Virgin to run West Coast rail route for 23 months

Virgin Rail has signed a deal with the government to run the West Coast mainline for another 23 months, following the collapse of a disastrous bidding process for a new 13-year contract.

This summer FirstGroup beat incumbent Virgin to win the £5bn deal following a hard-fought contest.

But in October the government was forced to admit that the process had been flawed and said it would have to be re-run in full.

Later today an investigation will be published into what went wrong with bids to run trains from London to Birmingham, Manchester and Glasgow;

Rolls-Royce in corruption talks with SFO

British engineering stalwart Rolls-Royce today admitted that it is in discussions with the Serious Fraud Office over concerns that the firm may have been involved in bribery and corruption.

The SFO requested information relating to the company’s dealings in Indonesia and China. The Rolls-Royce is co-operating with the probe.

“The consequence of these disclosures will be decided by the regulatory authorities,” the company said.

“It is too early to predict the outcomes, but these could include the prosecution of individuals and of the company.”

Every little helps as Tesco boosts FTSE

Tesco proved that every little helps by assisting the FTSE to a healthy rise in early trading.

The supermarket group admitted last night that it is considering giving up on its struggling US venture, exciting investors who have grown exasperated with the company’s inability to transfer its success to the other side of the Atlantic.

Philip Dorgan, an analyst at Panmure Gordon, said the announcement “is a clear signal to the market that management is prepared to take tough decisions” and raises the prospect of “more significant drivers of shareholder value” to come.

Shares in the firm gained 2.6 per cent to £3.35 in early trading.

Overall, London’s leading blue chip index was up 31 points – or 0.5 per cent – cracking the psychologically important 5,900 barrier thanks to the combined efforts of retail and mining.

The resources sector was boosted due to hope that policies designed to stimulate growth in China will support the copper price.

Vedanta topped the leaderboard, rising 4.2 per cent, although Anglo American, Evraz and Kazakhmys were not far behind. Almost every other resource-related stock on the index rose by at least one per cent, obscuring other sectors.

Outsourcer Serco was a rare exception to the rule, up 1.7 per cent.

Banking giant HSBC added one per cent after selling its stake in a Chinese insurer for $9.4bn.

Defensive stocks, such as Associated British Foods, Severn Trent and Land Securities were the biggest fallers.

In the FTSE 250 Argos owner Home Retail Group led the gains, up 7.9 per cent after Bank of America Merill Lynch upgraded the stock.

In Asia the Nikkei was up 0.4 per cent and the Hang Seng added 2.2 per cent.

Sage profits edge up

Newcastle-based software group Sage today announced healthy profit growth for the year ending 30 September, thanks to strong sales of support services.

But demand for its software in markets such as France and Spain struggled.

Underlying pre-tax profit of £356.3m was up from £343.5m, an increase of four per cent over the year.

Revenue from continuing operations hit £1.3bn, up from £1.27bn.

Guy Berruyer, chief executive, said the outlook is uncertain: “As we look forward, the global macro-economic outlook remains uncertain and we are watchful of the environment in Europe, particularly in France.”

“We are making good progress with our strategy for accelerating growth and remain confident we will continue to deliver on our strategic and financial goals.”

HSBC sells Chinese insurer for $9.4bn

HSBC bank today announced that it has sold its stake in a Chinese insurer for $9.4bn (£5.8bn).

The bank’s 15.6 per cent share in Ping An Insurance has been bought by CP group, a firm controlled by Dhanin Chearavanont, Thailand’s richest man.

HSBC spent $1.7bn to build the 15.6 percent stake in China’s second-largest insurer between 2002 and 2005, leaving the bank with a substantial profit.

The investment is a change of direction for CP Group, which has previously concentrated on agriculture.

FTSE 100 flat on US budget uncertainty

The FTSE 100 was broadly flat in early trading as uncertainty continued over the fate of US budget talks to avert January’s so-called “fiscal cliff”.

The White House has dismissed a budget deal proposal from congressional Republicans that included tax reforms and spending cuts, saying it did not meet President Barack Obama’s pledge to raise taxes on the wealthiest Americans.

Meanwhile British retail sales edged up in November, though by less than analysts were expecting, the British Retail Consortium said this morning.

London’s leading share index was up 9.4 points – or 0.16 per cent – to 5,880.69 in early trading. The FTSE has struggled to clear the psychologically important 5,900 point in recent days.

