Share Markets Rally To New Post-Crisis Highs

Japan's Nikkei share average has ended at a new 53-month high, taking the index to a level not seen since the collapse of Lehman Brothers and helping buoy other markets.

The Nikkei climbed 2.6% to 12,283.62, its highest closing level since September 2008.

Meanwhile in London, the FTSE 100 was up 31.51 points, or 0.5%, at 6,470.67 points by 8.10am on Friday, hitting a new fresh five-year high.

Frankfurt's Dax index also broke through its 8,000-point mark for the first time since January 2008.

The FTSE 100 eased to close 0.7% up and the Dax closed 0.6% up.

"Markets are breaking higher. At this time it is pointless to fight the strong uptrend," Securequity sales trader Jawaid Afsar said.

"With so much support from central banks it's hard to see where the downside will come from."

The Tokyo-based index gained 5.8%, the biggest weekly gain since December 2011, with exporters and property shares the big winners.

Stocks have been helped by stronger US economy data, a weakening yen and ongoing optimism that aggressive easing will soon be adopted by the Bank of Japan's (BOJ's) new leadership.

On Tuesday the Dow Jones reached a new all-time high

The stocks were supported by lower-than-expected jobless claims data signalling further improvement in US employment, as well as the weaker yen which hit a 42-month low.

US non-farm payroll figures are expected to show encouraging signs when they are released later on Friday.

Global brands which scored big on the Nikkei in the week included Honda at 2.7%, Nissan at 3% and Toshiba's climb of 3.9%.

Markets have also been buoyed by China's exports, which jumped by a fifth in February from a year earlier - boosting shares and supporting base metal prices.

The Hang Seng index in Hong Kong closed 1.41% higher on Friday.

Investors were bullish after the BOJ raised its outlook on Thursday, noting at the last meeting chaired by governor Masaaki Shirakawa that Japan's economy was "bottoming out".

Successor Haruhiko Kuroda, who is expected to implement aggressive quantitative easing, takes his place soon.

Equities have become an increasingly attractive proposition for many investors as central bank interest rates remain suppressed.

"An appetite for risky assets is rising as global shares such as US stocks are up and the yen is weak," Daiwa Securities analyst Yoshiyuki Kondo said.

"Investors think that they might lose if they don't buy Japan stocks now."

:: The Dow Jones index in Wall Street has seen a record-setting rally but the Bloomberg relative strength index has now approached the marker indicating prices will probably fall.

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Boeing Dreamliner Fire: No Cause Found

Dreamliner: Boeing 'Finds Fix'

Updated: 2:29pm UK, Thursday 28 February 2013

Boeing has said it has found a "permanent" solution to fix battery problems on its grounded 787 Dreamliner aircraft.

The head of the company's commercial aircraft division made the announcement following talks with Japanese government officials in Tokyo over the fate of the lithium-ion batteries used in the planes, which are at the centre of a world safety probe.

All 50 of the 787s in service industry-wide were grounded in mid-January after a blaze on a Japan Airlines 787 at Boston airport and a second battery incident on an ANA flight in Japan.

Raymond Conner told reporters the company would not abandon batteries and he denied reports that the plane-maker was at odds with the battery's Japanese supplier, GS Yuasa, over how to fix the troubles.

"It is not an interim solution. This is a permanent solution," he said.

Mr Conner did not give any technical details of the proposed fix, saying only that he was "confident" in it, however US officials have suggested it would address overheating by putting more robust ceramic insulation around each of the battery's eight cells.

He continued: "The solution set that we have put in place provides three layers of protection and we feel that this solution takes into account any possible event that could occur, any causal factor that could cause an event.

"And we are very confident that this fix will be permanent and will allow us to continue with the technology," he concluded.

Boeing told the US Federal Aviation Administration and Department of Transportation last week what it intended to do to remedy the problems.

The US aircraft giant, which has bet heavily on its lightweight Dreamliner plane at a time when airlines are eager to slash fuel costs, desperately wants to get it back in the air but the battery remedy will still need to be tested before clearance is granted.

The investigation found that short-circuits caused a rapid rise in battery temperatures but the root cause has either not been identified or made public.

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Construction Falls Fuelling Triple Dip Fears

By Ed Conway, Economics Editor

Output in Britain's construction sector has slumped to the lowest level since the mid-1980s, further raising the prospect of Britain returning to recession.

Activity in the sector dropped by 6.3% in January, following a 16.3% fall in December.

It takes the sector's monthly output to a mere £6.7bn - the lowest level since the Office for National Statistics (ONS) started compiling monthly figures in 2010.

If the sector's output remains steady at this level for the entire first quarter, it will be the weakest three months for construction since mid-1986 - but month-on-month figures can be highly volatile.

Although the sector accounts for just 6.8% of Britain's total economic output, it has, according to the ONS, already "provided some of the main downward contributions to total output since the recession".

