will
have no claim for compensation from the Financial Services Compensation Scheme or any other scheme. We recommend
that you consult your own independent professional adviser before investing. This is a marketing document issued in the UK
by the London Branch of Societe Generale. Societe Generale is a French credit institution (bank) authorised by the Autorit de
Contrle Prudentiel (the French Prudential Control Authority). Societe Generale is subject to limited regulation by the Financial
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request. Any reproduction, disclosure or dissemination of these materials is prohibited.
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THECAPITALIST
A
NGELA KNIGHT, the departing
chief executive of the British
Bankers Association, was
yesterday forced to cancel
the industry bodys summer party
amid the continuing furore over
the Libor interest rate scandal.
News of the scrapped banker bash
came via an email from Ben
Andersen-Tuffnell to invitees, advis-
ing them that the shindig, planned
for tomorrow on the lawn outside
Westminster Abbey, would no
longer be taking place.
Dear Attendee, (the email stated):
We believe that in the current cir-
cumstances it would be wrong to
proceed with the reception on
Wednesday evening.
We regret the short notice but
our industry needs to think long
and hard about its collective behav-
iour and I am sure you understand
this is not the time for such an
event to take place.
Regards, Angela Knight CBE, chief
executive, British Bankers
Association (BBA).
The voice of banking and finan-
cial services.
Had the party gone ahead, it would
have clashed with Bob Diamonds
appearance tomorrow across the
road at Portcullis House, where the
Barclays chief executive will be try-
ing to explain his banks role in the
way in which the Libor interest rate
was manipulated.
Yesterday, it emerged that Marcus
Agius, who stepped down as chair-
man of Barclays over the interest
rate fixing scandal at the bank, had
also tendered his resignation as
chairman of the British Bankers
Association
Last week the BBA said it was
shocked by the regulators report
about the manipulation of Libor.
Barclays was fined a record 290m
for attempting to alter the interbank
lending rate between 2005 and 2009.
Incoming BBA chief executive
Anthony Browne must be hoping
things will have changed for the bet-
ter by the time the Christmas party
season comes around.
Sir Nigel Rudd was at Barclays for 13 years
Knight and the
BBA put banker
bash on hold
Sir Nigel Rudd is an angel
G
E
T
T
Y
ESSAR Energy yesterday said it
agreed to sell a 50 per cent stake in
an offshore gas exploration block
in Vietnam to Italian oil major Eni.
Under the deal Eni will assume
operator status for the block.
Further investment is required to
establish gas reserves in the block
and no gas is being produced at
present, Essar Energy said.
Block 114 is located in shallow
waters off the coast of Vietnam
and holds an estimated one trillion
cubic feet of gas.
The deal is yet to be agreed by the
Vietnamese government, the com-
pany said in its announcement.
It added: The reduction in Essar
Energys stake in block 114, which
was previously 100 per cent, is in
line with the strategy for its explo-
ration and production business of
introducing strategic partners to
help manage risk and of focusing
on the development of its core
assets.
The firms plan to drill two explo-
Essar Energy to
sell its Vietnam
interest to Eni
BY HARRY BANKS
ration wells and conduct seismic tests
before decided the next steps for the
block, Eni said yesterday.
Last week Essar Energy, which
recently fell out of the FTSE 100,
reported that its figures had been
dented by a tax case with Indian
authorities.
The company said Januarys ruling
against tax breaks had pushed it to a
pre-tax loss of $1.1bn (707m) for the
15 months to 31 March.
The company is pinning its hopes on
the Vadinar refinery Indias second
largest private sector oil refinery with
capacity of 20m metric tonnes per
annum, or 405,000 barrels per day.
SHARES in UK exploration firm Soco International jumped 6.9 per cent yesterday after
it announced plans to buy out its minority partner in its main oil subsidiary in Vietnam.
Soco will pay $95m (61m) in cash to buy the 20 per cent in the Vietnam subsidiary
that it doesnt already own from partner Lizeroux Oil & Gas.
SOCO SOARS ON FAR EAST FIELD PURCHASE
Essar Energy Plc
26Jun 27Jun 28Jun 29Jun 2Jul
125.00
122.50
120.00
117.50
115.00
p
125.70
2Jul
DELL said yesterday it will buy
enterprise management software
maker Quest Software for $2.4bn
(1.5bn) in cash, trumping a
$2.17bn bid by private investment
firm Insight Venture Partners.
Dell sparked a bidding war in
June when it offered $25.50 per
share for Quest, outbidding
Insights initial offer in March of
Dell wins bidding war for Quest
Software with $2.4bn cash deal
BY CITY A.M. REPORTER
$23 per share. Insight later bid
$25.75 a share for Quest.
The addition of Quest will
enable Dell to deliver more
competitive server, storage,
networking and end user
computing solutions and services
to customers, said John
Swainson, president of Dell
Software Group.
TUESDAY 3 JULY 2012
13
NEWS
cityam.com
JP Morgan
Cazenove
Land Securities Aviva Lloyds TSB Slaughter & May Lloyds TSB Slaughter & May viva AAv Lloyds TSB JP Morgan Land Securities Land Securities
2011 Retail Bank
of the Y
Lloyds TSB Slaughter & May
2010 Law Firm
ear of the YYe
2010 Marketing
Campaign
ear of the YYe
2011 Retail Bank
ear the YYe
viva AAv Lloyds TSB
2011 Investment
ear Bank of the YYe
2011 Property
Firm of the Y
JP Morgan
Cazenove
Land Securities
2011 Property
ear the YYe
Land Securities
Cranswick acquires Kingston
n Pork supplier Cranswick yesterday
said it has acquired cooked and roasted
meat producer Kingston Foods.
Cranswick said the move would help
broaden the companys customer base.
Cranswick said it has acquired the
entire issued share capital of Kingston
Foods, which had gross assets of 3.7m
on 27 January. Tony Turner and Paul
Williams will continue in their current
positions as managing director and
operations director once they have sold
the firm.
Hansteen seals warehouse deal
n Property investment company
Hansteen Holdings yesterday said it had
completed the purchase of a portfolio of
six warehouses in Germany from Dexus
Funds Management for 26m (21m).
The purchase, which was funded from
the firms existing cash pile, reflects an
initial yield of 13.77 per cent. The proper-
ties total 127,000 square metres.
Hansteens joint chief executive Ian
Watson said: We believe the portfolio
represents fundamentally great value on
a vacant possession basis. The fact that
is that in addition it combines a high run-
ning yield, with potential to add value.
Profits surge at Omega Diagnostics
n Allergy testing specialist Omega
Diagnostics said yesterday its profit had
soared by 36 per cent to 1m in the year
to 31 March. Revenue jumped by 41 per
cent to 11m. Its allergy testing division
grew turnover by almost a third to
4.5m, and its food intolerance kits put
on 10 per cent growth to hit 3.9m in
revenues. However its infectious disease
division saw revenue dip by two per
cent. The company said it was concen-
trating on markets in India China, Russia
and Brazil for more growth.
Linde plans share sale to fund buy
n German industrial gas firm Linde
plans to raise up to 1.5bn from selling
new shares to help fund its purchase of
Lincare Holdings, which will put it ahead
of Air Liquide in the medical gas market.
Linde has agreed to pay $4.6bn for the
Florida-based provider of oxygen and
respiratory therapy services to patients
in the home, boosting its position in a
market benefiting from cost cuts by hos-
pitals and an ageing population. Linde
shares fell 1.8 per cent following news of
the fundraising measures.
IN BRIEF
TUESDAY 3 JULY 2012
14
cityam.com
LONDONREPORT
US stocks edge
higher despite
signs of slump
U
S stocks edged higher yesterday,
shaking off a surprise
contraction in US
manufacturing, which some
investors took as a signal the Federal
Reserve will take more forceful actions
to boost the economy.
The Institute for Supply
Managements manufacturing index
came in at a lower reading than
expected in June, registering a contrac-
tion in the sector for the first time
since July 2009.
The S&P was lower for much of the
session but closed slightly higher in
late gains.
Still, industrial shares were under
pressure after the data, the latest in a
string of indicators pointing to deterio-
rating economic conditions around
the globe. Boeing lost 1.5 per cent to
$73.18 and Caterpillar was off 1.4 per
cent at $83.68.
The weak data supported the view
that conditions were worsening, and
investors said it made the Fed more
likely to adopt additional easy money
policies, like more quantitative easing.
The ISM reading was pretty weak.
But it is pretty positive that the market
had an excuse to sell off and instead
were resilient, said Mike Gibbs, chief
market strategist at Morgan Keegan in
Memphis, Tennessee. This gives
investors a little more confidence that
QE3 may be on the cards.
Eurozone manufacturing shrank
again in June and factories are prepar-
ing for worse, according to business.
Manufacturing in China also weak-
ened in June with export orders.
UBS cut its year-end target on the
S&P 500 index to 1,375 from 1,475,
implying that the market would only
rise about one per cent from current
levels over the next six months.
B
RITAINS top shares extended gains
yesterday, led by rallies in banking
and commodity stocks, with the
market primed for fresh economic
stimulus moves later this week, building
on measures agreed by an EU summit to
counter the Eurozone debt crisis.
But some commentators were more pes-
simistic on the market outlook, feeling
that with uncertainties still hanging over
the Eurozone deal, any disappointment on
the detail of the new measures could trig-
ger a sell-off.
I suppose a bit of momentum coming in
from the summit on Friday, which I
assume is the positive tone in the market
today. That could change when we get
more details about how it is going to work
out, because at the moment there are a lot
of open questions, said Peter Dixon, the
UK economist at Commerzbank in
London.
The FTSE 100 closed 69.49 points higher,
or up 1.25 per cent, at 5,640.64. The UK
blue chip index jumped 1.4 per cent on
Friday.
Volumes were relatively thin, at 74 per
cent of the 90-day daily average, way below
the level seen last Friday, showing sluggish
trading activities as investors are still cau-
tiously positioned in a market that still
requires a solid driver.
Financial stocks were in demand, sup-
ported by Fridays Eurozone news given
the sectors direct exposure to the blocs
sovereign bonds, with insurer Aviva the
top blue chip gainer, up 3.7 per cent.
Barclays rallied 3.4 per cent after having
suffered a 17 per cent slump in the past
three days over a Libor-fixing scandal that
cost chairman Marcus Agius his job.
UK banking and commodities rally
on likelihood of economic stimulus
BESTof theBROKERS
Avocet Mining PLC
160
140
120
100
80
p
26Jun 27Jun 28Jun 29Jun 2Jul
77.10
2 Jul
AVOCET MINING
Canaccord Genuity has cut
its recommendation on
the gold miner from buy
to holdand reduces its
target price to 100p from
245p after it lowered 2012
production guidance by 15
per cent.
DASHBOARD CITY
NEW YORK
REPORT
YOUR ONE-STOP SHOP FOR JOB MOVES,
BROKER VIEWS AND MARKET REPORTS
FTSE
5,600
5,650
5,450
5,500
5,550
26Jun 27Jun 28Jun 29Jun 2Jul
5,640.64
2 Jul
Halfords Group PLC
237.50
235.00
232.50
230.00
227.50
222.50
225.00
220.00
p
26Jun 27Jun 28Jun 29Jun 2Jul
223.80
2 Jul
HALFORDS
Panmure Gordon has
downgraded the retailer
from buy to hold and
cut its target price from
315p to 220p, as it expects
it to be one of the losers
from the Jubilee trading
period and poor weather.
Randall and Quilter Investment Holdings PLC
102.00
101.50
101.00
100.50
100.00
99.50
p
26Jun 27Jun 28Jun 29Jun 2Jul
100.75
2 Jul
RANDALL AND
QUILTER
Numis has upgraded the
specialist insurer from
add to buy with an
unchanged target price
of 130p, after it resolved
disputes and gave a
reassuring AGM update.
Kingfisher
Karen Witts will join the home
retailers board as finance
director in October. She is
currently finance chief for
Africa, Middle East, Asia and
Asia Pacific at Vodafone, and is
also a non-executive director of
Wolseley. Witts worked at BT
Group for more than 10 years,
most recently as finance head
for BT Retail.
Dechert
Dr Markus J Friedl has joined the international law firms
corporate and securities group as a national partner in
the Frankfurt office, which was established this year.
Friedl has previously worked for other international and
German law firms in Frankfurt, and was most recently a
counsel at Schilling Zutt & Anschtz. Dechert now has
more than 25 lawyers working in Germany.
Marsh
The insurance broker has appointed Andrew George to
chair its global energy practice. George was previously
head of Marshs energy practice for Europe, the Middle
East and Africa and succeeds Jim Pierce, who will now
lead Marshs global industry practices group. Andrew
Herring, head of Marshs wholesale energy practice, will
be appointed to Georges previous post.
JHC
Eric Dickinson has been appointed accounts director at
the IT solutions company. Dickinson has over 25 years
experience in the financial industry, having worked at
Socit Gnrale Securities Services as UK head of
sales and global relationship management, as well as
at The Bank of New York (now BNY Mellon) and TCA
Synergo.
Chadbourne & Parke
Craig Barnett is joining the international law firm as an
associate in the insolvency and restructuring group at its
London office. Before joining the firm, he spent five
years at Dundas & Wilson as an associate in the
corporate recovery department.
WHOS SWITCHING JOBS Edited by Jamie Sutherland
+44 (0)20 7092 0053
morganmckinley.com
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
CITY MOVES
To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com
in association with
Will the government meet its borrowing targets
for the current parliament?
%
g
79
7.3
13.7
Yes
No
Dont know
VOICE OF THE CITY
PoliticsHome.com PoliticsHome.com
In association with
Apply to join today at WWW.CITYAM.COM/PANEL
Is the UKs public borrowing out of control?
%
32.4
4.1
63.5
Yes
No
Dont know
To what extent do the governments debt levels
harm the economy as a whole?
%
37.9
5.5
5.5
ole?
5 5
2.3
1.8
47
Greatly harm
Somewhat harm
Have a neutral eect
Somewhat benet
Greatly benet
Dont know
CITY professionals have
voiced deep scepticism over
the possibility of the
coalition meeting its
borrowing targets, with less
than one in seven believing
that the government can
hit its forecasts.
Our Voice of the City panel,
run in association with
PoliticsHome.com, found
that just 13.7 per cent of
respondents thought that
the current parliament
would succeed with its Plan
A targets.
A full 79 per cent believe
that the government will
fail, after the national debt
ploughed through the 1
trillion barrier.
Almost two thirds of
respondents saw the UKs
public borrowing as out of
control, while just under a
third demurred.
