London Metal Exchange to be bought by HKEx for £1.4bn

The London Metal Exchange is set to be sold to the Hong Kong stock exchange (HKEx) in a deal worth £1.4bn.

The offer must now be approved by the LME board. If accepted it will give Asia’s largest bourse a much needed entry into a the booming commodity trading business, and brings LME members closer to China, the world’s biggest metals buyer.

It includes an agreement to “preserve the LME’s unique business model”, including the continuation of open outcry trading at the 135-year-old exchange.

Charles Li, chief executive of HKEx said: “The acquisition of LME Holdings represents a unique opportunity for us to acquire in one stroke a position of global leadership in the commodities market. This is consistent with our strategy to expand beyond equities and equity derivatives and offers significant opportunities for revenue growth.”

Some analysts have expressed concern the HKEx may be over-paying for the LME. Those concerns have partly weighed down on the company’s shares, with the stock down 9.4 per cent this year, compared to a 4.3 per cent rise in the benchmark Hang Seng index.

Britain’s trade deficit widens against expectations

Britain’s goods trade deficit unexpectedly widened in April as exports to countries outside the EU fell sharply while imports dipped less, according to data released today by the Office for National Statistics (ONS).

The ONS said the goods trade deficit grew to £10.1bn – the second-largest gap since records began in January 1998. Economists had forecast a gap of £8.5bn.

Exports to non-EU countries fell 10.3 per cent in April, driven by lower sales of chemicals and cars. Exports of goods to the EU dropped 6.8 per cent on the month, outweighing a 3 per cent fall in imports.

Separate non-seasonally adjusted ONS data showed that construction output fell 8.5 per cent year-on-year in April.

Yesterday, in a bid to boost economic growth, Bank of England governor Mervyn King said that Britain would launch a scheme to provide cheap long-term funding to banks to encourage them to lend to businesses and consumers.

Eurozone concerns and football bid war keep FTSE pinned back

The FTSE 100 fell back in early trading, reversing the previous session’s gains, with Eurozone concerns dominating after Spain’s debt rating was downgraded and Italy faces up to a crucial bond auction.

Last night credit ratings agency Moody’s slashed its rating on Spanish government debt by three notches to ‘Baa3’ from ‘A3’, saying the newly-approved Eurozone plan to help Spain’s banks will increase the country’s debt burden.

Meanwhile Italy is set to offer up to €4.5bn in bonds at an auction later today and all eyes will be on their borrowing costs, which are expect to rise. Sunday’s Greek election remains too close to call.

In London the FTSE was down 0.9 per cent in early trading with traders closely following BSkyB’s record-breaking deal for rights to show Premier League football matches in Britain.

Shares in the firm dropped by seven per cent following yesterday’s announcement that it has agreed to pay £2.3bn over three years to broadcast 116 live matches. This is a substantial premium on previous agreements and Sky appears to have been forced into a costly bidding war with new entrants. Football is the cornerstone of Sky’s satellite TV business but analysts fear it may struggle to recoup the cost of this additional investment.

Fellow FTSE firm BT Group was the other successful bidder, with a surprise offer to pay £738m for 38 games over the same three year period. Its shares fell 2.8 per cent.

Miners also fell, tracking weaker copper prices as concerns over the debt crisis continued to be a factor sapping demand for metals. Glencore was down four per cent, Xstrata off 3.9 per cent and engineering firm GKN was down 3.5 per cent.

But Polymetal was the biggest riser, up 1.5 per cent.

Tullow Oil dropped three per cent after drilling was halted off the coast of French Guiana on environmental grounds. Shell was down 0.9 per cent on the same news.

In the FTSE 250, outsourcing firm Computacenter dropped 14.6 per cent after saying it would need to invest heavily to meet demand for its IT services. It is set to hire 700 new employees and buy new technology to support its business.

Retailer WH Smith was up almost three per cent despite announcing a slight drop in sales for the last quarter.

In Asia the Nikkei closed down 0.2 per cent and the Hang Seng was down 1.1 per cent.

Shell extend deadline for Cove Energy bid

Oil giant Royal Dutch Shell this morning extended the deadline for shareholders in Cove Energy to accept its $1.8bn offer for the firm.

But Shell has only received acceptances from five per cent of shareholders and analysts expect the takeover battle has longer to run.

Shell and Thai firm PTT have been vying to acquire Cove in recent months, lured by its stake in huge gas fields discovered off the coast of Mozambique.

PTT trumped Shell’s $1.8bn offer with a $1.9bn bid in May. But shares in Cove have been trading well above PTT’s offer on investor expectations that a bidding war will occur.