"Construction output is highly responsive to the economic cycle and fell by 16.7% when comparing the last quarter of 2012 with the first quarter of 2008," the ONS said.

"More positively, business confidence in the industry was upbeat this month, though it remains to be seen whether a sustained recovery can be made."

Alan Clarke of Scotiabank said the figures "make a triple dip in the UK increasingly likely".

Michael Saunders of Citigroup said: "Given that the data are not seasonally adjusted, one must be careful about going from these data to prospects for Q1 GDP. But, the data look weak. 

" ... With only one month of Q1 data so far, the uncertainties in this estimate are clear, but Q1 has not got off to a good start."

The poor figures are consistent with a big fall in construction output reported by Markit in its PMI of the sector in the first two months of the year.

But while the manufacturing and building sectors of the economy are struggling, the services sector, which accounts for around three quarters of the economy, is expanding faster than expected, which may prevent the economy contracting in the first quarter of the year.

Given that the technical definition of a recession is two successive quarters of contraction, and that Britain's economy shrank in the final quarter of last year, a fall this quarter would put the UK officially back in recession.

The construction sector and commercial property market have been at the epicentre of Britain's financial crisis and recession, facing as they do a major fall in property prices coupled with a large overhang of debt.

A recent Financial Services Authority study showed that around a third of British commercial real estate loans by value have been subject to forbearance - despite interest rates being at a record loan.

Insiders suggest the picture may have worsened since then.

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Permira's 'Death Bond' Firm To Join IPO Rush

By Mark Kleinman, City Editor

The private equity group behind Just Retirement, one of Britain's biggest providers of so-called 'death bond' annuities, is preparing to float the company amid a revival in the market for public share sales.

I have learnt that Permira, the buyout group which owns stakes in New Look, the fashion retailer, and Birds Eye, the frozen food producer, has hired bankers to begin the process of securing a listing on the London Stock Exchange.

Sources close to Permira said that Deutsche Bank and Nomura had been appointed in recent days to oversee a review of Just Retirement's options, with the likeliest outcome seen as a stock market listing.

Permira will also consider an outright sale of Just Retirement, which it bought from the stock market for £230m in 2009.

Insiders said on Friday that the review was "at a very early stage, with no decisions taken". The review by Deutsche Bank and Nomura is unlikely to result in a decision for the best part of a year, one source said.

Its decision about which exit route to pursue will hinge at least in part upon the fate of Partnership Assurance, a rival to Just Retirement, which is in the advanced stages of readying a public listing.

Partnership, which is owned by Cinven, another private equity group, is expected to be worth as much as £1bn when it comes to the market.

Both Just Retirement and Partnership are specialist financial services companies which offer enhanced retirement annuities to customers whose life expectancy may have been limited by illness or disease. Just Retirement also offers equity release products enabling retirees to unlock money from their homes.

Such specialist companies have expanded aggressively in recent years, and last month Just Retirement announced record group quarterly sales of £491m, a year-on-year increase of more than 50%.

"Record results were recorded for enhanced annuity and fixed term annuity sales. These high sales volumes have resulted from increased total market activity by financial advisers to bring forward business ahead of the December cut off dates for gender and the retail distribution review. We expect volumes in the next quarter will be significantly lower than these exceptional market levels," Rodney Cook, Just Retirement chief executive, said.

Whichever route Permira opts to pursue, Just Retirement will be worth well in excess of the price it paid to take the company private four years ago.

A flotation would provide another litmus test of the relationship between private equity firms and institutional investors, which is slowly recovering after years of mistrust at the way buyout firms sold portfolio companies to the public markets during the last decade.

In addition to Cinven's ambition to float Partnership, Doughty Hanson, another private equity firm, has announced plans to list HellermannTyton, an industrial group.

The market for flotations is also being revived in a broader way, with companies such as esure, the motor insurer, and Royal Mail at various stages of preparation for a listing.

Permira declined to comment.

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Post Office Workers Support Strike Action

Post Office workers have voted in support of strike action in a ballot by the Communication Workers Union (CWU).

Almost 90% voted in favour of industrial action over a dispute about pay and job security, the union said.

Three-quarters of the union's members that work in Crown branches - high street stores run by the Post Office - took part in the ballot.

The CWU said the dispute was over a pay rise due last year, that 4,000 Post Office staff had not yet received.

Fears over job security for 770 people working across the 70 offices due to be franchised was also an issue, it added.

The union's deputy general secretary, Dave Ward, said its members had spoken "loud and clear".

"They are fed up with being treated like second-class workers by the Post Office and they want their concerns to be listened to," he said.

"There hasn't been so much as the pretence of negotiations from Post Office Ltd and that must change if strike action is to be avoided.

"We are now asking the company to come to the table to discuss pay and job security for these workers and avoid the need for strike action."

But the Post Office said the CWU's vote rejected an offer of cash payments totalling up to £3,400 to be paid before April 2015.