Seventy-two per cent
blamed the profligacy of
Gordon Browns Labour
government for the debt
crisis, with just over 15 per
cent blaming the current
coalition government, and
10.5 per cent placing the
blame on the Eurozone,
financial services or
consumers. In order to
resolve the problem, 70.8
per cent pointed to
spending cuts. Though just
8.7 per cent thought tax
rises were a good idea, 40.2
per cent thought the
government needed to
enforce existing tax rules
more effectively. Some 44.8
per cent believed tax cuts
could bring extra revenue
and were preferable.
In their comments,
respondents lambasted
chancellor George Osborne
as economically illiterate,
and attacked PM David
Cameron for failing to
make good on his promises
of radical cuts. They also
pointed to regulation and
high tax rates as major
restrictions on recovery.
One argued that the true
size of the national debt
was much higher due to
private finance initiative
liabilities.
TUESDAY 3 JULY 2012
15
MARKETS
cityam.com
LON GD ONCE FIX AM ..................................1596.25 26.75
SILVERLDN FIX AM .........................................27.52 0.00
MAPLE LEAF 1 OZ............................................29.62 0.04
LON PLATINUM AM .....................................1442.00 35.00
LON PALLADIUM AM.....................................580.00 12.00
ALUMINIUM CASH.......................................1834.00 2.00
COPPER CASH............................................7604.00 184.00
LEAD CASH..................................................1795.50 27.50
NICKEL CASH............................................16470.00 110.00
TIN CASH...................................................18750.00 90.00
ZINC CASH...................................................1842.50 43.50
BRENT SPOT INDEX.........................................95.28 2.75
SOYA ............................................................1512.75 46.75
COCOA........................................................2289.00 63.00
COFFEE...........................................................170.10 7.10
KRUG ..........................................................1653.50 -2.00
WHEAT..........................................................174.60 3.38
AIR LIQUIDE.......................................................91.76 1.71 92.79 73.38
ALLIANZ ............................................................80.17 1.06 98.60 56.16
ANHEUS-BUSCHINBEV....................................62.79 1.49 62.82 33.85
ARCELORMITTAL .................................................12.15 0.04 24.77 10.47
ASML HOLDING.................................................41.30 1.24 41.44 21.22
AXA ..................................................................10.60 0.12 15.94 7.88
BANCO SANTANDER............................................5.25 0.03 7.57 4.17
BASF SE ............................................................55.25 0.55 69.80 42.19
BAYER...............................................................57.48 0.70 58.64 35.36
BBVA..................................................................5.64 0.01 8.06 4.52
BMW..................................................................57.41 0.48 73.95 43.49
BNP PARIBAS....................................................31.65 1.32 54.98 22.72
CARREFOUR.......................................................14.72 0.17 24.89 13.38
CRH PLC.............................................................15.35 0.24 16.93 10.28
DAIMLER...........................................................36.24 0.90 53.95 29.02
DANONE...........................................................49.40 0.39 54.96 41.92
DEUTSCHE BANK...............................................29.01 0.51 42.08 20.79
DEUTSCHE TELEKOM............................................8.71 0.06 10.94 7.69
E.ON...................................................................17.23 0.23 20.00 12.50
ENEL ...................................................................2.55 0.13 4.53 2.23
ENI ....................................................................17.00 0.87 18.72 11.83
ESSILOR INTERNAT.............................................74.15 0.85 75.52 46.89
FRANCE TELECOM..............................................10.44 0.06 14.73 9.45
GDF SUEZ..........................................................18.90 0.15 25.44 15.62
GENERALI ASS. ..................................................10.78 0.56 14.95 8.16
IBERDROLA.........................................................3.72 -0.00 5.88 3.03
INDITEX.............................................................81.36 -0.17 82.70 52.20
ING GROEP CVA..................................................5.28 0.01 8.72 4.21
INTESA SANPAOLO...............................................1.10 0.07 1.92 0.85
KON.PHILIPS ELECTR..........................................15.73 0.16 18.06 12.01
L'OREAL ............................................................92.77 0.53 94.80 68.83
LVMH...............................................................121.00 1.15 136.80 94.16
MUNICHRE.......................................................111.90 0.75 118.35 77.80
NOKIA .................................................................1.67 0.05 5.19 1.60
REPSOL YPF.......................................................12.78 0.14 23.29 11.07
RWE..................................................................32.82 0.64 39.24 21.15
SAINT-GOBAIN..................................................29.58 0.48 45.38 25.77
SANOFI .............................................................60.33 0.59 60.43 42.85
SAP...................................................................47.54 1.00 54.85 32.88
SCHNEIDER ELECTRIC.........................................44.18 0.45 58.85 35.00
SIEMENS ............................................................67.14 1.00 96.19 62.13
SOCIETE GENERALE ...........................................18.95 0.54 42.64 14.32
TELEFONICA .......................................................10.41 0.04 16.61 8.81
TOTAL................................................................35.99 0.49 42.97 29.40
UNIBAIL-RODAMCO SE.....................................147.90 2.80 162.95 123.30
UNICREDIT..........................................................2.94 0.25 10.13 2.20
UNILEVER CVA..................................................26.60 0.21 27.16 20.96
VINCI .................................................................37.77 0.99 44.79 28.46
VIVENDI .............................................................14.81 0.18 18.61 12.02
VOLKSWAGEN VORZ........................................124.50 -0.10 152.20 86.40
Price Chg High Low
EU SHARES
WORLD INDICES
FTSE 100. . . . . . . . . . . . . . . . . . . . . 5640.64 69.49 1.25
FTSE 250 INDEX . . . . . . . . . . . . . . . 11093.47 161.34 1.48
FTSE UK ALL SHARE . . . . . . . . . . . . . 2927.12 35.67 1.23
FTSE AIM ALL SH. . . . . . . . . . . . . . . . 679.43 4.36 0.65
DOWJONES INDUS 30 . . . . . . . . . . 12871.39 -8.70 -0.07
S&P 500. . . . . . . . . . . . . . . . . . . . . . 1365.51 3.35 0.25
NASDAQ COMPOSITE. . . . . . . . . . . . 2951.23 16.18 0.55
FTSEUROFIRST 300 . . . . . . . . . . . . . 1035.32 13.93 1.36
NIKKEI 225. . . . . . . . . . . . . . . . . . . 9003.48 -3.30 -0.04
DAX 30 PERFORMANCE . . . . . . . . . 6496.08 79.80 1.24
CAC 40 . . . . . . . . . . . . . . . . . . . . . . 3240.20 43.55 1.36
SHANGHAI SE INDEX . . . . . . . . . . . . 2226.11 0.68 0.03
HANG SENG. . . . . . . . . . . . . . . . . . 19441.46 416.19 2.19
S&P/ASX 20 INDEX. . . . . . . . . . . . . 2505.20 24.40 0.98
ASX ALL ORDINARIES . . . . . . . . . . . 4172.50 37.00 0.89
BOVESPA SAO PAOLO . . . . . . . . . . 54692.79 338.16 0.62
ISEQ OVERALL INDEX . . . . . . . . . . . . 3161.37 12.75 0.40
STRAITS TIMES . . . . . . . . . . . . . . . . 2910.59 32.14 1.12
IGBM . . . . . . . . . . . . . . . . . . . . . . . . . 721.30 2.81 0.39
SWISS MARKET INDEX. . . . . . . . . . . 6109.41 42.55 0.70
Price Chg %chg
3M....................................................................89.28 -0.32 98.19 68.63
ABBOTT LABS...................................................64.63 0.16 64.67 46.29
ALCOA ................................................................8.63 -0.13 16.60 8.21
ALTRIA GROUP.................................................34.96 0.41 34.96 23.20
AMAZON.COM.................................................229.32 0.97 246.71 166.97
AMERICAN EXPRESS.........................................59.05 0.84 61.42 41.30
APPLE.............................................................592.52 8.52 644.00 331.88
AT&T.................................................................36.20 0.54 36.20 27.29
BANK OF AMERICA.............................................8.05 -0.13 11.25 4.92
BOEING CO ........................................................73.18 -1.12 77.83 56.01
BRISTOL MYERS SQUI .......................................36.05 0.10 36.34 25.69
CATERPILLAR....................................................83.68 -1.23 116.95 67.54
CHEVRON........................................................105.86 0.36 112.28 86.68
CISCO SYSTEMS..................................................17.08 -0.09 21.30 13.30
CITIGROUP........................................................27.46 0.05 43.06 21.40
COCA-COLA.......................................................78.92 0.73 79.00 63.34
COMCAST CLASS A............................................32.26 0.29 32.50 19.19
CONOCOPHILLIPS..............................................55.73 -0.15 80.13 50.62
CVS/CAREMARK ................................................47.81 1.08 47.81 31.30
DU PONT(EI) DE NMR.......................................49.43 -1.14 57.50 37.10
EXXON MOBIL...................................................85.34 -0.23 87.94 63.47
GENERAL ELECTRIC...........................................20.49 -0.35 21.00 14.02
GOOGLE A.......................................................580.47 0.40 670.25 480.60
HEWLETT PACKARD ..........................................20.16 0.05 37.70 19.12
HOME DEPOT.....................................................53.01 0.02 53.28 28.13
IBM .................................................................195.83 0.25 210.69 157.13
INTEL CORP ......................................................26.67 0.02 29.27 19.16
J.P.MORGAN CHASE..........................................36.28 0.55 46.49 27.85
JOHNSON & JOHNSON.....................................68.00 0.44 68.05 55.76
KRAFT FOODS A ...............................................38.89 0.27 39.99 31.88
MC DONALD'S CORP.........................................88.08 -0.45 102.22 82.01
MERCK AND CO. NEW.......................................41.85 0.10 41.85 29.47
MICROSOFT ......................................................30.56 -0.03 32.95 23.79
OCCID. PETROLEUM..........................................85.94 0.17 109.08 66.36
ORACLE CORP...................................................29.80 0.10 34.13 24.72
PEPSICO............................................................70.76 0.10 70.79 58.50
PFIZER .............................................................23.00 -0.01 23.30 16.63
PHILIP MORRIS INTL ........................................89.00 1.74 91.05 60.45
PROCTER AND GAMBLE .....................................61.19 -0.06 67.95 57.56
QUALCOMM INC ................................................55.67 -0.02 68.87 45.98
SCHLUMBERGER...............................................64.94 0.03 95.53 54.79
TRAVELERS CIES ...............................................63.92 0.08 65.27 45.97
UNITED TECHNOLOGIE......................................75.04 -0.49 91.83 66.87
UNITEDHEALTH GROUP....................................56.26 -2.24 60.75 41.27
US BANCORP DELAWRE ...................................32.44 0.28 32.98 20.10
VERIZON COMMS..............................................44.93 0.49 44.93 32.28
VISA CL A........................................................126.62 2.99 126.80 74.79
