Business news and markets: as it happened, September 13, 2013

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Olli Rehn, the EU commissioner for monetary affairs, has said it is "not time for shouting" that the eurozone crisis is over with unemployment still at "dramatic levels".

• EC's Olli Rehn says premature to call crisis over • US retail sales below expectations • House price inflation should be capped at 5pc • Eurozone employment falls 0.1pc • Twitter files for IPO

Latest

17.04 That's all from us this week. We'll be back on Monday.

Enjoy the weekend.

17.01 Commenting on today's market movers, David Madden at IG (LSE: IGG.L - news) , said:

London equities have spent most of the day in the red as profit taking has set in. The FTSE is just shy of its one-month closing high as traders find themselves under less pressure now the Syrian situation has cooled down. An immediate strike on Syria appears to be off the table since President Assad has agreed to hand over chemical weapons, and this has brought stability to the markets.

Aer Lingus (Other OTC: AELGF - news) has had a bumpy ride after the Irish airline issued a profit warning. The announcement comes nearly two weeks after Ryanair lowered their full-year profit forecasts.

16.55 European stock markets have closed. The FTSE 100 in London finished flat, at 6,588, while the CAC 40 (Paris: ^FCHI - news) in Paris closed up 0.2pc at 4,115 and Frankfurt's DAX 30 (Xetra: ^GDAXI - news) also rose 0.2pc to 8,507.50.

16.20 German pharmaceutical giant Bayer AG (LSE: 0P6S.L - news) is the latest company being investigated by Chinese authorities over unfair competition practices.

Bayer , which makes Alka-Seltzer and Berocca , said it was co-operating with authorities. In a statement, it said:

In China as in other regions around the globe, it is our responsibility to base our business models on absolute integrity At Bayer we have very strict compliance rules in place, which clearly forbid incompliant behavior of our employees.

China has already launched a probe into whether UK drug maker GlaxoSmithKline (LSE: GSK.L - news) and French rival Sanofi (NasdaqGM: GCVRZ - news) paid doctors to encourage the use of their medications.

16.01 Greek public sector workers have been stripped of a perk they have enjoyed for almost two decades - six extra days of paid holiday if they use a computer. More from Reuters :

The decision to scrap the bonus was a "small, yet symbolic" step in modernizing an outdated civil service, said Kyriakos Mitsotakis, the administrative reform minister who has taken on the challenge of overhauling public institutions.

Bailed out twice by the eurozone and the IMF, Greece has started cancelling arcane benefits to cut state spending and reform a public sector widely seen as profligate and inefficient with a 600,000-strong workforce.

Allowances that have already gone include a bonus for showing up to work and one regulation letting unmarried daughters receive their dead father's pension.

Commenting on the changes, Mr Mitsotakis said:

It belongs to another era. Today, in times of crisis, we cannot hold on to anachronistic privileges.

15.39 International business editor Ambrose Evans-Pritchard reflects on a moment in history in his latest blog to argue why we've swapped the EU Leviathan for a dangerous and fragmented Europe :

Germany's euro break-up party Alternative für Deutschland (AfD) has unveiled its foreign policy. It is pure Bismarck.

"Germany and Europe have no interest in a further weakening of Russia," said Alexander Gauland, AfD's foreign affairs chief. "Germany's relations with Russia should be managed with meticulous care."

What they say is no longer an academic question. The party is rising fast in the polls and may break through the 5pc barrier to take seats in the Bundestag, scrambling a close election.

AfD openly evokes the "Rückversicherungsvertrag", the secret "Reinsurance Treaty" between the Kaiser (Other OTC: KGHI - news) 's Germany and Tsarist Russia in 1887. (As reported by Die Welt)

The terms were that the Germany would remain neutral if Russia were attacked by the Austro-Hungarian empire over disputes in the Balkans.

In return, Russia would remain neutral if Germany were attacked by a revanchist France determined to take back Alsace-Lorraine. It was Otto von Bismarck's guarantee later dropped by the Kaiser Wilhelm II that Germany would not have to fight a war on two fronts.

15.13 Over to Germany - the federal elections take place next Sunday (September 22).

Kathleen Brooks , head of research a Forex.com says this weekend will be a key test for incumbent chancellor Angela Merke as an important state election takes place in Bavaria .