Cove is expect to announce the discovery of more gas on Monday.

Nokia to cut 10,000 jobs

Finnish mobile phone manufacturer Nokia announced today that it will cut a further 10,000 jobs, while warning that its second-quarter losses will be worse than expected.

The latest announcement takes the total number of planned jobs cuts at the group to more than 40,000 since Stephen Elop took over as chief executive in September 2010 .

Nokia said it would be hit by additional restructuring charges of around €1bn (£809m) by the end of 2013.

The once-dominant firm failed to become a leading player in the smartphone market, ceding ground to Apple’s iPhone and devices that use Google’s Android software.

Last year it decided to scrap its own Symbian operating system and switch to Microsoft’s new Windows Mobile platform.

WPP shareholders reject Sir Martin Sorrell’s pay deal

Investors at WPP, the world’s largest advertising agency, this afternoon revived the shareholder spring by rejecting a big pay rise handed to chief executive Sir Martin Sorrell.

At the firm’s Dublin AGM 59.5 per cent of shareholders voted against the group’s remuneration report, which will hand Sorrell a a substantial increase to his pay package, taking the total to £6.8m.

The vote is non-binding and Sorrell is expected to push ahead with the rise, arguing he deserves the remuneration for turning WPP into the world’s leading advertising group.

He says the pay increase will bring him in line with other chief executive at WPP’s global competitors.

Stelios’ African airline prepares for launch with Lonrho acquisition

Stelios Haji-Ioannou’s plans to launch a new budget airline for Africa moved a step closed this morning after conglomerate Lonrho announced the sale of its aviation business.

British investment firm Rubicon has bought the unit for £55.1m and will now make plans to launch a carrier named ‘FastJet’ with Stelios.

As part of the deal easyJet-founder easyGroup will own five per cent of Rubicon.

“Under a licensing agreement with easyGroup, the airline will be branded FastJet and will use modern jet aircraft and operate to European standards,” Lonrho said in a statement.

The airline already has operational hubs in East, West and South West Africa and strategic hubs in Kenya, Tanzania, Ghana and Angola

David Lenigas, executive chairman of Lonrho commented: “I am delighted that Sir Stelios Haji-Ioannou and easyGroup have studied this market and concluded that the Lonrho aviation division provides a unique entry platform for the development of a true low cost carrier for Africa, to be branded FastJet.”

“The combination of Lonrho’s experience in Africa; the aviation experience of Sir Stelios Haji-Ioannou and easyGroup; the route network and operations already established by Lonrho Aviation across Africa and Rubicon’s cash resources will enable Fastjet to quickly develop its low cost airline.”

Cairn buys North Sea firm for £414m

British oil firm Cairn Energy announced this morning that is has bought North Sea firm Nautical Petroleum for £414m.

The offer represents a premium of 51.1 per cent to yesterday’s closing price of 297.8p per share.

Cairn said in March that it would look to spend some of its $1.2 billion cash pile to build up a business which would be producing oil in the near-term. In April is bought privately-held Agora Oil & Gas for $450m (£289m).

Simon Thomson, chief executive of Cairn said: “This acquisition … complements our recent acquisition of Agora to help build a platform in North West Europe.

“Specifically we will increase our equity position in the Catcher area, which contains several oil discoveries and follow-on prospectivity, and acquire a material stake in Kraken, another large, North Sea oil development project.”

Sainsbury’s sales get jubilee boost

J Sainsbury, Britain’s third-largest supermarket, posted a rise in first-quarter sales, assisted by shoppers celebrating the recent diamond jubilee.

Sainsbury’s said sales at stores open over a year – and excluding fuel – rose 1.4 per cent in the 12 weeks to 9 June.

The firm said it outperformed the market and it was well placed to continue to do so.

British Bankers’ Association names new chief executive

The British Bankers’ Association (BBA) announced today that Anthony Browne, a Morgan Stanley banker and former advisor to London mayor Boris Johnson, will take over as its new chief executive in September.

The organisation lobbies on behalf of the industry and also appears in the media to represent the financial services industry.

Browne takes over from Angela Knight, who said in April she would step down following a five year spell as head cheerleader for Britain’s banks.

Anthony Browne said: “It will be an honour to lead the BBA, helping to resolve the complex issues still surrounding banking five years after the start of the financial crisis. We need to continue to lead on reform, ensuring the banking sector meets the needs and expectations of our customers and shareholders, and can play its pivotal role in returning the UK to economic growth.

“In a time of change and uncertainty, the BBA has a critically important mission to ensure the banking sector returns to health, remains in Britain, and has the trust of the public and politicians.”