WAL-MART STORES..........................................69.35 -0.37 69.95 48.31
WALT DISNEY CO..............................................48.72 0.22 48.95 28.19
WELLS FARGO & CO..........................................33.55 0.11 34.59 22.58
COMMODITIES CREDIT & RATES
BoE IR Overnight.........................................0.500 0.00
BoE IR 7 days..............................................0.500 0.00
BoE IR 1 month...........................................0.500 0.00
BoE IR 3 months.........................................0.500 0.00
BoE IR 6 months ........................................0.500 0.00
LIBOR Euro - overnight ...............................0.260 0.00
LIBOR Euro - 12 months ................................1.186 0.00
LIBOR USD - overnight.................................0.168 0.00
LIBOR USD - 12 months................................1.069 0.00
Halifax mortgage rate ................................3.990 -0.02
Euro Base Rate.............................................1.500 0.00
Finance house base rate..............................1.500 0.00
US Fed funds ...............................................0.250 0.00
US long bond yield......................................2.700 -0.05
European repo rate......................................0.148 0.00
Euro Euribor .................................................0.321 0.00
The vix index ...............................................16.80 -0.28
The baltic dry index...................................1004.0 0.00
Markit iBoxx ...............................................250.51 0.80
Markit iTraxx...............................................159.68 -9.03
Price Chg High Low
Price Chg %chg Price Chg %chg Price Chg %chg
US SHARES
BAE Systems . . . . . . . . .290.7 2.1 333.0 248.1
Chemring Group . . . . . .274.1 -0.3 638.5 271.2
Cobham. . . . . . . . . . . . .235.6 3.4 239.5 165.9
Meggitt . . . . . . . . . . . . .388.3 3.0 413.5 304.9
QinetiQ Group . . . . . . . .159.8 2.7 159.8 101.5
Rolls-Royce Holdi . . . . .869.0 11.0 870.0 557.5
Senior . . . . . . . . . . . . . . .192.1 4.5 213.0 135.6
Ultra Electronics . . . . .1640.0 53.0 1780.0 1305.0
GKN . . . . . . . . . . . . . . . . .181.7 1.1 245.0 157.0
Bank of Georgia H . . .1064.0 -7.0 1120.0 929.8
Barclays . . . . . . . . . . . . .168.4 5.6 265.6 138.9
HSBC Holdings . . . . . . . .570.1 9.0 629.1 463.5
Lloyds Banking Gr . . . . . .31.5 0.4 50.8 21.8
Royal Bank of Sco . . . . .219.0 3.7 396.9 173.4
Standard Chartere . . . .1419.0 34.5 1672.0 1169.5
Barr (A.G.) . . . . . . . . . .405.0 5.8 439.0 343.7
Britvic . . . . . . . . . . . . . .334.5 4.6 399.5 289.9
Diageo . . . . . . . . . . . . .1658.0 16.0 1658.2 1112.0
SABMiller . . . . . . . . . . .2574.5 19.5 2660.0 1979.0
AZ Electronic Mat . . . . .300.0 13.0 323.5 206.1
Croda Internation . . . .2299.0 36.0 2316.0 1597.0
Elementis . . . . . . . . . . .200.0 1.5 211.8 107.5
Johnson Matthey . . . .2207.0 -1.0 2408.0 1523.0
Victrex . . . . . . . . . . . . .1276.0 5.0 1590.0 1025.0
Yule Catto & Co . . . . . . .143.4 -1.6 253.0 133.9
/$ 1.2584 0.0079
/ 0.8018 0.0043
/ 100.04 1.0204
/ 1.2472 0.0066
/$ 1.5693 0.0015
/ 124.74 0.6310
FTSE 100
5640.64
69.49
FTSE 250
11093.47
161.34
FTSE ALL SHARE
2927.12
35.67
DOW
12871.39
8.70
NASDAQ
2951.23
16.18
S&P500
1365.51
3.35
Brown (N.) Group . . . . .248.5 4.1 291.0 222.4
Carpetright . . . . . . . . . .675.0 -1.0 728.5 375.0
Debenhams . . . . . . . . . .86.3 -0.3 86.8 51.2
Dignity . . . . . . . . . . . . . .810.0 3.0 868.0 727.0
Dixons Retail . . . . . . . . . .18.1 -0.2 19.6 9.4
DunelmGroup . . . . . . .522.5 3.0 533.0 392.9
Halfords Group . . . . . . .223.8 -5.4 374.7 221.5
Home Retail Group . . . . .84.5 -0.2 165.7 69.2
Inchcape . . . . . . . . . . . .343.5 12.9 425.4 268.1
JD Sports Fashion . . . . .724.0 9.0 1030.0 570.0
Kingsher . . . . . . . . . . .289.0 1.6 313.8 217.0
Marks & Spencer G . . . .327.9 2.9 389.5 301.8
Next . . . . . . . . . . . . . . .3195.0 -4.0 3199.0 2153.0
Sports Direct Int . . . . . .310.0 4.2 315.6 190.0
Ted Baker . . . . . . . . . . .907.0 6.0 928.5 633.0
WHSmith . . . . . . . . . . .553.0 8.5 559.0 451.6
NMC Health . . . . . . . . . .193.0 2.5 230.0 190.0
Smith & Nephew . . . . .639.0 1.5 686.5 521.0
Synergy Health . . . . . . .925.0 23.5 981.0 762.5
Barratt Developme . . . .144.6 5.5 151.5 67.5
Bellway . . . . . . . . . . . . .840.0 5.0 859.5 540.5
Berkeley Group Ho . . .1426.0 17.0 1446.0 1025.0
Bovis Homes Group . . .487.4 16.5 518.5 326.5
Balfour Beatty . . . . . . .300.6 2.6 323.8 214.6
CRH . . . . . . . . . . . . . . . .1241.0 9.0 1547.0 1052.0
Galliford Try . . . . . . . . .647.0 15.0 653.0 383.8
Kier Group . . . . . . . . . .1259.0 1.0 1489.0 1095.0
Drax Group . . . . . . . . . .567.0 6.5 581.5 453.0
SSE . . . . . . . . . . . . . . . .1401.0 10.0 1423.0 1193.0
Dialight . . . . . . . . . . . .1058.0 18.0 1120.0 643.5
Domino Printing S . . . .559.5 19.5 701.5 434.3
Halma . . . . . . . . . . . . . .427.8 10.2 429.6 306.3
Laird . . . . . . . . . . . . . . . .191.8 4.7 222.0 128.5
Morgan Crucible C . . . . .288.5 10.0 360.0 224.0
Oxford Instrument . . . .1291.0 64.0 1299.0 714.0
Renishaw. . . . . . . . . . .1394.0 -6.0 1886.0 800.0
Spectris . . . . . . . . . . . .1550.0 18.0 1902.0 1039.0
Aberforth Smaller . . . .589.0 9.5 714.0 494.0
Alliance Trust . . . . . . . . .355.3 3.0 392.7 310.2
Bankers Inv Trust . . . . .408.9 3.4 433.8 346.5
BH Global Ltd. GB . . . . .1148.0 13.0 1212.0 1085.0
BH Global Ltd. US . . . . . . .11.5 0.3 12.2 10.8
BH Macro Ltd. EUR . . . . . .18.7 0.0 20.2 16.9
BH Macro Ltd. GBP . . . .1921.0 3.0 2078.0 1745.0
BH Macro Ltd. USD . . . . . .18.7 0.1 20.2 16.8
BlackRock World M . . . .577.0 9.5 782.0 556.0
BlueCrest AllBlue . . . . . .165.9 0.4 174.0 160.5
British Assets Tr . . . . . . .117.2 2.2 137.6 109.0
British Empire Se . . . . . .413.7 5.7 530.0 386.6
Caledonia Investm . . .1441.0 19.0 1780.0 1237.0
City of London In . . . . . .297.5 1.7 306.9 257.0
Dexion Absolute L . . . . .135.2 1.4 146.1 130.0
Edinburgh Dragon . . .240.0 3.0 253.1 201.4
Edinburgh Inv Tru . . . . .495.1 6.7 504.0 422.5
Electra Private E . . . . .1665.0 21.0 1740.0 1287.0
Fidelity China Sp . . . . . . .76.0 0.6 102.9 70.0
Fidelity European . . . .1095.0 13.0 1280.0 912.0
Foreign and Colon . . . .303.6 3.9 327.9 261.5
Herald Inv Trust . . . . . .490.9 12.0 545.5 419.0
HICL Infrastructu . . . . . .119.3 0.8 123.6 112.7
John Laing Infras . . . . . .107.4 0.7 110.6 103.8
JPMorgan American . . .897.5 14.0 965.5 721.5
JPMorgan Asian In . . . . .177.8 1.3 243.9 170.0
JPMorgan Emerging . . .535.0 3.5 610.5 480.1
JPMorgan Indian I . . . . .339.2 4.7 437.0 303.4
LawDebenture Cor . . . .381.0 5.0 398.7 323.0
Mercantile Invest . . . . .974.5 17.5 1090.0 823.0
Merchants Trust . . . . . . .375.8 8.9 427.7 341.5
Monks Inv Trust . . . . . . .322.9 2.6 357.4 298.1
Murray Income Tru . . . .655.0 15.0 674.0 568.0
Murray Internatio . . . . .994.0 11.0 1012.0 818.5
NB Global Floatin . . . . . .98.5 0.0 103.0 92.5
Perpetual Income . . . .272.2 4.2 273.8 236.5
Personal Assets T . . .34400.0 70.0 36000.0 32340.0
Polar Capital Tec . . . . . .366.0 3.0 404.0 299.5
RIT Capital Partn . . . . .1275.0 32.0 1360.0 1096.0
Scottish Inv Trus . . . . . .461.5 6.2 524.0 417.0
Scottish Mortgage . . . .676.0 13.0 781.0 565.0
SVG Capital . . . . . . . . . .282.3 3.0 295.5 165.1
Temple Bar Inv Tr . . . . .914.0 13.0 970.0 791.0
Templeton Emergin . . .538.0 5.0 678.5 497.0
TRProperty Inv T . . . . . .151.3 3.3 206.1 136.2
TRProperty Inv T . . . . . .65.3 0.9 94.0 59.8
Utilico Emerging . . . . .162.6 1.6 169.5 133.8
Witan Inv Trust . . . . . . .459.2 4.3 533.0 401.5
3i Group . . . . . . . . . . . . .197.5 0.4 292.1 166.9
3i Infrastructure . . . . . . .122.6 1.2 128.0 115.6
Aberdeen Asset Ma . . .264.7 5.0 283.8 167.8
Ashmore Group . . . . . . .353.3 4.8 420.0 306.4
Brewin Dolphin Ho . . . . .141.7 4.2 177.0 113.7
Camellia . . . . . . . . . . .9250.0-250.010603.0 8800.0
Charles Taylor . . . . . . . .155.3 -4.3 164.0 115.6
City of London Gr . . . . . .73.0 0.0 79.0 61.3
City of London In . . . . . .323.3 0.8 440.0 304.3
Close Brothers Gr . . . . .752.0 7.5 812.0 590.0
F&C Asset Managem . . .84.0 1.0 84.6 56.1
Hargreaves Lansdo . . . .537.0 7.5 629.5 402.5
Helphire Group . . . . . . . . .1.0 -0.0 3.8 1.0
Henderson Group . . . . .104.3 2.3 163.7 92.9
Highway Capital . . . . . . .14.0 0.0 19.5 12.0
ICAP . . . . . . . . . . . . . . . .339.8 2.3 498.8 311.6
IG Group Holdings . . . .478.7 -0.3 502.5 393.6
Intermediate Capi . . . . .278.3 8.1 338.4 197.9
International Per . . . . .243.0 3.9 388.8 148.5
International Pub . . . . . .118.4 0.0 121.6 112.6
Investec . . . . . . . . . . . . .381.0 9.0 522.0 310.4
Jupiter Fund Mana . . . .219.5 4.3 260.2 184.9
Liontrust Asset M . . . . . .92.5 -2.0 125.0 57.9
LMS Capital . . . . . . . . . . .67.5 1.0 68.8 54.0
London Finance & . . . . .19.5 0.0 23.5 18.0
London Stock Exch . . .1024.0 20.0 1093.0 756.5
Lonrho . . . . . . . . . . . . . . . .7.5 0.8 18.0 6.6
Man Group . . . . . . . . . . . .74.5 -1.7 259.6 69.2
Paragon Group Of . . . .170.0 3.0 200.7 134.6
Provident Financi . . . .1234.0 19.0 1237.0 915.0
Rathbone Brothers . . .1264.0 27.0 1351.0 977.0
Real Estate Credi . . . . . . .86.5 0.0 143.0 79.5
Record . . . . . . . . . . . . . . . .17.1 0.1 32.4 9.8
RSM Tenon Group . . . . . . .6.5 0.1 31.5 4.8
S & U . . . . . . . . . . . . . . .845.0 0.0 855.0 547.5
Schroders . . . . . . . . . . .1370.0 34.0 1665.0 1166.0
Tullett Prebon . . . . . . . .286.5 2.5 386.4 262.3
Walker Crips Grou . . . . . .38.0 0.0 51.5 36.0
BT Group . . . . . . . . . . . .215.3 3.9 232.1 161.0
Cable & Wireless . . . . . .29.8 0.2 45.2 27.3
Cable & Wireless . . . . . .37.9 -0.0 48.7 14.2
COLT Group SA . . . . . . . .125.0 0.1 143.4 84.1
KCOM Group . . . . . . . . . . .71.7 0.2 84.0 65.6
TalkTalk Telecom . . . . .192.4 1.9 193.9 118.9
TelecomPlus . . . . . . . .854.0 2.0 856.4 550.0
Booker Group . . . . . . . . .93.2 2.2 93.2 66.2
Greggs . . . . . . . . . . . . .503.0 -1.0 558.0 445.0
Morrison (Wm) Sup . . .267.0 0.9 328.0 263.0
Ocado Group . . . . . . . . . .75.0 -2.7 198.2 52.9
Sainsbury (J) . . . . . . . .304.5 3.1 334.2 263.5
Tesco . . . . . . . . . . . . . . .314.7 4.7 411.5 297.1
Associated Britis . . . . .1288.0 6.0 1293.0 977.0
Cranswick . . . . . . . . . . .818.5 3.5 841.0 588.5
Dairy Crest Group . . . . .334.2 4.1 387.1 290.4
Devro . . . . . . . . . . . . . . .307.1 4.1 332.2 232.0
Tate & Lyle . . . . . . . . . . .647.5 0.0 720.5 544.5
Unilever . . . . . . . . . . . .2155.0 11.0 2189.0 1892.0
Mondi . . . . . . . . . . . . . .550.0 5.0 664.0 413.5
Centrica . . . . . . . . . . . . .319.6 1.6 330.3 278.8
National Grid . . . . . . . . .681.0 5.5 684.5 569.0
Pennon Group . . . . . . .768.5 6.5 777.0 623.5
Severn Trent . . . . . . . .1662.0 9.0 1796.0 1407.0
United Utilities . . . . . . .679.5 4.5 680.5 560.0
Cookson Group . . . . . .606.0 16.0 747.5 395.8
Rexam. . . . . . . . . . . . . .423.6 2.6 438.0 299.8
RPC Group . . . . . . . . . . .389.0 1.0 397.0 300.5
Smith (DS) . . . . . . . . . . .152.0 4.6 183.7 113.3
Smiths Group . . . . . . . .1018.0 3.0 1212.0 869.5
Price Chg High Low
Persimmon . . . . . . . . . .635.0 26.0 706.5 374.0
Reckitt Benckiser . . . .3446.0 81.0 3660.0 3100.0
Redrow . . . . . . . . . . . . .125.9 5.0 126.6 90.2
Taylor Wimpey . . . . . . . .50.0 2.2 52.8 28.7
Bodycote . . . . . . . . . . . .344.3 11.1 437.1 225.6
Fenner . . . . . . . . . . . . . .382.9 21.6 483.7 280.0
IMI . . . . . . . . . . . . . . . . .841.5 10.0 1119.0 636.5
Melrose . . . . . . . . . . . . .369.0 -3.1 441.6 268.0
Rotork . . . . . . . . . . . . .1998.0 28.0 2260.0 1501.0
Spirax-Sarco Engi . . . .2011.0 25.0 2334.0 1649.0
Weir Group . . . . . . . . .1563.0 33.0 2236.0 1375.0
Evraz . . . . . . . . . . . . . . .258.5 -2.2 460.5 241.0
Ferrexpo . . . . . . . . . . . .213.8 -1.4 495.3 179.4
Talvivaara Mining . . . . .170.0 -1.5 457.0 129.0
BBA Aviation . . . . . . . .203.0 -1.0 222.4 156.0