Apparently election campaigns in Bavaria are all about performing well in beer halls and it looks like Merkel’s key coalition partner, the Christian Social Union party, can have a scoop or two to celebrate as the latest polls expect it to secure an important win over the Social Democrat opposition.

Bavaria is considered a key litmus test and it is an important state: it has 9.5 million voters, is home to BMW (Xetra: 519000 - news) and Siemens (TLO: SIE.TI - news) and it has an enviable unemployment rate at just 3.9pc.

If the CSU can secure victory here it could suggest that there is little appetite for political change in the country, which would give Merkel important momentum heading into the last week of campaigning.

So what does this mean for markets?

Markets dislike uncertainty so a win for the CSU and thus a seal of approval for Merkel, may give financial markets a boost.

This is important for the Eurozone as Germany has spear headed efforts to deal with the Eurozone’s sovereign crisis.

... Without her at the helm of the currency bloc investors may start to doubt the survival of the union once again.

Angela Merkel

14.49 Dominique Strauss-Kahn , who faces aggravated pimping charges in France, will serve as an economic adviser for Serbia's top officials.

According to reports , Serbia's deputy prime minister Aleksandar Vucic told state television that Strauss-Kahn, the former International Monetary Fund chief, will advise him and Serbia's prime minister and finance minister on restructuring the country's large foreign debt.

Vucic asserted that the charges against Strauss-Kahn did not tarnish his reputation as a financial expert.

Vucic, who is considered the most powerful Serbian politician, said:

Big (painter) Picasso treated women and children very badly, while some other people, like Hitler, loved women.

If you are going to judge people like that, then you could judge Strauss-Kahn badly.

Dominique Strauss-Kahn

14.14 Yields on 10-year UK gilts and 10-year US treasuries are falling, indicating that investors are retreating to safety as the retail figures indicate the recovery may not be as strong and as broad based as expected.

US 10-year treasury yield on Friday

UK 10-year gilt yield on Friday

14.09 Economists still think the Fed could well annouce tapering at its meeting next week, despite today's numbers.

Paul Dales , senior US economist at Capital Economics, says that even thought the numbers are weaker than expected at least they show an improvement.

It still looks as though real annualised consumption growth in the third quarter won’t match the second quarter’s 1.8pc, but at least the underlying trend is improving.

At the margin, this may support a tapering of QE3 at next week’s Fed meeting.

14.02 The dollar has fallen sharply after those retail figures, erasing earlier gains.

Dollar against a basked of currencies on Friday. Source: Bloomberg

13.53 Will those weaker-than-expected retail figures alter the US Fed's plans for tapering its QE programme?

Not according to forexlive.com's Adam Button .

No, a taper is close to a done deal. What’s up for debate is how large it will be.

The questions was $10 billion or $15 billion. Most market watchers had settled on $10B but $15B was an option. Now, $15B is probably off the table now.

13.50 Barclays (LSE: BARC.L - news) is not impressed with those retail figures.

13.47 US Retail sales are out and are below expectations.

Sales rose just 0.2pc in August from a month earlier, the smallest in four months, and below the forecast of 05.pc.

July's figure was revised up to 0.4pc from 0.2pc, according to figures from the US Commerce Department.

13.35 It has emerged that documents identifying prosecution witnesses in a case against defence contractor BAE Systems (LSE: BA.L - news) turned up at a cannabis farm in east London after being lost by the Serious Fraud Office, writes Alistair Osborne.

The witnesses’ identities were among 32,000 document pages, 81 audio tapes and electronic media from 59 sources that Britain’s fraud-busting agency sent to the wrong owner.

The files ended up in a storage facility in east London that was also being used as a cannabis farm, according to shadow attorney general Emily Thornberry.

Further details of the data lost by the SFO emerged after she tabled a parliamentary question asking if “the identities of any prosecution witnesses and informants were contained” in the evidence that went missing.

The SFO admitted last month that it had lost 3pc of the data relating to its long-running bribery probe into BAE’s £43bn al-Yamamah arms deal in Saudi Arabia, which the agency closed in 2010.

