Chinese economy shows recovery

The Chinese economy improved last month, according to factory surveys released yesterday.

“There is growing confidence that China’s economy bottomed in July-September, with signs of firmer external demand,” said Hirokazu Yuihama, a senior strategist at Daiwa Securities.

Monday’s final reading of HSBC’s China manufacturing Purchasing Managers’ Survey (PMI) rose to 50.5 in November from 49.5 in October, the first time since October 2011 the headline number has topped the 50-point line that demarcates growth and contraction from the previous month.

“This confirms that the Chinese economy continues to recover gradually,” HSBC’s chief China economist Hongbin Qu wrote.

FTSE ends week little changed

The FTSE 100 closed down slightly today, as mid-session gains vanished by the end of the day.

The flagship index was down 0.06 per cent at 5,866.82 but November still finished as one of the best-performing months of the year for London stocks.

The markets were hit by this afternoon’s release of figures showing record-high unemployment across the Eurozone, as well as continuing worries over the fate of US budget negotiations.

There were few substantial rises, with chip maker ARM Holdings topping the leaderboard with an increase of 1.5 per cent.

Aberdeen Asset Management also recovered some lost ground, while engineering firm IMI and Polymetal both added more than one per cent.

Burberry fell by 2.3 per cent after investors decided they had pushed the stock too high in recent days.

Meanwhile B&Q owner Kingfisher fell after analysts downgraded its stock as a result of poor sales.

In the FTSE 250 Sportingbet fell after the gambling business said that a dearth of fixtures had impacted on its profitability.

German parliament agrees bailout deal

German lawmakers approved the latest bailout for Greece today by a majority believing a Greek bankruptcy could lead to the break-up of the euro zone.

473 of the 584 deputies in the parliamentary chamber voted for the bailout, which aims to cut Greece’s debt load to 124 per cent of national output by 2020.

Michael Grosse-Broemer, a CDU politician, said he was happy with the outcome of the vote but added “Greece must now continue its efforts to reduce its debts and carry out structural reforms.”

Finance minister Wolfgang Schaeuble said that the country’s competitiveness was finally improving as a result of the austerity program but added Germany will be strictly monitoring Greece’s reforms to ensure that the country meets its fiscal targets.

Schaeuble warned against speculation that governments will eventually be forced to write off part of the Greek debt commenting “such false speculation does not solve the problem”.

French government eyes deal with ArcelorMittal

The French government and steel producer ArcelorMittal are hopeful of closing to a deal to avoid a temporary nationalisation of a steelworkers, ahead of a midnight deadline.

ArcelorMittal, controlled by Britain’s richest man Lakshmi Mittal, says two furnaces at the site in north-eastern France are not viable but Socialist President Francois Hollande wants them kept open. The government has threatened to take over the site if no private buyer is found.

The two furnaces together employ 600 workers with the entire site providing work for 2,700.

Earlier this week Mayor of London Boris Johnson called the French government’s stance “eccentric” and said ArcelorMittal would be welcome to move production to London.

“The sans-culottes appear to have captured the government in Paris,” he added.

RBS to close Indian business

Royal Bank of Scotland’s sale of its Indian retail and commercial banking operations to HSBC has fallen through, and it will now wind down the business, it announced today.

RBS agreed to sell the business to HSBC in July 2010, but the deal lapsed on Friday. It has 31 branches and 400,000 customers, with assets of £190m and revenues of £42m in the first months of this year.

“Consistent with RBS’s strategic objective to reduce or exit its non-core assets and businesses, it will begin to wind down its retail and commercial banking business in India, whilst meeting all customer obligations,” RBS said in a statement.

Profits fall at B&Q owner

Profits at DIY group Kingfisher fell by six per cent in the third quarter to £257m, due to a tough sales environment in the UK and France.

The owner of the B&Q chain saw UK and Ireland sales fall by 3.8 per cent on a like-for-like basis. The firm is badly affected by the stagnating housing market.

Chief executive Ian Cheshire said: “Following a particularly tough first half, I am pleased that our teams’ hard work has delivered a solid profit performance in our third quarter, one of our most significant trading periods in the year.”

Retail profit was also affected by substantial foreign exchange charges as the firm translated euro and Polish zloty profits into sterling.

Dixons losses narrow

Electrical retailer Dixons today announced that it has slightly reduced its pre-tax losses for the first six months of the year.

The firm said it lost £22.2m for the 24 weeks to October 13, down from £25.3m for the same period last year.

But the UK business, which largely operates under the Currys and PC World brands, returned to first-half profitability for the first time in five years.

“We have significantly reduced net debt, successfully undertaken a £150 million bond issue and delivered good underlying profit growth in the UK and Northern Europe,” said chief executive Sebastian James.

“It is increasingly clear in each of our markets that our service-based, multi-channel business model is what customers want. We are outpacing our competitors, and have seen Comet enter administration in the UK and Expert exiting the market in Sweden.”

UK house prices stagnating

UK house prices were flat during November, according to figures released by the Nationwide building society.

Its survey said the average house price remained at £164,000 this month, the same as in October but 1.2 per cent lower than at the same point last year.

Nationwide’s chief economist Robert Gardner said: “The resilience of employment together with the ultra-low level of interest rates has been instrumental in preventing a glut of unsold homes from building up on the market and exerting sustained downward pressure on house prices.”

US budget talks hit standstill

US politicians last night remained deadlocked over dramatic, year-end tax increases and spending cuts known as the “fiscal cliff.”

At the White House, small business leaders emerged from a one-hour meeting with President Barack Obama to voice support for his goal of extending low tax rates for the middle class beyond the end of the year, while letting rates rise for wealthier taxpayers.

Republicans want to extend low tax rates – enacted a decade ago under the administration of former Republican President George W. Bush – for all taxpayers, including households earning more than $250,000 a year.

Raising tax rates on the wealthy would discourage investment and hiring at a time of high unemployment, Republicans say.

Congressional Democrats allied with the president showed no sign of backing down from his stance on raising taxes for the wealthy.

With just a month left before the Bush tax cuts expire and automatic spending cuts begin to take hold, markets are anxious about predictions that falling off the “fiscal cliff” could trigger another recession.

Thomas Cook profits halve

Thomas Cook this morning said operating profit for the year to 30 September fell by 49 per cent to £156m. The company largely blamed the slump on higher fuel costs.

Despite this the venerable travel group said it was optimistic about its performance in recent months.

“These results reflect the major issues that Thomas Cook faced last year, but they mask the material improvement that we made in the fourth quarter,” said chief executive Harriet Green.

“Our brand has demonstrated its strength by recovering all the ground lost during last year’s difficulties and we have identified significant further efficiency improvements.”

Net debt fell by £103m to £788m and the firm said it has carried over 23m customers in the last year.

Underlying revenue dropped slightly to £9.49bn.