Stobart Group Ltd . . . . .115.9 2.9 145.0 110.3
Admiral Group . . . . . . .1169.0 -23.0 1673.0 787.0
Amlin . . . . . . . . . . . . . .354.9 1.0 417.9 270.6
Beazley . . . . . . . . . . . . . .141.9 4.2 151.8 109.6
Catlin Group Ltd. . . . . . .422.0 -3.5 449.0 337.0
Hiscox Ltd. . . . . . . . . . .424.0 -3.3 430.0 340.5
Johnston Press . . . . . . . . .5.0 0.1 7.9 4.1
MecomGroup . . . . . . . . .64.3 -4.8 242.0 63.0
Moneysupermarket. . . .126.9 1.7 135.9 93.4
Pearson . . . . . . . . . . . .1262.0 -4.0 1269.0 1038.0
PerformGroup . . . . . . .404.9 4.9 408.5 150.0
Reed Elsevier . . . . . . . .516.0 4.5 578.0 461.3
Rightmove . . . . . . . . . .1615.0 23.0 1621.0 1058.0
STV Group . . . . . . . . . . . .91.0 -1.0 128.8 76.3
Tarsus Group . . . . . . . . .155.0 2.8 165.0 119.5
Trinity Mirror . . . . . . . . . .26.0 -1.3 54.3 25.5
UBM . . . . . . . . . . . . . . .596.0 11.5 641.5 416.0
UTVMedia . . . . . . . . . . .147.8 -2.3 159.5 92.5
Wilmington Group . . . . .83.0 -3.5 119.0 78.5
WPP . . . . . . . . . . . . . . .796.0 23.0 880.0 578.0
Yell Group . . . . . . . . . . . . .1.6 0.1 11.0 1.2
African Barrick G . . . . . .393.2 6.0 616.5 309.8
Anglo American . . . . .2109.0 20.5 3181.0 1955.5
Antofagasta . . . . . . . . .1097.0 9.0 1491.0 900.5
Aquarius Platinum . . . . .48.1 2.5 322.6 44.5
Avocet Mining . . . . . . . . .77.1 -13.0 286.8 74.2
BHP Billiton . . . . . . . . .1830.0 24.0 2521.5 1667.0
Bumi . . . . . . . . . . . . . . .310.0 -3.5 1166.0 296.5
Centamin (DI) . . . . . . . . .70.8 1.6 141.5 60.7
Eurasian Natural . . . . .425.6 10.2 815.0 390.8
Fresnillo . . . . . . . . . . . .1490.0 33.0 2150.0 1307.0
Jardine Lloyd Tho . . . . .717.0 17.0 764.5 576.0
Lancashire Holdin . . . . .793.0 -3.5 825.0 620.0
RSA Insurance Gro . . . .108.6 0.5 137.9 97.7
Aviva . . . . . . . . . . . . . . .282.7 10.1 446.3 255.3
Legal & General G . . . . .128.5 1.2 135.0 89.8
Old Mutual . . . . . . . . . . .154.0 2.6 188.1 112.1
Phoenix Group Hol . . . .487.0 7.1 610.0 405.3
Prudential . . . . . . . . . . .751.5 13.5 797.5 509.0
Resolution Ltd. . . . . . . .198.0 2.1 300.0 190.3
St James's Place . . . . . .334.2 -0.1 376.0 294.0
Standard Life . . . . . . . .234.4 1.0 250.7 172.0
4Imprint Group . . . . . .290.0 0.5 312.5 200.0
Aegis Group . . . . . . . . . .165.0 3.7 187.4 115.7
Bloomsbury Publis . . . .113.0 -3.0 133.0 91.3
British Sky Broad . . . . .687.5 -9.0 850.0 618.5
Centaur Media . . . . . . . .35.0 -0.9 52.5 28.5
Chime Communicati . . .164.3 7.8 277.0 143.0
Creston . . . . . . . . . . . . . .57.0 2.0 115.0 47.0
Euromoney Institu . . . .747.5 1.0 828.0 522.5
Future . . . . . . . . . . . . . . . .12.1 -0.1 18.8 8.3
Haynes Publishing . . . .175.0 0.0 255.0 175.0
Huntsworth . . . . . . . . . .42.0 -2.9 74.0 32.3
Informa . . . . . . . . . . . . .388.4 8.3 451.0 313.9
ITE Group . . . . . . . . . . . .193.0 -0.4 240.6 157.7
ITV . . . . . . . . . . . . . . . . . .77.8 1.2 89.9 51.7
GemDiamonds Ltd. . . .200.5 4.5 310.6 179.8
Glencore Internat . . . . .299.0 3.5 503.0 290.2
Hochschild Mining . . . .473.0 2.9 549.5 365.9
Kazakhmys . . . . . . . . . .730.0 8.5 1405.0 665.0
Kenmare Resources . . . .39.7 0.2 61.5 31.0
Lonmin . . . . . . . . . . . . .767.0 -7.5 1451.0 699.0
NewWorld Resourc . . .334.3 10.8 928.5 269.0
Petra Diamonds Lt . . . . .121.2 0.5 188.2 97.0
Petropavlovsk . . . . . . . .472.5 16.9 913.0 361.7
Polymetal Interna . . . . .919.5 10.5 1175.0 765.0
Randgold Resource . .5800.0 65.0 7565.0 4596.0
Rio Tinto . . . . . . . . . . .3060.5 41.5 4595.0 2712.5
Vedanta Resources . . .906.0 -6.0 2095.0 871.5
Xstrata . . . . . . . . . . . . .802.9 4.3 1417.0 764.0
Inmarsat . . . . . . . . . . . .492.5 1.0 571.0 389.3
Vodafone Group . . . . . .179.4 0.2 182.7 155.1
Genesis Emerging . . . .474.5 2.0 543.5 424.0
Afren . . . . . . . . . . . . . . .107.5 3.8 165.1 73.6
BG Group . . . . . . . . . . .1323.0 23.0 1547.0 1144.0
BP . . . . . . . . . . . . . . . . .432.5 10.6 504.6 363.2
Cairn Energy . . . . . . . . .269.6 4.7 473.8 248.2
EnQuest . . . . . . . . . . . . . .110.1 2.4 132.6 85.7
Essar Energy . . . . . . . . .125.7 3.7 422.1 101.6
Heritage Oil . . . . . . . . . .123.0 0.0 262.1 115.1
Ophir Energy . . . . . . . .595.0 15.0 637.5 184.5
Premier Oil . . . . . . . . . .350.2 12.2 455.4 310.0
Royal Dutch Shell . . . .2159.5 12.0 2402.0 1883.5
Royal Dutch Shell . . . .2239.5 14.5 2489.0 1890.5
Ruspetro . . . . . . . . . . . .133.5 -1.6 230.0 125.0
Salamander Energy . . . .171.6 0.9 235.8 148.0
Soco Internationa . . . . .309.4 20.0 371.5 254.9
TullowOil . . . . . . . . . . .1493.0 23.0 1601.0 945.5
Amec . . . . . . . . . . . . . .1026.0 24.0 1171.0 740.5
Hunting . . . . . . . . . . . . .740.5 19.0 968.0 530.0
Kentz Corporation . . . .380.0 1.0 508.0 325.0
Petrofac Ltd. . . . . . . . . .1437.0 49.0 1772.0 1108.0
Wood Group (John) . . .701.5 16.0 798.0 469.9
Burberry Group . . . . . .1336.0 11.0 1600.0 1092.0
PZ Cussons . . . . . . . . . . .317.0 0.8 380.0 285.0
AstraZeneca . . . . . . . .2882.0 29.0 3166.5 2543.5
BTG . . . . . . . . . . . . . . . . .411.0 3.2 414.9 236.8
Dechra Pharmaceut . . .494.0 8.0 524.8 392.5
Genus . . . . . . . . . . . . . .1253.0 12.0 1457.0 853.5
GlaxoSmithKline . . . . .1472.0 25.0 1497.0 1205.0
Hikma Pharmaceuti . . .656.5 4.0 789.0 555.5
Shire Plc . . . . . . . . . . . .1841.0 9.0 2300.0 1743.0
Capital & Countie . . . . . .211.1 1.5 211.1 158.1
Daejan Holdings . . . . .2720.0 50.0 3300.0 2282.0
F&C Commercial Pr . . . .106.5 2.3 106.5 92.6
Grainger . . . . . . . . . . . . .93.4 2.4 133.2 77.3
London & Stamford . . . .110.3 -1.4 135.0 101.8
Raven Russia Ltd . . . . . .58.2 0.6 67.5 47.3
Savills . . . . . . . . . . . . . . .357.4 7.4 402.0 256.2
UK Commercial Pro . . . . .71.0 0.4 82.0 65.1
Big Yellow Group . . . . .307.2 17.2 326.0 218.0
British Land Co . . . . . . .519.0 8.5 629.5 444.0
Capital Shopping . . . . .321.2 -0.8 401.7 288.7
Derwent London . . . . .1887.0 34.0 1887.0 1400.0
Great Portland Es . . . . .398.3 4.9 445.0 312.9
Hammerson . . . . . . . . .450.0 7.1 490.9 345.2
Hansteen Holdings . . . . .74.0 2.0 89.5 68.0
Land Securities G . . . . .750.5 12.0 885.0 612.0
SEGRO . . . . . . . . . . . . . .218.8 1.5 319.0 195.0
Shaftesbury . . . . . . . . .526.0 11.5 537.0 441.2
Anite . . . . . . . . . . . . . . .125.0 3.8 129.8 57.8
Aveva Group . . . . . . . .1659.0 29.0 1799.0 1298.0
Computacenter . . . . . .309.7 9.0 490.0 292.4
Fidessa Group . . . . . . .1605.0 55.0 2109.0 1439.0
Invensys . . . . . . . . . . . .225.8 3.1 333.9 180.9
Logica . . . . . . . . . . . . . .105.9 -0.1 135.6 59.0
Micro Focus Inter . . . . . .541.5 11.0 543.5 242.9
Sage Group . . . . . . . . . .280.3 3.0 312.4 231.7
SDL . . . . . . . . . . . . . . . .650.0 8.0 756.0 586.0
Telecity Group . . . . . . . .813.0 10.0 822.5 450.5
Aggreko . . . . . . . . . . .2085.0 13.0 2316.0 1522.0
Ashtead Group . . . . . . .272.0 12.1 275.0 99.4
Atkins (WS) . . . . . . . . . .685.5 -4.5 799.0 490.2
Babcock Internati . . . . .864.5 11.0 881.0 570.5
Berendsen . . . . . . . . . .502.5 2.5 568.0 402.7
Bunzl . . . . . . . . . . . . . .1055.0 12.0 1063.0 676.5
Cape . . . . . . . . . . . . . . .269.2 5.9 591.5 205.0
Capita . . . . . . . . . . . . . .658.5 2.5 767.0 602.0
Carillion . . . . . . . . . . . . .280.1 3.9 387.0 253.5
De La Rue . . . . . . . . . . .1021.0 7.0 1030.0 730.0
Diploma . . . . . . . . . . . .448.0 2.5 460.5 284.0
Electrocomponents . . .209.3 4.3 274.5 182.2
Experian . . . . . . . . . . . .916.0 15.5 998.0 665.0
Filtrona PLC . . . . . . . . . .483.8 5.3 487.0 296.3
G4S . . . . . . . . . . . . . . . .283.7 4.6 292.1 219.9
Hays . . . . . . . . . . . . . . . . .75.7 2.1 104.6 58.9
Homeserve . . . . . . . . . .153.6 -2.4 505.5 137.5
Howden Joinery Gr . . . .128.8 1.3 130.8 93.1
Interserve . . . . . . . . . . .315.2 3.2 341.3 270.1
Intertek Group . . . . . .2694.0 22.0 2697.0 1744.0
Menzies(John) . . . . . . .608.5 8.5 652.0 445.5
Michael Page Inte . . . . .378.0 4.1 552.5 323.0
Mitie Group . . . . . . . . . .262.7 2.5 296.7 208.0
PayPoint . . . . . . . . . . . .708.5 4.5 740.0 465.0
Premier Farnell . . . . . . .176.0 2.8 249.0 144.5
Regus . . . . . . . . . . . . . . .90.7 0.8 117.5 64.0
Rentokil Initial . . . . . . . . .74.2 0.6 95.9 58.2
RPS Group . . . . . . . . . . .210.5 2.0 253.0 156.6
Serco Group . . . . . . . . .544.0 8.0 565.0 458.0
Shanks Group . . . . . . . . .80.0 3.7 129.8 75.8
SIG . . . . . . . . . . . . . . . . .101.8 5.0 145.2 77.0
Travis Perkins . . . . . . . .1021.0 50.5 1125.0 715.0
Wolseley . . . . . . . . . . .2393.0 16.0 2558.0 1404.0
ARM Holdings . . . . . . . .511.0 5.5 645.0 464.0
CSR . . . . . . . . . . . . . . . .225.0 4.6 321.6 154.1
Imagination Techn . . . .496.6 30.0 717.0 296.9
Spirent Communica . . .164.5 4.0 174.0 105.8
British American . . . .3298.0 56.5 3298.0 2592.0
Imperial Tobacco . . . .2504.0 49.0 2591.0 1974.0
Betfair Group . . . . . . . .750.0 2.0 901.0 567.0
Bwin.party Digita . . . . .109.7 -0.3 174.0 100.6
Carnival . . . . . . . . . . . .2185.0 3.0 2465.0 1742.0
Compass Group . . . . . .670.0 1.0 672.5 512.5
Domino's Pizza Gr . . . .520.0 5.5 526.0 393.1
easyJet . . . . . . . . . . . . .532.0 0.5 536.0 302.5
FirstGroup . . . . . . . . . . .233.5 9.2 370.2 190.0
Go-Ahead Group . . . . .1235.0 31.0 1598.0 1086.0
Greene King . . . . . . . . .553.0 2.5 557.0 410.0
InterContinental . . . . .1551.0 16.0 1573.0 955.0
International Con . . . . .158.6 -0.9 258.7 132.0
Ladbrokes . . . . . . . . . . . .157.5 0.3 181.4 114.0
Marston's . . . . . . . . . . . .104.0 0.1 106.8 84.6
Millennium& Copt . . . .489.6 10.6 517.0 371.2
Mitchells & Butle . . . . . .248.6 -1.6 320.0 215.6
National Express . . . . . .214.1 -0.1 262.4 180.0
Rank Group . . . . . . . . . . .117.9 0.9 153.7 109.5
Restaurant Group . . . . .303.4 7.4 309.7 254.9
Spirit Pub Compan . . . . .50.0 -0.8 62.8 35.3
Stagecoach Group . . . .270.4 4.0 287.4 220.0
TUI Travel . . . . . . . . . . . .173.8 4.3 231.8 136.7
Wetherspoon (J.D. . . . .424.8 -1.4 449.9 371.3
Whitbread . . . . . . . . . .2087.0 59.0 2087.0 1409.0
WilliamHill . . . . . . . . . .285.3 2.5 286.6 183.3
Abcam . . . . . . . . . . . . . .419.0 1.8 460.0 320.0
Advanced Medical . . . . .66.0 1.0 95.0 64.0
Albemarle & Bond . . . .235.3 -9.8 400.1 229.2
Amerisur Resource . . . . .34.8 1.0 35.0 9.5
Andor Technology . . . .382.0 6.0 685.0 355.0
Archipelago Resou . . . . .50.0 -1.0 79.0 49.0
ASOS . . . . . . . . . . . . . . .1715.0 -60.0 2406.0 1142.0
Aurelian Oil & Ga . . . . . . .14.0 -0.3 71.0 13.8
Avanti Communicat . . .333.0 11.3 436.5 241.3
Blinkx . . . . . . . . . . . . . . .39.8 -1.0 158.0 33.5
Borders & Souther . . . . .63.0 3.3 131.0 43.5
BowLeven . . . . . . . . . . . .58.3 0.0 342.3 53.5
Brooks Macdonald . . .1140.0 -10.0 1365.0 940.0
Cluf Gold . . . . . . . . . . . . .67.5 0.3 112.8 63.3
Cove Energy . . . . . . . . .269.3 1.8 273.3 61.0
Daisy Group . . . . . . . . . .95.5 3.0 126.5 86.0
EMIS Group . . . . . . . . . .607.5 -5.0 637.5 397.5
Faroe Petroleum . . . . . .148.8 1.3 177.8 130.0
Gulfsands Petrole . . . . . .86.0 1.0 226.5 82.0
GWPharmaceutical . . . .76.8 2.8 130.0 74.0
H&T Group . . . . . . . . . .294.0 -0.5 395.0 253.0
Hargreaves Servic . . . . .759.5 -6.5 1264.0 741.5
Healthcare Locums . . . . . .3.0 -0.3 3.1 2.8
IDOX . . . . . . . . . . . . . . . .39.0 -0.9 40.3 20.9
ImpellamGroup . . . . . .345.0 0.0 375.0 225.0
Iomart Group . . . . . . . .146.0 -1.0 151.0 93.5
James Halstead . . . . . .525.0 -20.0 552.3 410.3
London Mining . . . . . . .194.8 -0.8 405.0 185.0
Lupus Capital . . . . . . . . .129.5 1.5 134.5 86.0
M. P. Evans Group . . . . .500.0 22.0 525.0 371.0
Majestic Wine . . . . . . . .462.0 6.8 510.0 315.0
May Gurney Integr . . . .230.5 -2.5 302.0 226.0
Monitise . . . . . . . . . . . . . .33.5 0.5 40.0 25.5
Mulberry Group . . . . . .1507.0 26.0 2472.0 1295.0
Nanoco Group . . . . . . . . .67.3 0.3 85.8 38.0
Nautical Petroleu . . . . .459.5 1.5 468.0 223.5
Nichols . . . . . . . . . . . . .704.8 1.8 732.0 505.0
Numis Corporation . . . . .97.5 2.5 119.6 72.0
