Eurozone retail sales improve in January

Eurozone retail sales increased slightly in January, according to figures from the EU.

Retail sales in countries that use the Euro increased by 0.3 per cent in January while there was a 0.7 per cent increase across all 27 EU nations.

The biggest improvements were in Latvia, Slovenia and Romania.

But another set of figures, Markit’s Eurozone Composite PMI, which gauges private sector activity across the continent’s entire economy, slipped to 49.3 in February, below January’s reading of 50.4.

A reading below 50 denotes contraction, meaning Europe’s private sector economy has been stuck in a modest decline for five of the last six months.

“Today’s PMI surveys don’t bode well for the euro zone economy as a whole as a mild recession is well in the cards,” said Annalisa Piazza at Newedge.

Insurer AIG selling $6bn of AIA shares to repay US government

Insurer American International Group (AIG) is selling part of its stake in Hong Kong-based AIA Group to raise about $6bn (£3.8bn) to help the firm pay off the US government.

AIG is looking to place some 1.7 billion AIA shares in a range of HK$27.15-27.50 per share – a discount of up to 7 per cent to Friday’s AIA closing price.

The shares will go to institutional investors and AIG expects to use the proceeds to reduce the balance due to the U.S. Treasury Department.

The U.S. Treasury owns 77 per cent of AIG following a massive $182bn bailout in the wake of the 2008 global financial crisis. AIG holds around a third of AIA which, at Friday’s close, was worth $14.9bn.

As of end-December, AIG owed the Treasury $8.4bn to redeem interests in the AIA SPV.

Eurozone economy to shrink in 2012

The eurozone is heading into its second recession in just three years, while the wider European Union will stagnate, the EU’s executive said on Thursday, warning that the currency area has yet to break its vicious cycle of debt.

The Commission forecast that economic output in the 17 nations sharing the euro will contract 0.3 per cent this year, reversing an earlier forecast of 0.5 per cent growth in 2012. The wider European Union will not manage any growth this year, the Commission said.

However, the EU’s top economics official said the slowdown will be mild.

“Recent developments in survey data suggest that the expected slowdown will be rather mild and temporary,” EU Economic and Monetary Affairs Commissioner Olli Rehn told a news briefing following the release of the European Commission’s interim report on the EU economy.

Meanwhile German business confidence has risen to its highest level in seven months, offering fresh evidence that Europe’s largest economy will dodge a recession even as euro zone peers tighten their belts to fight off the sovereign debt crisis.

The Munich-based Ifo think tank’s business climate index, based on a monthly survey of some 7,000 companies, rose to 109.6 in February, beating expectations for 108.8. That was its highest since July 2011 and the fourth increase in a row.

Edinburgh Woollen Mill saves 6,000 Peacocks jobs

British clothing retailer Edinburgh Woollen Mill is to acquire two thirds of discount clothing retailer Peacocks, in a deal which will see 6,000 jobs saved.

Administrators KMPG said they had agreed the sale of 388 stores from Cardiff-headquartered Peacocks but another 224 stores would be closed immediately, leading to 3,100 redundancies.

Peacocks called administrators in and was put up for sale in January after succumbing to falling sales and high debts.

Four bidders were still interested last week, including a Pakistani textile billionaire but the British firm won out.

British shoppers’ disposable incomes have been squeezed by rising prices, muted wage growth and government austerity measures, prompting a flurry of retail casualties as store chains faced tough trading conditions in the run-up to Christmas.

Peacocks failed to come to an agreement with its main lenders, Royal Bank of Scotland and Barclays, to restructure its £240m of debt.

“A strong brand presence and loyal customer following meant that Peacocks attracted a great deal of interest from both trade and private equity bidders, leading to today’s successful sale,” KMPG’s Chris Laverty said.

Private equity firm Sun European Partners last month bought sister firm Bonmarche, also from administrators KMPG, as part of a pre-pack administration.

FTSE closes down as doubts remain about Greek bailout

The FTSE 100 closed down today after investors remained unconvinced by the Greek bailout deal.

London’s blue chip index closed down 17.05 points, or 0.3 per cent at 5,928.20, retreating from a seven-month closing high it reached on Monday following high expectations for the Greek deal.

Having risen 6.5 per cent since the start of the year, bolstered by liquidity injections from global central banks and improved risk appetite, the FTSE is approaching overbought territory on the relative strength indicator.

Low turnover underlined investors’ cautious mood, with volumes on the FTSE 100 coming in at 93 percent of the 90-day average.