Replying to her question, solicitor general Oliver Heald admitted: “I understand that the identities of some prosecution witnesses were included within the material that was sent in error.”

A Eurofighter Typhoon jet built by BAE Systems

13.02 In corporate news now. Axa Wealth has been fined £1.8m by the Financial Conduct Authority (FCA) for failing to give suitable investment advice to customers passed on to it from banks and building societies.

Kyle Caldwell reports that thousands of customers passed on from building societies and banks to Axa Wealth, part of the global AXA Group (Milan: AXA.MI - news) , were not warned of the risk of investing in Isa funds and investment bonds and are in line for full compensation from any losses.

The regulator said 26,000 customers were wrongly advised in a range of investment products while Axa (Paris: FR0000120628 - news) staff pocketed lucrative bonuses for making the sales.

According to the FCA, customers were put into stocks and shares Isas, open-ended investment companies (Oeics) and investment bonds without AXA assessing their attitude to risk and losses.

The customers were mainly nearing retirement and largely not experienced investors. But AXA failed to confirm how much risk its customers were prepared to take or explain the dangers in clear terms.

The FCA said AXA sold around 37,000 products to 26,000 customers between 15 September 2010 and 30 April 2012 in branches of Clydesdale Bank, Yorkshire Bank and the West Bromwich Building

Thousands of AXA Wealth customers were not given suitable investment advice.

12.32 Rehn finishes up by talking about the fifth anniversary of the Lehman Brothers' collapse.

The financial crisis was not an act of God

Since the collapse regulation and supervision have been "significantly strengthened".

But "we must never lower our guard", he adds.

He says regulators and authorities "must remain vigilant" so that the experience of the financial crisis "remains where it belongs - in the history books".

12.24 Rehn notes that in the coming nine months the bailout programmes in Ireland , Spain and Portugal are due to conclude, while there is "an important decision to take" regarding Greece.

I can tell you that there will be no single rule or pattern that we will follow here.

We need to look carefully at the optimal solution in each case for the best exit.

The objective in all cases will be to ensure financial stability.

12.17 Rehn says that unemployment remains at "dramatic levels" in Southern Europe and that is why it is important to step up the economic reforms in these countries.

12.14 The press conference is now taking place. You can watch it live here.

Olli Rehn , the EU commissioner for monetary affairs, says it is "not time for shouting that the eurozone crisis is over - that is premature".

The summer has brought encouraging signs that the European economy has reached a turning point.

A gradual economic recovery is taking root in Europe.

He says complacency is "a luxury we simply cannot afford".

Complacency in policy and in terms of reforms.

Many households and business, especially SMEs, are still struggling to obtain credit so more needs to be done to remove these bottlenecks of growth that are holding us back at the moment.

11.56 Back to the eurozone meeting - the finance ministers have agreed the payment tranche to Cyprus as part of its bailout.

11.49 Spain's public debt has surged to a record high, equal to 92.2pc of total economic output in the second quarter of 2013.

The Bank of Spain said public debt in the eurozone's fourth largest economy leapt by 14.7 percentage points when compared to the same period last year.

11.31 Back to the meeting of the eurozone finance ministers in Lithuania where the main topic of conversation is banking union.

It may not be going well after Germany and Finland both said today that the European Commission should not get the final say on how and when a eurozone bank is closed.

It is not a new stance from Berlin, which has always said those powers should be exercised at a national level.

German Finance Minister Wolfgang Schaeuble told the Boersen Zeitung newspaper today:

Resolution should generally be done by national authorities and not by the EU Commission.

It is not an appropriate central resolution authority.

Instead, where necessary in disputed cases, a central resolution board should be able to take binding decisions when there are conflicts between national resolution authorities.

On entering the talks Finnish Finance Minister Jutta Urpilainen said the Commission's role was one of the issues he wanted to discuss:

For us it is important that the authority that in future will decide what will be done for troubled banks is as independent as possible and that also its mandate was narrow.

We see that the authority operating under pressure should be as independent as possible. We have not been very excited that the Commission would act as this authority.

German Finance Minister Wolfgang Schaeuble

11.09 Greece upsetting its civil servants again after it announced plans to scrap their right to take six extra days off a year if they work at computer screens for more than five hours a day.