Pan African Resou . . . . . .15.8 0.3 18.3 10.9
Patagonia Gold . . . . . . . .25.8 0.8 70.0 22.0
Prezzo . . . . . . . . . . . . . . .65.8 1.5 70.0 53.5
Rockhopper Explor . . .263.0 5.3 393.5 141.0
RWS Holdings . . . . . . . .485.0 -19.0 560.0 400.0
Secure Trust Bank . . . .1025.0 0.0 1077.5 755.0
Sirius Minerals . . . . . . . . .15.8 0.3 32.0 7.1
Smart Metering Sy . . . .169.0 -0.5 186.5 75.0
Songbird Estates . . . . . .109.0 -1.0 153.0 100.0
Valiant Petroleum . . . .382.5 3.3 603.0 353.5
Young & Co's Brew . . . .615.0 -10.0 712.0 580.0
Soco International . . . . . . . . . . .309.4 6.9
Imagination Techno . . . . . . . . .496.6 6.4
Fenner . . . . . . . . . . . . . . . . . . . .382.9 6.0
Big Yellow Group . . . . . . . . . . . .307.2 5.9
Aquarius Platinum . . . . . . . . . . . .48.1 5.4
Oxford Instruments . . . . . . . . . .1291.0 5.2
Travis Perkins . . . . . . . . . . . . . .1021.0 5.2
SIG . . . . . . . . . . . . . . . . . . . . . . . .101.8 5.2
Shanks Group . . . . . . . . . . . . . . .80.0 4.8
Ashtead Group . . . . . . . . . . . . . .272.0 4.7
Avocet Mining . . . . . . . . . . . . . . . .77.1 -14.4
Ocado Group . . . . . . . . . . . . . . . .75.0 -3.5
Halfords Group . . . . . . . . . . . . . .223.8 -2.4
Man Group . . . . . . . . . . . . . . . . . .74.5 -2.2
Admiral Group . . . . . . . . . . . . . .1169.0 -1.9
Homeserve . . . . . . . . . . . . . . . . .153.6 -1.5
Spirit Pub Company . . . . . . . . . .50.0 -1.5
British Sky Broadc . . . . . . . . . . .687.5 -1.3
London &Stamford . . . . . . . . . .110.3 -1.3
Ruspetro . . . . . . . . . . . . . . . . . . .133.5 -1.2
Risers FaIIers
MAIN CHANGES UK 350
Price Chg High Low Price Chg High Low Price Chg High Low Price Chg High Low Price Chg High Low Price Chg High Low Price Chg High Low
Price Chg High Low Price Chg High Low
GILTS
http://corporate.webfg.com
mailto:
globaltechsales@webfg.com
Tsy 9.000 12 . . . . . .100.79 0.00 108.9 100.0
Tsy 4.500 13 . . . . . . .102.87 -0.02 106.2 102.7
Tsy 2.500 13 . . . . . . .281.10 -0.03 287.3 280.8
Tsy 8.000 13 . . . . . . .109.57 -0.02 115.7 109.5
Tsy 5.000 14 . . . . . . .110.31 0.02 112.9 110.0
Tsy 8.000 15 . . . . . . .126.13 0.06 129.2 125.8
Tsy 4.750 15 . . . . . . .113.79 0.04 115.4 111.5
Tsy 4.000 16 . . . . . .114.00 0.08 114.7 108.6
Tsy 2.500 16 . . . . . .342.99 0.06 348.1 330.2
Tsy 8.750 17 . . . . . . .140.20 0.01 141.9 135.6
Tsy 12.000 17 . . . . . .116.77 0.00 126.4 115.5
Tsy 1.250 17 . . . . . . . .114.74 0.11 117.1 110.5
Tsy 5.000 18 . . . . . .122.66 0.13 123.6 114.2
Tsy 4.500 19 . . . . . . .121.84 0.21 123.3 110.3
Tsy 3.750 19 . . . . . . .117.26 0.22 118.7 104.4
Tsy 2.500 20 . . . . . .367.06 0.21 373.0 334.7
Tsy 4.750 20 . . . . . . .124.91 0.24 126.7 111.3
Tsy 8.000 21 . . . . . .154.28 0.27 156.6 139.3
Tsy 4.000 22 . . . . . .120.55 0.34 122.4 103.4
Tsy 1.875 22 . . . . . . .127.30 0.30 130.3 115.1
Tsy 2.500 24 . . . . . . .332.15 0.33 339.0 293.0
Tsy 5.000 25 . . . . . . .133.17 0.40 135.4 111.5
Tsy 4.250 27 . . . . . .124.94 0.49 127.2 101.7
Tsy 1.250 27 . . . . . . .123.35 0.31 127.0 108.7
Tsy 6.000 28 . . . . . .150.07 0.49 152.7 123.7
Tsy 4.750 30 . . . . . . .132.23 0.51 135.0 107.3
Tsy 4.125 30 . . . . . . .315.70 0.36 322.8 280.4
Tsy 4.250 32 . . . . . .124.26 0.57 126.9 100.3
Tsy 4.250 36 . . . . . . .124.11 0.56 127.0 99.6
Tsy 4.750 38 . . . . . . .133.91 0.54 137.2 107.9
Tsy 4.500 42 . . . . . .129.75 0.64 133.6 104.1
% %
AUTOMOBILES & PARTS
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TOBACCO
TRAVEL & LEISURE
AIM 50
I
WISH people were banned from
talking so loosely about the
money supply. Its like someone
telling you that the London
underground station is closed.
Unless you know which one, it isnt
very helpful.
There are a number of ways to
measure the money supply, but the
main problem is that they often fail
to capture the essence of money
which is defined as the generally
accepted medium of exchange.
Narrow measures, such as the old
M0, ignore the fact that people can
use their current accounts as a
direct source of payment. Broad
measures, such as M4, incorporate
assets that need to be liquidated
before they can be used for transac-
I
N THE present debate on the euro
crisis, Germany is frequently
portrayed as a model of economic
strength, a beacon of fiscal
prudence and a proponent of
structural reform. Her resources seem
endless and her government debt an
indisputable safe-haven. If only
Germany shared her strength and
resources more generously, the euro
debt crisis could be solved. But this is
an optical illusion. Sooner or later,
markets will wake up to the reality of
the countrys fundamental
weaknesses and grave challenges.
Over the 13 full calendar years of the
life of the euro, Germany accumulated
an additional 900bn (722bn) in pub-
lic debt. The overall debt load rose from
1,200bn in early 1999 to 2,100bn at
the end of 2011, or from 61 per cent to
81 per cent of GDP. Remember that it
was Germany that pushed through the
Maastricht criteria, among them a
debt-to-GDP ratio of no more than 60
per cent. Germany met this bench-
mark barely in only three of 13
years, and presently has little chance to
get there ever again. Only for four of
AMSTER DAM
*Subject to terms, conditions and availability. Price valid as of 26 June. Based on one-way fare from London City Airport to Amsterdam, inclusive of taxes, one 23kg bag and complimentary infight service. Book at c
cityam.com/forum
Its utter recklessness
that the country is now
the backstop for the
entire continent
In association with
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Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.

16
TUESDAY 3 JULY 2012
DETLEV SCHLICHTER
Germanys economy is only king
in the blind valley of the Eurozone
those 13 years did Germanys deficit
stay within the Maastricht Treatys rec-
ommended limit of 1 per cent, and on
seven occasions it exceeded the maxi-
mum of 3 per cent.
True, last years deficit of 1 per cent
looks respectable when compared to
most of the Eurozone, or Britain (8.4
per cent) or the US (8.7 per cent). But
this was achieved after two years of
three per cent growth, record-low bor-
rowing costs and the lowest unemploy-
ment rate in 20 years. Even then, the
German state could not balance its
books. And these rosy conditions will
certainly not last. As elsewhere, artifi-
cially low interest rates are, for the
time being, sustaining a mirage of
profitability and prosperity in large
parts of the German economy, in par-
ticular the financial sector.
More important is the fact that
Germany sits on a ticking fiscal time
bomb and nothing has been done in
years to diffuse it. Over the past four
decades, Germany extended consider-
able, unfunded promises to the popu-
lace, mainly in the areas of public
health insurance, state pensions and
the public care insurance. An expen-
sive inheritance of the last conserva-
tive government under Helmut Kohl,
Chancellor Angela Merkels mentor.
These commitments constitute, at
minimum, implicit government debt
in excess of 200 per cent of present
GDP.
The Germans like their welfare state
and their appetite for reform is strictly
limited. The modest, but not unimpor-
tant, measures to liberalise the labour
market that Germany now feels give
her the right to lecture others on the
topic of structural reform, all date back
to the second Gerhard Schroeder gov-
ernment ten years ago. Nothing has
happened under Merkel. No wonder,
these reforms cost Schroeder the chan-
cellorship.
Germany is not an exception. Like
most other mature social democracies,
it is slowly but surely going broke.
Differences with Greece and Spain are
of speed and degree only, not of direc-
tion. It is utter recklessness that the
country has now taken it upon itself to
be the backstop for the entire conti-
nent. Once Spain has officially joined
the casualty list, 80 per cent of
European Financial Stability Facility
(EFSF) funds will have to come from
just 3 countries: Germany, France and
Italy. That would mean a bill in excess
of 200bn for Germany right away,
more than 8 per cent GDP. But as
Italy or various national banking sec-
tors could be next in line, demands
on German funds are practically limit-
less.
Banks in the periphery are haemor-
rhaging deposits, which are flowing to
a considerable degree to Germany. At
the level of the national central banks,
these transfers are not being settled.
This allows banking sectors in the
periphery to replace vanishing client
deposits with ECB funds, and thus
limit asset sales and balance sheet con-
traction at local banks in Spain and
Greece. This puts the Bundesbank in
the uncomfortable position of being a
de-facto creditor to other central
banks. At the end of May, Target2 bal-
ances at the Bundesbank stood at
700bn, about 27 per cent of German
GDP.
Germany may well be last man stand-
ing in the Euro drama but that only
means that there will be no one left to
bail her out. Bunds as safe-haven invest-
ments are another bubble ready to
burst.
Detlev Schlichter is the author of Paper
Money Collapse The Folly of Elastic Money
and the Coming Monetary Breakdown (Wiley,
2011). He blogs at papermoneycollapse.com
tions.
When the Bank of England makes
decisions about the necessity and
efficacy of quantitative easing, they
chiefly look at M4, the broad money
supply. However, in May 2009 they
decided that deposits of other
financial corporations were under-
mining M4 and released a new ver-
sion, M4ex, which stripped them
out. This was all in good timing,
because while M4 was suggesting
that the money supply was expand-
ing by 12-18 per cent throughout
2008/2009, M4ex showed that it fell
from over 10 per cent growth to
about 4 per cent. This is far more
consistent with common sense, but
with two conflicting measures there
is scope for economists to trust
whichever fits their prior beliefs.
Indeed, the recent debate over QE3
rests on an estimate of what would
happen to broad money growth
with and without further monetary
stimulus. As the chart shows, those
advocating more money pumping
are wont to focus on the traditional
measure of M4, which is suffering
from an ongoing monetary contrac-
tion. However, M4ex is growing at a
positive, moderate rate.
There is also scope for other meas-
ures, and a richer conversation
about how to measure the money
supply. In the US, money of zero
maturity (MZM) has emerged as a
complement, occupying a middle-
ground between narrow and broad
money. Kaleidic Economics the
London-based business roundtable
that I direct currently publishes a
similar measure called the Austrian
money supply (MA).
MA has revealed strong monetary
growth throughout 2011. In the first
few months of 2012 it has been
growing at above 5 per cent per
annum. This suggests that the mon-
etary authorities might be reinflat-
ing the bubble that caused the 2008
recession.
Anthony J. Evans is associate professor
of economics at ESCP Europe Business
School.
www.anthonyjevans.com
Twitter: @anthonyjevans
FRONTLINE
ECONOMICS
ANTHONY J. EVANS
The science of measuring the money supply can be artfully constructed
Measures of the money supply
Apr2011 Jul 2011 Oct 2011 Jan2012
9%
6%
3%
0%
-3%
M4ex
MA
M4
MN QUICK
cityjet.com
It takes no time to
y from City Airport.
From 70
*
one way.
17
Winners and losers
[Barclays chair was right to resign over
scandal, yesterday] Bob Diamond should
be applauded for having led and very
successfully grown Barclays' investment
banking operations into a global titan.
But an operation or organisation typically
reflects the standards and behaviours of
its leaders, especially if the leader has a
strong personality.
Philip Morrish
Changing the metric of Libor appears to be
fraught with legal difficulties, due to the
sheer number of contracts currently tied to
it. Would the International Swaps and
Derivatives Association have the authority
to change the contracts, and would their
reach extend to all such contracts?