Miner Fresnillo posted the biggest fall as shares fell two per cent to £19.50.

Chipmaker ARM Holdings was close behind, falling 1.7 per cent following strong gains in recent days.

Meanwhile plumbing and building supplies group Wolseley dipped as a slightly cautious outlook and weak showings in continental Europe weighed against continued strong growth in North America in the first quarter.

Schroeders continued yesterday’s strong performance to top the leaderboard with a 1.5 per cent rise. Investors have flocked to fund managers as the sector stages an end-of-year rally.

Other modest increases were posted by the likes of Centrica, Aviva and RBS.

In the FTSE 250 brewer Greene King reported healthy results, helped by strong food sales at the pubs it manages.

Asian indices were muted, with the Nikkei down 0.27 per cent and the Hang Seng up 0.15 per cent.

Greene King boosted by diners

Brewer Greene King today announced strong sales growth for the 24 weeks to 14 October 2012, largely thanks to strong sales at the pubs it controls.

Total revenue was £566.2m, up from £527.5m for the same period last year, leaving operating profits of £122.7m.

“Our team has delivered another strong trading performance driven by 17 per cent profit growth in our retail division,” said Rooney Anand, Greene King’s chief executive.

The firm is in the process of expanding its retail operation, with an increased focus on food. Many of Greene King’s customers are casual users of the chain, with weekly offers now accounting for 27 per cent of all meals sold at the firm’s Hungry Horse chain.

British retail sales pick up in November

UK retail sales improved slightly in November, according to figures released today by the British Retail Consortium.

Like-for-like retail sales rose by 0.4 per cent in value compared to the same month last year, after falling 0.1 percent in October. Despite this analysts had hoped for stronger growth.

Total retail sales rose 1.8 per cent in value terms on the year, up from 1.1 percent growth in October. But with inflation running at 2.7 per cent, this suggests that retail sales volumes are still falling.

“November was off to a flying start helped by end-of-month paydays, mid-season sales and the impact of half term, which had been in the previous month last year,” said Stephen Robertson, head of the British Retail Consortium.

“But sales growth slowed as November unfolded, suggesting that customers are taking care not to spend too much too soon, although must-have toy and technology items did well as people bought early so as not to be disappointed.

FTSE 100 boosted by Chinese manufacturing figures

The FTSE was up in early trading as investors responded positively to Chinese manufacturing figures.

Meanwhile the equivalent UK figures, released this morning, show that British manufacturing activity shrank much less than expected in November.

Despite this, concerns over the US “fiscal cliff” – a combination of US government spending cuts and tax rises due to be implemented in early 2013 – could stop the index moving much higher.

London’s blue chip index gained 9.3 points – or 0.3 per cent – to hit 5,876 this morning.

Fund management group Schroders was the top-performing FTSE 100 stock, rising 3.6 per cent after Bank of America Merrill Lynch upgraded the stock to “buy” from “neutral.”

Publisher Reed Elsevier was close behind, adding 15p – or 2.4 per cent – to hit £6.57 a share.

Miners were buoyed by the data from China, the world’s top metals consumer, with Vedanta, Kazakhmys, ENRC and Rio Tinto all benefiting.

Polymetal was also up 0.5 per cent after saying that gold reserves at one of its Russian mines are twice as large as previously thought.

Insurer RSA gained after Deutsche Bank upgraded the stock to “buy”.

But there were few fallers on the FTSE 100 this morning, with Hargreaves Lansdown posting the largest drop of 1.4 per cent.

In the FTSE 250 Cable & Wireless Communications added 5.4 per cent after agreeing to sell most of its Monaco & Islands division to Bahrain’s Batelco Group in a deal worth up to $1bn.

Asian stocks struggled overnight, with the Hang Seng down 1.2 per cent and the Nikkei up just 0.1 per cent.

UBS could pay £280m fine for Libor fixing

UBS could pay $450m (£280m) to regulators following allegations that its employees submitting false figures to the organisation that compiles the Libor rate, according to a report in the New York Times.

This summer Barclays paid a similar fine after admitting that it manipulated the benchmark interest rate, resulting in the resignation of its chief executive Bob Diamond.

Libor, which is set by the British Bankers Association and Thomson Reuters, underpins enormous numbers of global transactions including some mortgages and credit cards.

Other banks, including RBS and Deutsche Bank, have already set aside funds for Libor-related fines.