Reuters reports that in an emailed statement from the Athens- based Administrative Reform Minister Kyriakos Mitsotakis said

The abolition of this time off is a small, but symbolic step in the modernization of public administration.

The benefit, introduced in 1989, “belongs to another era” and such “anachronistic privileges” can’t be kept during times of crisis, he said.

Greek civil servants protested earlier this year after the parliament approved a sweeping bill of reforms, including cuts to the public sector that will see thousands of people lose their jobs.

10.55 Analysts at Jefferies have this morning suggested that the relationship between the Government and troubled outsourcing group Serco may not be as bad as some have feared. The group has been hit by an overcharging scandal linked to a criminal tagging contract, as well as allegations of fraud relating to a contract to operate prison vans. The Jefferies experts said:

Earlier this week we met with the UK Government's Chief Procurement Officer. We sense a more conciliatory tone regarding discussions with Serco which supports our view that the relationship will not be severed.

In a weak market, Serco shares have edged up 0.1pc.

10.45 Has today’s new orders release fired the starting gun for an industry recovery , asks Simon Rawlinson , head of strategic research and insight at EC Harris.

The most encouraging sign is evidence of recovery across all sectors with the exception of public non-housing.

The housing sector is predictably shifting into higher gear, and infrastructure orders recovering from a big dip in the first quarter have made a big contribution to the quarter of quarter jump.

Most encouraging is the 10pc increase in commercial orders as this sector has been languishing since the crash in 2008.

But read the figures with caution he warns.

Statistics always need to be read with care, and with a change of provider and assessment method coinciding with a big upturn, it is conceivable that some of the increase is related to measurement, not activity.

It is also important to remember that 2013 activity levels are still below those seen in 2012, and the industry will recover from a very low base.

With industry mood music increasingly turning positive the second quarter new orders release points to the beginning of a recovery for construction as well as the wider economy.

10.25 More good news for the UK - construction output growth sped up to 2.2pc in July from June and there were signs of more expansion to come as new orders leapt in the second quarter.

In June, construction output had fallen 1.1pc on the month

New orders in the construction sector jumped nearly 20pc in the April-June period from the previous three months, boosted by housing and the building of new wind and solar farms, to show its biggest jump in four years, according to figures from the Office for National Statistics.

Annual growth of 32.8pc in construction orders was the biggest since records began in 2005.

Source: Barbour ABI

Construction accounts for about 6pc of British gross domestic product.

ONS officials said the contribution of construction to GDP in the second quarter was slightly stronger than previously estimated but not by enough to make a change to the overall growth rate of the economy during the period, reports Reuters.

Despite the growth, British construction output remains nearly 15 percent below its pre-crisis peak in 2008.

10.19 As the eurozone finance ministers meet, the official data agency for the region has just released the bad news that employment in the combined 17 nations fell by 0.1pc in the second quarter.

It is, however, a slowdown from the first quarter when there was a 0.4pc fall in the number of people employed.

In the wider 27-member EU employment was flat in the second quarter, ahead of the 0.2pc decrease in the first three months of the year.

Source: Eurostat

On a country level, Estonia saw the largest employment growth (+1.5pc) followed by Lithuania and Portugal (both +0.8pc), Luxembourg (+0.7pc), the Czech Republic and Ireland (both +0.5pc).

Cyprus saw the biggest decline (-2.1pc), followed by Spain (-0.5c) and the Netherlands , Slovenia and Slovakia (all -0.4pc).

Source: Eurostat

10.08 Speaking of Lehman Brothers, with the five year anniversary since it filed for bankruptcy on Sunday, there is a lot around looking at where we are now compared to then.

Jessica Ground, Fund Manager in Schroders ' UK equities team, says given the number of issues "it is not surprising that five years on, while much has been achieved, we are still working on an ultimate solution".

In the UK we can look back on some good progress, and banks are much safer than they were in 2007.

There is a new generation of management who realise that bigger is not better and are focused on cutting costs and returning capital to shareholders rather than making acquisitions.

Shareholders are more aware of the need to act on corporate governance concerns before they spiral out of control.

Regulatory oversight has been beefed up and a more hands on approach is clearly being taken, as demonstrated by the recent PRA exercise on capital.