Martin Madden
I dont understand who lost out from the
manipulation. I see mention of mortgage
holders and pension funds who were
counterparties, but how did they lose?
Kate McFarlane
Libor manipulation isnt a victimless
crime. Chief among the victims are the
vast majority of Barclays employees for
whom the scandal will be an
embarrassment. Money comes and goes
a damaged reputation is tougher to fix.
And the reputation of the City as an
employer to many of Britains best and
brightest also suffers. Defences salaries
and bonuses often cite talent and
expertise. What evidence of talent is
there in trading a rigged market?
Kevin Wales
W
E SHOULD be under no
illusion about how
catastrophic the failure
of the Libor rate setting
mechanisms has been.
There has been widespread
manipulation of the most
important price of risk. And we
dont need reminding how
important the price mechanism is
for the allocation of everything
from goods to services, and of
course capital. Any manipulation
of prices naturally leads to a
misallocation of capital,
redistribution of wealth, and
arbitrage opportunities. With
Libor forming the base for over
500 trillion in securities and
loans, Barclays is lucky to get away
with a fine of 290m.
However, just beating up Barclays
as a proxy for our frustration will
do nobody any good. We must
identify the source of failure and
take the right steps so it doesnt
happen again. The main culprit for
this misery is the British Bankers
Association, which has allowed a
price setting mechanism to persist
that was wholly inadequate for the
task. It was designed in a period
when trading was done over the
telephone, and prices communicat-
ed via newspapers. It was never
updated, despite enormous techno-
logical change in the trading
room, and no safeguards devel-
oped, despite its tremendous suc-
cess as a reference value.
The process invited manipula-
tion, and some traders responded
to the economic incentives manip-
ulation offered. This is obviously a
failure of the traders, but also of
the institution that designed the
process.
To regain trust in the system, the
public debate needs to focus on
how to restructure Libor. It must be
TOP TWEETS
Drought news just in: April to June this year
has been the wettest second quarter in the UK
since records began in 1910.
@cjsnowdon
The public is asking for head of top bankers.
How many politicians, regulators and central
bankers have resigned for the mess we are in?
@TheBigFish_UK
Barclays one of biggest FTSE risers but for
perspective, still 14 per cent lower than last
Monday, 3bn off value due to Libor scandal
@DavidJones_IG
Spain is now paying more to borrow for 3
months than Germany is doing for 30 years.
@plegrain
Would a vote for Scottish independence in
its referendum be boon for its businesses?
YES
Scotland is a country rich in opportunity and bursting with
innovation, but sadly this does not translate often enough into
greater commercial opportunities. Independence will provide us
with new tools tax credits for example to deliver a step-change
in Scotlands research and devlopment. Independence provides
greater scope to shape the regulatory environment to promote
competition, while encouraging consumer choice and technical
innovation. Scotlands international links are key to building success,
however, we are often one step removed from that international
market and business is frustrated at being directed through London
to connect with Europe and beyond. Control of air passenger duty
would enable us to grow the number of direct international air links.
With independence, we can utilise all the economic levers to provide
the stable and supportive environment Scottish businesses demand.
Stewart Hosie MP is the SNPs Treasury spokesperson.
Stewart Hosie
NO
Alistair Darling
Scotland is better off as part of the United Kingdom because of
the huge benefits of a single market for business. We have the
pound and share a financial services regulatory regime with our
neighbour. Its important given the size of the sector in Scotland.
On top of that, there are many other rules and regulations that
apply across the border. And Scotland as part of the UK has far
greater influence in the European Union than it would ever have
alone. The nationalists ill-thought-out plan for a currency union,
sharing the pound with the rest of the UK, would create the same
problems we see in the Eurozone today. A common currency
eventually takes you back to political union, exactly where you
started from. The nationalists have yet to explain to business the
uncertainty, risks and costs of separation.
Alistair Darling is the former chancellor of the exchequer and
leader of the Better Together cross-party campaign group.
RAPIDresponses
robust to manipulation, using
technology in a clever way to min-
imise the ability of ex-post manipu-
lation by delivering prices in real
time. While internal and external
oversight is desirable, we have to be
realistic about how much can be
achieved with it. Unfortunately, if a
process that offers enormous
rewards can be manipulated, even-
tually somebody will try to do it.
There are obvious things that
need fixing. Libor needs to be
based on real trades, and not
assumed trades. It will need to be
volume-weighted, and not treat
every trade equally. The informa-
tion needs to be sourced directly
and automatically from in-house
trading systems, and this interface
has to be secure against human
interference.
The delivery of real-time prices
will allow users to average over a
longer time period, making manip-
ulation less rewarding and less
harmful. We will also need to do
spot checks that trades have even-
tually been settled.
Any manipulation should lead to
automatic disqualification by the
FSA (soon to be FCA). But we should
not put all the responsibility onto
the supervisor. In the end, the
banks must look after themselves
and their clients.
Dr Tom Kirchmaier is lecturer in busi-
ness economics and strategy at
Manchester Business School and a fellow
of the Financial Markets Group at LSE.
TUESDAY 3 JULY 2012
TOM KIRCHMAIER
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Email theforum@cityam.com or comment at cityam.com/forum
Libor needs swift
modernisation to
recapture trust
G
E
T
T
Y
Facebook Inc
1 Jun 11 Jun 28Jun
32
30
28
26
$
TUESDAY 3 JULY 2012
18
cityam.com
A
S Barclays shares bounced
back yesterday, this served as
an important reminder to
retail traders that the
markets are not rational and it is
easy to get your fingers burned.
Anybody set up to take a short
position on the FTSE open would
have been hurt as the bank went
on to be one of the strongest
performers of the London session
up 3.4 per cent on the day to finish
at 168.4p. But why? The public may
have received its sacrificial offering
in the form of chairman Marcus
Agiuss resignation and the move
may have taken some pressure of
chief executive Bob Diamond, who
is due to testify to the Treasury
select committee on Wednesday
but this does not change the
fundamentals of the stock. Nor
does it affect last weeks 290m
fine for abusing the BBA Libor
estimated interest rate, or the
possibility of more heads
tumbling. Although weve been
spared a Leveson-type public
enquiry, with Hugh Grant grilling
Bob Diamond about the effects of
a shifted Libor quote on a turbo
swap position there will be a
parliamentary inquiry into the
Libor scandal.
But this is nothing new once the
markets got the scent of blood, it
seemed that spread betters were as
keen to short Facebook as retail
investors were keen to blow the
school fees on buying stocks in the
first place. Trading according to the
news headlines is the most straight-
forward and easy to understand
approach out there a bank receiv-
ing publicity is easier to grasp than
a bullish engulfing candlestick pat-
tern on a chart. According to Angus
Campbell, head of sales at Capital
Spreads, sometimes markets simply
over-react to headlines and share
price movements can go too far.
This is certainly the case with
Barclays, where its share price
plummeted some 15 per cent after
Barclays stabilises as
value investors return
The resignation of Marcus Agius does not change Barclays fundamentals
Beware of trading
on public sentiment,
writes Craig Drake
TRADING MANAGEMENT WEALTH
THE TIPSTER
Hoping for a high-flying statement
B
UDGET airline Easyjet will be
hoping that the Eurozone crisis
is not going to put off people
from travelling this summer, as
it issues its a trading statement on
Thursday. Its share price has done its
own share of high flying, putting on
over 30 per cent in 2012. With the far
from clement conditions weve been
experiencing in the UK, who doesnt
need a holiday? Capital Spreads
quotes a price of 528.3p-531.2p for
EasyJet.
BSkyB has evolved into a three-
dimensional company, with products
and services offered through the
television, through online media and
now through handheld devices. The
company dominates the pay-per-
view sports market and innovative
new hardware has given the company
a definitive edge. The share price
suffered following the News Corp.
acquisition fiasco, and in the short
term it slipped back from its range
highs on Friday. But with full-year
results due on 26 July, there are three
weeks to price in any upside
potential. Spread Co quotes 688.45p-
689.95p for BSkyB.
Investors will be looking for updates
on exploration activity, as well as
production, from Tullow Oil when it
releases a trading statement
tomorrow. The company reported
reservoirs in late March and increased
estimates in May. Investors will be
hoping to see positive reports from
its most recent trading activity in
French Guiana. A positive reading
from the recent Ghana drilling project
in the Jubilee Field will also likely act
as a catalyst for upside. Tullow
experienced a number of setbacks
after initial production got underway,
and so investors will be looking for
details from the report of when full
production will be resumed. CMC
quotes a price of 1,493.99p-
1,494.99p for Tullow Oil.
CRAIG DRAKE
the news of the Libor fixing scan-
dal broke, and already yesterday
we saw buyers dip their toes back
into the stock thinking that its a
bargain. Other banks saw their
share price rise, but with it
unlikely that Barclays was the
only bank to spit in the soup,
other fines will follow. According
to Campbell, last weeks fall pre-
sented a great opportunity to
investors: Of course, theres no
guarantee that they will add to
yesterdays bounce, but after
such steep falls, its difficult not
to think that they are now a
buy.
The Libor scandal will continue
to run, but recent price action
has been a lesson to traders of
the dangers of trying to catch a
falling knife, and its a lesson
that is applicable to any stock
being pounced upon by the mar-
kets.
fx360.com
twitter.com/fx360 facebook.com/fx360
The contents of this column are provided for general information purposes only. One should consider the appropriateness
of the information in light of their own objectives, financial situation or needs before trading. CD11UK.074.010612
DAVID MORRISON
SENIOR MARKET STRATEGIST, GFT
Barclays PLC
26Jun 27Jun 28Jun 29Jun 2Jul
200
190
180
170
160
p
168.40
2Jul
Loans from the proposed ESM will not be senior to other debts
F
RIDAYS trading brought the first half
of the year to an extraordinary
conclusion. Risk assets soared, as
investors responded to news from the
EU summit. Expectations for a positive
outcome from the meeting were low to
non-existent. Yet, despite the well-
publicised objections by Germany in the
lead-up, European leaders cobbled
together an agreement to alter the way that
bailout funds can be used. European bailout
facilities will be used to recapitalise banks
directly. In this way, future loans
including the latest one for Spain will not
add to troubled countries debt loads. On
top of this, traders cheered the
announcement that loans from the
proposed European Stability Mechanism
(ESM) will not be senior to other debts. So
investors will be happier believing that their
existing holdings will not become
subordinate. The fact that this was already
implied in previous statements was
ignored.
But before all this can happen, a single
bank supervisor for the Eurozone must be
established, with European Central Bank
(ECB) involvement. This suggests a move
towards a banking union, although
supervision is a long way short of the
deposit guarantee scheme, or a bank
resolution authority, that many economists
believe is vital for the Eurozones continued
existence. European leaders also agreed to
negotiate closer fiscal cooperation and a
120bn (96bn) package to help stimulate
growth and job creation.
Much was made of the announcement
that funds from the European Financial
Stability Facility (EFSF) and ESM will be
used to buy up the sovereign debt of
troubled countries, with the aim of keeping
a lid on bond yields. Previously, the ECB
controversially bought sovereign debt of
troubled peripheral counties in the
secondary market through its Securities
Markets Programme. The ECB has held off
for over four months now, so it looks as if
the baton has been passed on. But it is
worth remembering that there is only
around 200bn left in the EFSF. The credit
facility in the ESM should total 500bn.
While significant, this will not be enough to
backstop Spain, let alone Italy. Of this
500bn, the ESM has paid in capital of
80bn; the rest is pledges from Eurozone
countries. In terms of which countries stand
behind the two funds, Germany provides
guarantees for 27 per cent; France for 20 per
cent; Italy for 17 per cent; and Spain 12 per
cent. In consequence, if yields on Spanish
and Italian sovereign debt rise back up to
danger levels, then these two countries
stand as significant guarantors to a bailout
fund that will be used to buy their own
bonds. Understandably, given the extent of
its potential liability, Germany opposes any
increase in the ESM.
Nevertheless, the summit has been
viewed as a major victory for France, Italy
and Spain, and a climb-down for Germany
as German Chancellor Merkel has always
insisted that liability and control must go
together. But as more flesh is put on the
agreement, the more likely it is that Germany
will insist on some conditionality. Already
there is talk that Germany wants individual
governments to be liable should their own
countrys banks fail to pay back bailout
loans. In addition, it has been reported that
Germany is ready to push for the
implementation of a financial transaction tax
(FTT), and banks will only be able to access
funds from the ESM if they are in countries
that have signed up to the new tax.
The bullish view is that the agreements
made at this EU summit have broken the
chains linking sovereign and banking risk.
Many also see progress towards political and
fiscal integration, which will, it is hoped,
ultimately keep the Eurozone together and
so ensure the survival of the euro. An
alternative view is that EU leaders have once
again come up with yet another short-term
fudge, which simply buys the Eurozone a bit
more time. Peripheral countries remain
burdened by debt and solidly in recession
with no apparent way of achieving economic
growth. Last weeks summit has done little to
change this fundamental dynamic.
ECB MANOEUVRES HAVE NOT
CHANGED THE EU DYNAMICS
BY CRAIG DRAKE
G
E
T
T
Y
Shoppers are not as keen as they were
tive trades panel, the report presents
mixed fortunes for retailers: It is
notable that sales were still considered
to be below par for the time of year.
McKenna adds: Weak consumer confi-
dence and uncertainty over the eco-
nomic outlook are still putting a brake
on consumer spending across the
whole retail sector.
POWER OF THE POUND
The gulf between wages and inflation
has fallen, slowing the erosion of the
purchasing power of the pound in
your pocket. Consumer Prices Index-
based inflation has been flattened to
2.8 per cent a long way from the 2011
rate of 5.2 per cent. At the same time,
wages are increasing by around 2 per
cent on average. But while inflationary
pressures on the family shop have
been eased, behaviour is going to lag
macroeconomic data released by quasi-
autonomous government depart-
ments, and the public will need
greater incentives to increase their
shopping. Tesco for one has seen its
share price hit by spending power tak-
CURRENCY STRATEGIST
CHRIS VECCHIO
My pick: Short Aussie dollar-dollar and Aussie dollar-yen
Expertise: Fundamental and technical analysis
Average time frame of trades: 1 day to 1 week
Technical divergences are building and it appears we have
completed five waves up in the Aussie dollar-yen and Aussie
dollar-dollar, the FX markets barometer of risk-appetite. As
such, we expect declines which should be provoked by
market participants not buying the Eurozone summit results.
With QE3 off the table until the end of the year, the US dollar
should start to perk up and attract new buyers with ease once
European concerns return in the coming days and weeks.