Euro zone policymakers agreed a €130bn rescue for Athens, enabling it to meet bond payments due in March.

With the widely expected deal done, investors switched their focus to the remaining deep doubts about Greece’s ability to recover and avoid a default in the longer term, as well as risks of contagion to other countries.

Shell was one of the few gainers on the FTSE, up 0.8 per cent, as higher oil and metal prices boosted energy firms and miners.

Banks were the biggest weight on the FTSE, with Barclays down 1.3 per cent and RBS 1 per cent lower.

Cyclical companies, which do well at times of economic strength, also suffered with International Airlines Group and advertiser WPP each off 2 per cent.

ASDA sales growth slows

Supermarket firm Asda suffered a slowdown in sales growth as shoppers were squeezed by rising prices and muted wages growth.

Britain’s second-biggest supermarket chain said today that sales at stores open over a year, excluding fuel and VAT sales tax, rose 1 per cent in the fourteen weeks to 7 January.

Asda said underlying sales rose just 0.1 per cent in the last three months of 2011, followed by a surge in demand as customers took advantage of January sales.

But the figures still compare favourably to Tesco, the market leader, who reported a 2.3 per cent drop in underlying UK sales for the six weeks to 7 January.

Asda, which trades from around 540 stores, lagged Britain’s grocery market in 2010 but fought back in 2011, helped by its purchase of smaller format Netto stores and a re-launch of its own-brand food range.

House sales up 23% on last year

There were 64,000 UK property sales in January, up 23 per cent compared the same month last year, according to figures from HM Revenue and Customs (HMRC).

Sales numbers endured the traditional post-Christmas dip, falling from 86,000 in December.

But the January figures are the highest since 2008.

Yesterday the Council of Mortgage lenders said that mortgage lending was up 10 per cent to £10.5bn last month, boosting hopes that the market is on the road to recovery.

However some experts suggest there is simply a rush to enjoy the tax holiday from the 1 per cent stamp duty rate for first-time buyers on properties worth between £125,000 and £250,000. The exemption ends on 24 March.

Mortgage lending up by 10%

Gross mortgage lending hit £10.5bn in January, up 10 per cent compared to the same month last year, according to figures from the Council of Mortgage Lenders (CML).

Lending fell by 14 per cent from £12.2bn from December but was still substantially up on figures from January 2011.

CML chief economist Bob Pannell said he believed the market was being driving by first-time buyers seeking to complete deals before the stamp duty concession ends in March.

“Should inflationary pressures continue to fall back, the squeeze on household finances should ease progressively and help support stronger economic recovery going into the second half of the year. This can only be good news for the housing market further down the track,” he said.

The stamp duty rate of one per cent for first-time buyers who purchase properties worth between between £125,000 and £250,000 will be reintroduced next month.

Mortgage lending up by 10%

Gross mortgage lending hit £10.5bn in January, up 10 per cent compared to the same month last year, according to figures from the Council of Mortgage Lenders (CML).

Lending fell by 14 per cent from £12.2bn from December but was still substantially up on figures from January 2011.

CML chief economist Bob Pannell said he believed the market was being driving by first-time buyers seeking to complete deals before the stamp duty concession ends in March.

“Should inflationary pressures continue to fall back, the squeeze on household finances should ease progressively and help support stronger economic recovery going into the second half of the year. This can only be good news for the housing market further down the track,” he said.

The stamp duty rate of one per cent for first-time buyers who purchase properties worth between between £125,000 and £250,000 will be reintroduced next month.

Italian police seize $6 trillion of fake US bonds

Italian police announced today they had seized about $6 trillion (£3.8 trillion) of fake U.S. Treasury bonds in Switzerland, and issued arrest warrants for eight people accused of international fraud and other financial crimes.

The operation, co-ordinated by prosecutors from the southern Italian city of Potenza, was carried out by Italian and Swiss authorities after a year-long investigation.

The fake securities, more than a third of U.S. national debt, were seized in January from a Swiss trust company where they were held in three large trunks.

The eight alleged fraudsters are accused of counterfeiting bonds, credit card forgery, and usury in the Italian regions of Lombardy, Piedmont, Lazio and Basilicata, police said.

The Swiss Federal Prosecutor’s office said Zurich state prosecutors had worked on the investigation at the request of the Italian prosecutor. The Swiss handed over their findings in July of last year.

In 2009, Italian financial police seized $742bn of fake U.S. bearer bonds in the northern Italian town of Chiasso, near the Swiss border.