But while progress has been made, there is still work to be done, she says.

Disclosure by banks on the risks that they face could be improved further and harmonised

While Basel 3 has made good progress in laying down more robust capital, countries are still taking different approaches.

I have concerns that the legislation on the proposed ring fencing of UK retail banking has not undergone enough scrutiny, and may therefore not deliver all the proposed benefits.

09.49 Songbird Estates, the company that owns 69pc of Canary Wharf, has said its portfolio has risen in value by 2.6pc to £5.6bn in the first half.

Underlying profits before tax rose to £283.8m, up from £102.2m last year.

The company, seen as a bellwether for financial services, is being particularly carefully watched this weekend since Sunday will be the fifth anniversary of the implosion of Lehman Brothers.

09.35 Time to catch up on some corporate news.

Staff at JD Wetherspoons are in for a good weekend after the pub company said it was handing them a £28.6m bonus pot after record full-year results.

The pubs empire said revenues jumped 7pc to £1.3bn and adjusted pre-tax profits rose 6.3pc. The average bonus of more than £1000 will go to staff most of whom are on the minimum wage and zero-hours contracts.

Founder and chairman Tim Martin is delighted with the results but less pleased with his tax bill which works out as £632,000 per pub. "Our post-tax profit increased by £7.9m yet our taxes paid increased by £32.2m," he has said. "It is unsustainable to have far higher taxes for the pub industry than those for supermarkets."

The outspoken pub chain founder spoke to Executive Business Editor Kamal Ahmed this morning and says that "there has to be an equal tax playing field" between supermarkets and pubs chains.

09.21 Back in the stock market, engineer Kentz , which slid 9.2pc on Thursday after Amec (Other OTC: AMCBF - news) pulled out of a bid approach, has fallen a further 2.9pc in the FTSE 250 (FTSE: ^FTMC - news) on news its other suitor, Germany's M+W , is also walking away from the company.

Elsewhere in the mid-cap index, gold miner Polymetal is down 3.6pc and water group Pennon is off 2.5pc, with both companies knocked lower by broker downgrades.

09.01 Happy Friday 13th.

If you are superstitious stay away from those black cats. And if you are you are not alone.

Apparently Friday 13th costs the US economy £800m-$900m because people will not fly today or do business that they would normally do, according to a report by National Geographic .

Would you walk under it?

08.39 While banking main be the main focus of the meeting, there are reports that there will be a lot of discussions about whether or not Greece will need more aid.

But since Greece isn't officially on the agenda, there seems to be some confusion from the finance ministers themselves as to whether or not they will talk about the debt-laden country.

German finance minister says Greece is on the agenda:

But the Dutch finance minister, and head of the eurogroup of finance ministers, says Greece has been tabled until meetings later in the year.

Confusion.

08.31 European markets are falling in early trading.

In Germany the Dax is down 0.14pc

In France the Ca c is flat

In Spain the Ibex is down 0.32pc

In Italy the FTSE Mib (Milan: FTSEMIB.MI - news) is down 0.35pc

08.22 The "informal" meeting of the eurozone finance ministers in Lithuania (because it currently holds the EU presidency) kicks off this morning and will mostly focus on the banking sector.

Here is a run down of the agenda :

09.45- 13.00 - eurozone ministers meet

13.30-15.30 - working lunch which includes debrief from morning meeting and discussions on banking union.

15.30 - 16.00 - family photo

16.00-18.30 - talks on financial stability and economic outlook; improving access to finance for SMEs, and the response to G20 summit, plus preparation for another G20 event.

(All times are local - two hours ahead of UK)

In a note from the Lithuanian presidency to delegates, its says the focus of the discussions will be:

The Ministers and Governors will exchange views on current economic situation and outlook, current economic and financial policy stance. The discussion will also focus on the situation in the financial markets in the euro area and the EU, notably in the banking sector.

The meeting does run into Saturday when there will be discussions on the future shape fo the financial system and the fight against tax fraud and tax evasion.

08.12 After two fairly quiet days for the FTSE 100 (FTSE: ^FTSE - news) , the benchmark index looks like it may finish the week on a subdued note. The blue-chips have dipped 11 points in early trade to 6,577, and the mid-cap FTSE 250 has slipped six points to 15,186.