ANALYST PICKS
Doing the UK supermarket sweep
T
HE jubilant spending during
the Queens diamond jubilee
may have given the high
streets a boost, and inflation
is being slowly reined in, but UK
supermarkets are still facing a
difficult year ahead.
According to the Confederation
of British Industry (CBI), the
Queens Diamond Jubilee boosted
retail sales in June, but shop sales
were down for the time of year. In
its June survey, the CBIs distribu-
tive trades index came in at 42 per
cent its strongest figure in 18
months. Retailers followed up a
rise in retail figures in May with
another stint of strong growth in
both sales and orders.
The Jubilee celebrations, and the
extended weekend that came with
it, gave the high streets a boost.
But celebrations are unlikely to
continue into July for the super-
markets. According to Judith
McKenna, chair of the CBI distribu-
STRATEGIST
ILYA SPIVAK
My pick: Long dollar-yen
Expertise: Global macro
Average time frame of trades: 1 week to 6 months
I bought dollar-yen at 78.96 expecting an advance after the
Fed opted not to launch QE3 in June, helping to support US
yields relative to their Japanese counterparts. The pair has
already hit its initial target at 79.69 and I am now aiming for
80.38 as the next significant level. Prices are showing a
bullish engulfing candlestick pattern above the bottom of a
rising channel set from the 1 June low, hinting at an upswing
ahead.
CHIEF STRATEGIST
JOHN KICKLIGHTER
My pick: Short Aussie-dollar and long euro-Swiss franc
Expertise: Fundamental and technical analysis
Average time frame of trades: 1 day to 1 week
Surprise policy commitments from the EU this past week
generated a tremendous swell in volatility for euro and risk-
based assets. Is this a trend shift? I took profit on Canadian
dollar-Swiss franc last week, but reentered at SFr0.9270, as
its generally risk neutral. My euro-Swissie will be a slow burn
in a questionable euro recovery. For a risk view, I am looking
for a distant Aussie dollar-dollar parity break. If it gets down
there, its likely a trend.
ing a knock not just in Britain, but
in emerging markets too. The
Chinese slowdown has hit the
largest UK-listed grocer, with newly
implemented shopping hours legis-
lation in South Korea also affecting
profits.
Closer to home, its the race to the
doorstep for online retailers which
could cause the biggest shake-up.
Sainsburys and Tesco are making
substantial gains over initial pio-
neers Ocado, narrowing delivery
windows and improving product
quality. And its difficult to see
Ocado fighting back at 75p it is
now a long way from its February
2011 price of 285p. Though still prof-
itable, its average basket size has
shrunk to 113.10 and will have to
fight hard to prevent it shrinking
further.
The supermarkets may have had
cause to join in with the ticker-tape
celebrations last month. But in the
long term, it looks like a number of
UK supermarkets will be left on the
shelf this year.
TUESDAY 3 JULY 2012
19
cityam.com
ROAST has been around for six
years. There was a time when it
was one of the foodiest restaurants
in London, by which I mean the
sort of place those on the cutting
edge would go to with their mates.
Roast still does British cuisine (pretty) well
doesnt disappoint. Everything in
sight is painstakingly authentic
the bread arrives in cloth sacks; you
can see every imperfection in the
earth-tone crockery, which was pre-
sumably crafted by simple mountain-
folk, and the low-hanging fishbowl
light fittings cast an appropriately
dim, lazy glow.
The food is clean, crisp and impossi-
bly sometimes infuriatingly
healthy: smoked, pickled, rolled in
burnt hay or, more often than not,
just served raw. It tastes like it was for-
aged from the icy tundra by a buxom
fishermans daughter. Even the posh
pork scratchings were deceptively
light part of me wanted to run
home afterwards and smear myself
in lard and chocolate.
At its best, the food is superlative.
The asparagus poached, fried and,
of course, raw with pheasants egg,
was a highlight: just the right combi-
nation of crispy and earthy. Other
dishes were harder to love the lump-
fish roe with onion sauce and chick-
North Road is studiously authentic all smoked wood and plunging fishbowl light fittings.
This Danish gem is
always interesting,
says Steve Dinneen
TUESDAY 3 JULY 2012
20
cityam.com
LIFE&STYLERESTAURANTS
EPISODE 60 RETURN OF SUNDAY LUNCH
Weve reinstituted Sunday lunch chez
Cashman. My parents sit at one end of
the table and Emmas at the other.
Emma and I are scheduled to sit
between our respective in-laws but
would both prefer not to do so. Maria
and Noel sit mid-table, opposite one
another. They are intended to operate
as buffer states but as I survey the
scene, I wish wed also invited Kofi
Annan and Ban Ki-moon. A diplomatic
incident is surely on the cards.
Meanwhile, the twins sleep peacefully
upstairs.
I approach the table with a decent
bottle of claret. Noel chose this, I
announce to the grandparents. Its the
truth. Weve had a rather successful
and inexpensive run recently, following
Noels wine selections. Hes quite the
little sommelier. Grandparents cluck,
CITY DAD
although I can see Emmas father
scanning the kitchen in the hope that
weve backed Noels judgment to the
tune of at least half a case.
No, daddy, corrects Noel, waiting
for the admiring grandparental white
noise to abate. I dont smell it. I choose
by the label. Ha-has all round. And
then, in the absence of skilled
diplomatic intervention, Noels in like
Flynn, continuing his offensive. Daddy,
isnt it if the Rozzers are after you you
should put your hands in your pockets,
stay silent and keep walking? I sense
my fathers mischievous influence. Noel
turns to his maternal grandparents,
between whom Im sitting. And if you
want to rob someone, the best thing is
to break down their door with an axe,
sneak into their bedroom and steal their
keys and leave your keys. Then the next
night let yourself in and steal all their
stuff.
Emmas father chokes on his peas.
Her mother reaches for the bottle of
claret. And my father feigns deafness,
barking What? What was that, little
man? City Dad will be continued next
week. For previous episodes, please see
www.cityam.com
RESTAURANT
NORTH ROAD
69-73 St John St, EC1M 4AN
Tel: 020 3217 0033
FOOD hhhhi
SERVICE hhhhi
ATMOSPHERE hhhhi
Cost per person without wine: 75
RESTAURANT
ROAST
The Floral Hall, Stoney Street, SE1 1TL
Tel: 0845 034 7300
FOOD hhhii
SERVICE hhhhi
ATMOSPHERE hhhii
Cost per person without wine: 45
Back then in 2006 the cutting
edge was British food, locally
sourced and (seemingly) simply
made. I recall once going there
and receiving terrible service but
mindblowing food. A friend once
boasted of the time he ate heart at
Roast and loved it.
But with Marcus Verberne
(formerly of Caprice Holdings),
newly at the helm, I thought it was
high time I went back.
So how does Roast fare in the
gastronomical London of 2012,
when dayboat fish and local
asparagus no longer elicit oohs
and aahhs?
Not badly. The food is still fresh
and it still has one of the best
views in the area of Borough
Market and the streets
surrounding. But on entering
after a hiatus of several years I
couldnt help but notice the decor
felt out of date. The bar furniture
was slightly corporate, and there is
something slightly lacking in style
about the main dining room, too.
And the food was a little pricey,
we thought. Starters, which
include the likes of Loch Duart
salmon with soused cucumbers
and Atlantic prawn cocktail, are in
the 10-15 region and while
tasty probably wont blow your
mind. You can rest assured,
though, that whatevers in season
will be on the plate: heritage
tomatoes feature prominently
now; when we visited, it was all
about asparagus.
Mains start to get a bit more
interesting: at least, they sound
interesting. Goat curry;
chargrilled lamb neck with spelt
and yoghurt salad. We had
gorgeous-sounding duck and fish.
The fish a white dayboat catch
was cottony and well-made, but
there was some disappointment
with the duck, which was too
chewy.
The puddings are impressive. In
particular, the sticky date pudding
with neighbouring Neals Yard
creme fraiche. And who wouldnt
want Green & Black's chocolate
and sea buckthorn berry mousse?
Exactly.
Theres also a good English wine
selection we amused ourselves
with Chapel Down fizz and some
lovely white to go with. Roast is a
good restaurant, but its no longer
outstanding.
Zoe Strimpel
S
CANDINAVIA is having quite a
moment. We watch its TV
shows, we wear its jumpers, we
buy its furniture (while hoping
people wont notice it came flat-
packed in a cardboard box) and, at
least since Noma won the Worlds
Best Restaurant award, we eat its
food.
There is something reassuringly
real about our imagined version of
Scandinavia a kind of amalgama-
tion of Sweden, Norway and
Denmark, which ignores the millen-
nia of grand, individual history of
each and replaces them with a
Disneyfied fairytale-land of glacial
streams, wild elk and ruddy-cheeked
dames wearing heavy-knit jumpers.
North Road, located somewhat
counter-intuitively on St John St,
Roasts airy and light dining room commands great views of Borough Market.
en skin was rather insipid, no matter
how much I tried to convince myself
otherwise.
If there is ever a toss-up between
interesting and convenient,
Danish chef Christoffer Hruskova will
opt for the former. Quail eggs arrive
in a ceramic pot atop a mound of hay.
I didnt have any cutlery do I use my
fingers? Can you eat the hay? (yes and
definitely not, I discovered).
But, for the best part of 300 for
two people (including the cheese and
wine tasting menus we didnt
exactly hold back), its what I expect
something Ill still be talking about
in a few months time. For that kind
of money I want an experience: a glo-
rious failure (which North Road isnt)
is preferable to something dispas-
sionately tasty, which you can get for
a third of the price.
To finish, we were served what
looked like a bonsai tree, its foliage a
wisp of powder-pink candyfloss, dot-
ted with tiny leaves. By this stage, we
didnt worry about eating with our
hands (it would take a particularly
self-loathing member of the middle
classes to eat candyfloss with a knife
and fork). There was, however, a dis-
cussion between my mother and I
over whether you should attempt to
eat the soil. It certainly looked like
real earth and it had a stick poking
out of it, which I tend to use as a rule
of thumb for not putting something
in my mouth. I swallowed a finger-
ful anyway. North Road is that kind
of place give it a try, you might be
pleasantly surprised. It turns out you
can eat the soil.
North Road is a Scandinavian joy
21
TV & GAMES
cityam.com
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SKY SPORTS 1
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7pmCriminal Minds 8pmThe
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4.25am-5.25amKidnapped and
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7pmHollyoaks 7.30pmHow I Met
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1.35amHow I Met Your Mother
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7pmBear Grylls: Born Survivor
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ER 2amEmergency 3amWife
Swap 4amBirth Stories 5am-6am
Birth Days
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7pmThe Simpsons 8pmAshley
Banjos Secret Street Crew9pm
Starlings 10pmFILMForrest
Gump: Drama, starring Tom Hanks.
1994. 12.45amRoad Wars 1.15am
Transvestite Wives 2.05amRoad
Wars 2.55amIts Me or the Dog
3.45amEmergency Animal Rescue
4.35amAirline 5.05am-6amDont
Forget the Lyrics
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6pmBBC News
6.30pmBBC London News
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8pmHolby City
9pmTurn Back Time The
Family
10pmBBC News
10.25pmRegional News;
National Lottery Update
10.35pmCHOICE Imagine
12.05amFILMInfamous 2006.
2.05amWeatherview2.10amSign
Zone: The Fish Market: Inside
Billingsgate 3.10amSign Zone: A
Picture of London 4.10amSign
Zone: Great British Menu
4.40am-6amBBC News
5.50pmWimbledon 2012: Live
coverage of the eighth days
play.
8pmCHOICE Today at
Wimbledon: Highlights of the
womens singles quarter-finals.
9pmLine of Duty: Arnott and
Fleming close in on Gatess
secret.
10pmQI:
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11.20pmThe Secret History of
Our Streets: The changing
fortunes of Portland Road,
Notting Hill.
12.20amBBC News
4am-6amBBC Learning Zone
6pmLondon Tonight
6.30pmITV News
7pmEmmerdale
8pmLove Your Garden:
9pmBomber Command: John
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aircrews of RAF Bomber
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10pmITV News at Ten
10.30pmLondon News
10.35pmFILMPassenger 57:
Action thriller, with Wesley
Snipes. 1992.
12.15amJackpot247; ITV
News Headlines
2.45amLoose Women
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Embarrassing Bodies: Live from the
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tv 12.35amSteve Coogan: The Man
Who Thinks Hes It 1.35am
Triathlon 2.30amKOTV Boxing
Weekly 2.55amAmericas Cup
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10pmBig Brother
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12amBanged Up Abroad
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5.10am-6amHouse Doctor
Fill the grid so that each
block adds up to the total
in the box above or to the
left of it.
You can only use the
digits1-9 and you must not
use the same digit twice in
a block. The same digit may
occur more than once in a
row or column, but it must
be in a separate block.
COFFEE BREAK
Using only the letters in the Wordwheel, you have
ten minutes to nd as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
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 from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUES
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5
6
7 8
9
10 11
12 13 14 15
16 17
18 19
20
21
22
16 15 24
16 6
17 33
6 15
29 10
12 11
14 28
13 12
34 10
14 18
8 3 14
11
12
10
35
22
12
30
7
13
23
30
10
7
13
6
28
4
17
41
20
11
16
ACROSS
1 Small box
for holding
valuables (6)
6 Person who serves
at table (6)
7 Thin, scanty (6)
9 Attentive (7)
10 Famous American
battle, Davy
Crocketts last (5)
12 Combustible
substance derived
from organic
matter (7)
17 Paces (5)
18 Act as a go-
between (7)
20 Take for
granted (6)
21 Hairy facial
growths (6)
22 Rests on bended
legs (6)
DOWN
1 One of two actors who
are given the same
status in a lm (2-4)
2 Insect considered divine
by ancient Egyptians (6)
3 Afectedly dainty
or rened (4)
4 Characteristic mental
attitude (7)
5 Variety show with
topical sketches
and songs (5)
8 Expression used
to frighten away
animals (4)
11 Imitative behaviour (7)
13 Puts into service (4)
14 Bean or pea plant (6)
15 Things of value or
usefulness (6)
16 Number indicated by
the Roman VII (5)
19 Duty (4)
I
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4




4
G R E E N N I G E R
A B M N I
M U M B A I S I G N
B I S K I G
L E N S E D E W
E C A R R I E R C
P E R A R A T A
L D A B T C
A N T I L O G O U T
S N E I U
T O W E L A N G U S
1 6 8 5 1 2
7 4 8 9 9 3 1
1 2 5 3 8 6 9 7
8 7 9 4 8 9
3 7 1 8 9 2 4
2 6 1
8 5 4 9 7 6 3
3 7 9 9 4 3
1 4 3 2 3 7 2 1
6 4 1 9 8 5 7
9 1 5 2 3 1
4
4
4
4
4
4
4
4
4
The nine-letter word was
RECAPTURE
T
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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
TUESDAY 3 JULY 2012
IMAGINE
BBC1, 10.35PM
Paul Simon recalls the making of his
1986 album Graceland, returning to
South Africa to reunite with musicians
who played on the record.
TODAY AT WIMBLEDON
BBC2, 8PM
John Inverdale introduces highlights
from the womens singles quarter-
finals on day eight, and looks ahead to
tomorrows mens matches..
GORDON BEHIND BARS
CHANNEL4, 9PM
An inmate Gordon Ramsay believes
could potentially become a chef
continually gets into trouble with
prison officers.
TVPICK
FORMER Chelsea manager Andre
Villas-Boas is today expected to be
announced as Tottenhams new
manager as the search to replace
the sacked Harry Redknapp
reaches its conclusion.
Tottenhams failure to secure
qualification for the Champions
League was the overwhelming
factor in Redknapps departure
from White Hart Lane and Villas-
Boas who is expected to sign a
three-year contract now remains
the outstanding candidate to be
his successor, despite his failure to
impress at Chelsea.
Villas-Boas was last season
sacked after less than a year in
charge at Stamford Bridge and his
replacement, Roberto di Matteo,
thereafter inspired them to win
the FA Cup and Champions
League. He regardless continues to
be considered one of European
footballs brightest talents,
however, and was also considered
for the vacant Liverpool job before
Brendan Rodgers was eventually
lured from Swansea City.
One of Villas-Boass immediate
tasks at Spurs will entail a
restructuring of their playing
personnel. As well as Emmanuel
Adebayors departure, the futures
of the influential Ledley King and
Luka Modric remain uncertain.
Villas-Boas set
for three-year
deal at Spurs
BRITISH No1 Andy Murray will today
resume his efforts to advance to the
quarter-finals of Wimbledon after
rainfall yesterday halted the momen-
tum built throughout his fourth-
round match against Marin Cilic.
Intermittent drizzle transformed
into consistent rainfall during a
contest in which Murray had taken
control, a promising turn after early
exchanges had resulted in regular
clutching of the troublesome back
that had marred his performance at
last months French Open.
Murray presently holds a 7-5, 3-1
lead and any frustration felt at the
break in play that coincided with a
chance to close in on the second set
will no doubt be compounded by the
loss of a potential days rest in his bid
to reach the final at the All England
Club for the first time in his career.
Given the early eliminations of
rivals Rafael Nadal, the world No2,
and Andy Roddick, a previous
Wimbledon finalist, Murrays
chances of reaching that first final
and potentially even winning his
first ever grand slam are as kind as
they have ever been, though British
tennis fans will have been reminded
of the cruel intervention of rain
when Tim Henman appeared on the
brink of the 2001 final during his
semi-final against Goran Ivanisevic.
Henman had been leading the
Croatian by two sets to one when play
stopped, contributing to his loss of
momentum and eventual defeat, and
he never again became as close to
achieving that particular feat.
Six-time champion Roger Federer
ensured Murray was not alone in
being undermined by both the
weather and back problems, however.
The Swiss received treatment for dis-
comfort in his back during the first
set, and also experienced a 40-minute
break in play because of the rain,
though he regardless secured a 7-6 (7-
1), 6-1, 4-6, 6-3 victory over Xavier
Malisse to advance to the tourna-
ments final eight against 26th seed
Mikhail Youzhny and dismissed any
IN BRIEF
Klitschko set for final fight
n BOXING: WBC heavyweight
champion Vitali Klitschko will fight
Germanys Manuel Charr in Moscow on
8 September, and may retire afterwards
to pursue a career within politics. I will
make a decision after the election, he
said. Charr is young, hungry and
undefeated. He is afraid of nobody,
always marching forward.
Lavezzi latest to join PSG
n FOOTBALL: Argentinian international
forward Ezequiel Lavezzi has agreed a
four-year contract to leave Napoli and
sign for Paris St Germain. There is a
great project here, the opportunity to
win titles and I want to contribute to
that, said Lavezzi. This club will be
even more important in the future.
Fabio jumps through Hoops at loan
n FOOTBALL: QPR have signed
Manchester United left-back Fabio da
Silva on a season-long loan. Im so
happy to be here, he said. This loan is
so important for me in terms of my
career. I want to play as many games as
possible here. Fabios twin brother,
Rafael, meanwhile, has signed a new
four-year contract with United.
Dernbach to miss rest of series
n CRICKET: Surrey bowler Jade
Dernbach will miss the remainder of
Englands one-day international series
against Australia with a side strain
suffered during their six-wicket victory
on Sunday. But England are hopeful
James Anderson will be fit for the rest
of the series, despite his groin injury.
WBO lightweight challenger Kevin
Mitchell has vowed to use his only
professional defeat as his motivation
to overcome champion Ricky Burns
when they fight in Glasgow on
22 September.
Mitchell suffered a third-round
stoppage loss to Australias Michael
Katsidis in May 2010 but has won his
last two fights since then and
believes it is the pain of that defeat
that has inspired him to improve.
Since the Katsidis fight Ive never
looked back. Everything is perfect
now, said Mitchell.
I cant get up for the normal
Katsidis loss will inspire me to
victory over Burns, says Mitchell
fights, I want the big names and
the big names only. Theyre the
ones that deliver the big money.
I want the names like [WBA
champion] Brandon Rios. Ricky
Burns generates more money than
any other fight in this country so
thats why Im fighting him. After
this fight well go on from there.
Burns was the superior fighter
when sparring Mitchell last year
but the latter is adamant that it
was only his lack of fitness that
allowed the Scot to flourish.
I wasnt fit when we sparred,
he said. He was and got the better
of me. He was too fit and strong at
the time.
TUESDAY 3 JULY 2012
22
SPORT
cityam.com/sport
BY DECLAN WARRINGTON
BY DECLAN WARRINGTON
BY DECLAN WARRINGTON
@cityam_sport
WORLD CHAMPION Mark
Cavendish has revealed his desire
to win the second stage of the
Tour de France yesterday was
inspired by a greater goal to
make history.
Though he has previously
insisted the prospect of winning
an Olympic gold medal at London
2012 is his greatest ambition,
Cavendish performed
exceptionally during yesterdays
207.5-kilometre test from Vise
to Tournai to suggest he may still
be considering the bigger
picture with Team Sky throughout
the Tour.
We knew it was going to be
hard here this year, Cavendish
said after his maiden victory as
world champion.
I always say I wanted to make
history. There are not many
better ways to make history than
by being part of a team winning
the Tour de France with a
British rider.
It was always going to be
difficult to win stages and
if anything it made me
more relaxed.
In the past I always had a
dedicated team to a sprinter. With
a team I should win most of the
time so there was always that
pressure to win.
Chance to make
history pushes
Cavendish on
BY SPORTS DESK STAFF
concerns that he continues to carry
an injury. My back is okay, it started
to feel better as the match went on,
he said.
The day was far smoother for
world No1 and reigning champion
Novak Djokovic, who took just 90
minutes to dismiss fellow Serb
Viktor Troicki in straight sets during
a clinical 6-3, 6-1, 6-3 victory. I think
I played really well throughout the
whole match, Djokovic said,
though he must wait to learn the
identity of his quarter-final oppo-
nent after Richard Gasquets match
against Florian Mayer was also dis-
rupted by the weather with the lat-
ter leading 6-3, 2-1.
While the mens tournament
remains bereft of any true clarity,
the womens yesterday became far
clearer. Top seed Maria Sharapova
and four-time champion Kim
Clijsters suffered surprise defeats,
the latters love affair
with Wimbledon drawing to a
cruel conclusion.
Clijsters will retire after the US
Open, making yesterdays match her
last at the British grand slam, and
conceded that her conqueror,
German eighth seed Angelique
Kerber, had deserved to win.
I just had the feeling that there
was absolutely nothing I could have
done to have won that match, said
Clijsters. My opponent was better on
every level. That was all I was
thinking about.
I know that every time Ive played
here Ive given my best, and thats the
only thing that I can do.
TODAYS HIGHLIGHTS
Mens singles
n A Murray [4] v M Cilic [16]
n D Ferrer [7] v J Del Potro [9]
n M Fish [10] v J Tsonga [5]
Womens singles
n S Williams [6] v P Kvitova [4]
n A Radwanska [3] v M Kirilenko [17]
n T Paszek v V Azarenka [2]
Rain results
in misery
for Murray
Troublesome weather interrupts
play with British hopeful in charge
British No1 Andy Murray hopes to
reach the final at Wimbledon for the
first time in his promising career
T
wo great victories dominated
play this weekend, with Tiger
Woods winning the AT&T
National title at Congressional,
America, and Waless Jamie
Donaldson winning his first
European tour title at the Irish Open.
I firmly believe that that win
shows Woods to be back to his best.
He required his mental strength to
first overcome the overnight leader,
Brendon de Jonge, and then when
he and Bo Van Pelt were so close by
the end no one else was near
them and they were even with
two holes remaining, so winning
at that point showed what he
is about.
The victory was Woodss 74th PGA
Tour win and takes him above Jack
Nicklauss record. For him to do that
at 36, and to still be in such good
physical condition, I would
definitely also back him to surpass
Nicklauss Major win record. Woods,
on 14, needs five more victories to
do so, but hes got time on his side
Nicklaus won his last Major at the
age of 46.
If Woods were to stop playing
tomorrow Id already put him in
the top three players of all time,
but hes now said that he is
targeting Sam Sneads record of
82 PGA tour victories. Though its
a case of one step at a time and
thats how it should be treated,
again, at his age, he can certainly
do it.
Donaldsons was also a great
result. Hed said he was using the
event to prepare for The Open at
Royal Lytham & St Annes later this
month and it brought his first
European tour title. Aged 36 and
with that being his 255th
European tour event, he thoroughly
deserved the win and the
tournament truly belonged to him.
Sam Torrance OBE is a multiple
Ryder Cup-winning golfer and media
commentator. He has won 21
European Tour titles in a career
spanning 40 years and famously sank
the putt that clinched victory for
Europe in the 1985 Ryder Cup. He also
captained Europe to glory in 2002.
Follow him on Twitter @torrancesam
23
G
E
T
T
Y
Mark Cavendish edged the second stage
of the Tour de France by finishing half a wheel
in front of Andre Greipel
cityam.com
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GOLF
COMMENT
SAM TORRENCE
Woodss win shows he is back to his best
Sharapova lost 6-4, 6-3 to German
15th seed Sabine Lisicki to bring to an
end her bid to be the first since
Serena Williams in 2002 to win the
French Open-Wimbledon double.
[Lisicki] did many things better
than I did, Sharapova said. She
played very well. I could have done
things differently but not today.
The Russians exit strengthens
Williamss hopes of winning her fifth
Wimbledon title. After yesterdays 6-1,
2-6, 7-5 victory over Yaroslava
Shvedova, she today faces a quarter-
final against Petra Kvitova.
Ex-England coach is
only interested in
footballing affairs
TEAM GB manager Stuart Pearce is
adamant ticket sales and
merchandising will be far from
his mind as he prepares his squad
to compete for success at
London 2012.
Pearce has been fiercely
criticised for his decision to omit
former England captain David
Beckham from his squad despite
the midfielders influential and
dedicated support of Londons bid
to host the Olympic Games. Many
observers consider Beckham to
have been a key ticket seller for a
sport in which Team GB do not
traditionally feature and therefore
fear his absence will consequently
be a significant disappointment
for those hoping to witness the
denouement of a stellar career,
and though Pearce has admitted
to admiring Beckham and
sympathising with the fact that he
will miss the Games, he has
defiantly defended his position by
insisting that ticket sales are
simply not his concern.
In regard to ticket sales and
merchandise: Im a football man
and I pick solely on football
ability, said Pearce. I have to
back my opinion and thats what I
have done.
Ive got a list of names written
down now, who I think ability-wise
are good enough to do a job. I
didnt pick on personality, I didnt
pick on ticket sales and I certainly
wasnt picking on nationality.
To be honest I cannot tell you
how many players there are from
England and Wales. The 18 players
are all Olympians now and thats
the only way I view them.
Pearce was a senior figure under
Fabio Capello when the latter was
the England manager and, while
the Italian included Beckham as
part of his backroom staff during
the 2010 World Cup when he was
injured, Pearce has insisted that
Beckham will be extended no such
courtesy, even though though he
has undoubtedly displayed a
genuine passion for the Olympics.
That wont be the case with
regards to David, he said. With
what he's done to bring the bid to
these shores, I for one would
champion him for what he's done
for the cause. But we only have
seven passes [for backroom staff].
We have no passes for that.
The players have to be prepared
to come through the door on form
alone and that happens to be the
case with staffing too: they have
their role to play.
Olympic rules permit the
inclusion of three players over the
age of 23 and Beckhams omission
comes with the inclusion of
former Manchester United team-
mate Ryan Giggs, Liverpool striker
Craig Bellamy and, somewhat
surprisingly, Manchester City
defender Micah Richards.
Pearces squad comprises of five
Wales internationals and 13
Englishmen. The squad does not
include any Scottish or Northern
Irish players but within those
selected lies a hint of how he may
wish to play.
Steven Caulker, Neil Taylor, Joe
Allen and Scott Sinclar were
among the key players in
establishing Swansea City in the
Premier League during a season in
which they were widely praised for
their pleasing brand of passing
football. That no other club
features more than two players
suggests Pearces tactics may well
replicate those of the Swans.
Pearce: Ticket sales dont
concern me just players
Full Team GB Olympics Squad
Goalkeepers
n Jack Butland, England
n Jason Steele, England
Defenders
n Micah Richards, England, over 23
n Steven Caulker, England
n James Tomkins England
n Craig Dawson England
n Ryan Bertrand England
n Neil Taylor Wales
Midfielders
n Ryan Giggs, Wales, over 23
n Aaron Ramsey, Wales
n Scott Sinclair, England
n Tom Cleverley, England
n Joe Allen, Wales
n Jack Cork, England
n Danny Rose England
Strikers
n Craig Bellamy, Wales, over 23
n Daniel Sturridge, England
n Marvin Sordell, England
Team GB manager Stuart Pearce was a coach with England under Fabio Capello from 2008 until the Italians February departure