08.04 Few things to watch out for today.

In the UK the latest construction output data for July out this morning at 09.30 is expected to show a rise of 2.1pc, a significant improvement on the June number.

Eurozone finance ministers all meet today to discuss the faltering bailout programs of Greece and Cyprus with most market participants universally acknowledging that Greece is going to once again need more money and quite likely some further debt restructuring with Germany still implacably opposed to any form of OSI.

There is also some key US retail sale s figures out this afternoon

07.55 While Japan's Nikkei 225 has edged out growth, other Asian stocks fell as investors await the outcome of a Federal Reserve meeting next week.

The Nikkei 225 is up 0.12pc to 14,404.67 and Japan’s Topix added 0.1pc, erasing losses of as much as 0.8pc.

The Hang Seng declined 1.5pc. China’s Shanghai Composite slipped 0.8pc and Hong Kong’s Hang Seng Index dropped 0.5pc today.

Australia’s S&P/ASX 200 fell 0.4pc and South Korea’s Kospi both dropped 0.5pc. Taiwan’s Taiex slid 0.7pc and Singapore’s Straits Times lost 0.1pc. New Zealand’s NZX 50 rose 0.2pc.

07.41 Staying in Japan - industrial output rose 3.4pc in July , suggesting a recovery in factory activity remains intact.

The figure compared with an initial reading of a 3.2pc increase and follows a 3.1pc decline in June.

07.29 Over in Japan the government is considering a cut in corporate tax as part of a stimulus package to cushion the economy from the planned increase in the sales levy, according to three people briefed on the matter, Bloomberg reports.

Prime Minister Shinzo Abe has instructed officials to discuss a cut in the tax on company profits as he weighs whether to proceed with an increase in the consumption levy in April, according to the people, who asked not to be identified as the discussions aren’t public.

Economy Minister Akira Amari said today that corporate-tax reduction is an option as part of a planned package to reduce the economic blow from raising the sales tax. Japan’s Cabinet Office and the finance ministry see differently on cutting the corporate levy, Amari said.

Japan’s corporate-tax rate of 35.6pc includes local and national components and compares with 25pc in China and 17pc in Singapore, according to the finance ministry.

The Nikkei newspaper today reported that Japan may cut corporate taxes in the fiscal year starting April.

Japan's Prime Minister Shinzo Abe

07.12 Meanwhile, Twitter has used its own social media website to announce its plans to float on the stock market .

The online social media networking company said in its trademark 140-character message: "We’ve confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale."

The filing is the first step towards a listing that analysts estimate will value the company around $10bn (£6bn) and allow investors who have ploughed in around $1.2bn to get a return on their money.

It is also expected to make its three founders — Evan Williams, 41, Biz Stone, 39, and Jack Dorsey, 36 — hundreds of millions of dollars each.

07.05 Top story on our finance page this morning is news a top property institute has urged the Bank of England that house prices should be prevented from rising by more than 5pc a year to stop another bubble destabilising the economy, writes Philip Aldrick.

The proposal, from the Royal Institution of Chartered Surveyors (RICS), followed a warning from Bank of England Governor Mark Carney yesterday that policymakers needed to be “vigilant” to the risks of a bubble caused by the Government’s mortgage subsidy scheme.

RICS said the Bank should police its proposed 5pc cap in house price inflation through its Financial Policy Committee (FPC). If prices pushed above the limit, the FPC could enforce lower loan-to-value or loan-to-income ratios, shorten mortgage terms, or restrict lending to prevent them spiralling higher.

The Bank “should consider limiting annual house price inflation to 5pc in order to prevent another housing bubble, reckless bank lending and a dangerous build up in household debt”, RICS said. “This policy would discourage households from taking on excessive debt out of fear of missing out on a price boom, and discourage lenders from rushing to relax their lending standards as they compete for market share.”

House prices are already rising at 5.4pc annually, according to Halifax’s August measure. RICS said it was “open minded” to thresholds other than 5pc, and even suggested using the powers on a regional basis to try to depress isolated bubbles, such as in London.

07.00 Good morning and welcome to our daily business and markets live blog, your one stop shop for all the breaking business stories of the day.