The company's Network and Sales Director Kevin Gilliland said it was disappointed by the CWU's reaction.

"Our offer of cash payments recognises the contribution being made by our people to the turnaround of the business," he said.

"There is absolutely no room for manoeuvre. These payments are fair at a time when our Crown network is operating at a loss.

"Our door remains wide open to discussions with the CWU as to how we get the first of these payments into pay packets as quickly as possible."

Crown post offices account for 3% of the 11,800 branches across the UK.

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Investors Put £275m Price Tag On Go Compare

By Mark Kleinman, City Editor

Shareholders in Go Compare, the price comparison website, today slapped a minimum £275m price-tag on the company ahead of a sale later this year that insiders believe could value it at close to twice that sum.

Documents published today by esure, the motor insurance group which is listing its shares on the London Stock Exchange, reveal the complex ownership agreement between Go Compare's main investors.

Esure's prospectus confirms Sky News' report last month that the board of Go Compare has appointed investment bankers to oversee a sale of the company, which has become one of the dominant players in the price comparison market.

"Each shareholder in Go Compare has undertaken to sell its shares pursuant to an offer made under such joint sales process if that offer meets certain terms and conditions, including that the offer is made by a bidder which is not ultimately controlled by any private equity fund or funds and that each shareholder receives consideration under the offer which is at least equal to a pro rata share of £275 million on a 'cash-free debt-free' basis (to the extent such offer is also acceptable to other shareholders in Go Compare) and is offered terms or arrangements that are no less favourable than those offered to any other shareholder," the prospectus said.

People close to Go Compare, which is being advised by a firm called Evercore Partners, said the minimum price tag was likely to fall well below where offers were anticipated for the company.

Potential buyers of the price comparison site, have already been contacted, and bids are expected from private equity firms as well as major technology companies.

Esure owns 50% of Go Compare, with the other half owned by Hayley Parsons, the company's founder, and senior colleagues

The esure flotation, which will be the largest in London so far this year and should value it at about £1.1bn, will net founder Peter Wood a cash windfall of roughly £100m.

A Go Compare spokeswoman declined to comment on its sale process.

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Cameron's Speech Rebuked By Fiscal Watchdog

David Cameron has been rebuked by the Office for Budget Responsibility about the impact of his Government's austerity measures on economic growth.

In a high-profile speech on Thursday, the Prime Minister said the OBR was "absolutely clear that the deficit reduction plan is not responsible" for depressed growth, adding "in fact, quite the opposite".

But the head of the independent fiscal watchdog has written to Mr Cameron saying he misrepresented its position.

Chairman Robert Chote wrote to Number 10, disputing the claims.

He insisted that it believed there was a short-term effect and that "fiscal consolidation measures have reduced economic growth over the past couple of years".

The strong retort from the watchdog came in response to a passage from the Prime Minister's speech which he used to insist there was "no alternative" to the Government's strategy.

"There's not some choice between dealing with our debts and planning for growth," he said.

"As the independent Office for Budget Responsibility has made clear growth has been depressed by the financial crisis, the problems in the eurozone and a 60% rise in oil prices between August 2010 and April 2011.

"They are absolutely clear that the deficit reduction plan is not responsible. In fact, quite the opposite."

But the OBR published a letter sent to Number 10 on Friday by Mr Chote in which he took exception to the claims.

"For the avoidance of doubt, I think it is important to point out that every forecast published by the OBR since the June 2010 Budget has incorporated the widely-held assumption that tax increases and spending cuts reduce economic growth in the short term."

He added that an impact of "external inflation shocks, deteriorating export markets and financial sector and eurozone difficulties were more likely explanations" than incorrect multipliers for the reason growth was even weaker that initially forecast.

A Downing Street spokesman said: "The OBR has today again highlighted external inflation shocks, the eurozone and financial sector difficulties as the reasons why their forecasts have come in lower than expected.

"That is precisely the point the Prime Minister was underlining."

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US Boom: Jobs Jump By 236,000 In February

The number of people hired in the United States by non-farm employers jumped by 236,000 in February, exceeding expectations.

The unemployment rate also dropped to 7.7% from 7.9% in January, the lowest level since December 2008.

The Obama administration said it is evidence that the economic recovery is "gaining traction".

New jobs have averaged more than 200,000 per month since November last year.

Wages have increased and the gains were broad-based, led by the best construction hiring in six years.

New construction jobs continue to build up the US economy

But there was one negative detail in the government's February employment report.

Employers added fewer jobs in January than first estimated.

Job gains were lowered to 119,000 from an initially reported 157,000.

However, December hiring was a little better than first thought, with 219,000 jobs added instead of 196,000.

The upbeat figures saw a strengthening of the dollar, with Sterling sliding beneath the $1.49 figure.

Many economists expected hiring to fall in early 2013 largely due to the ongoing uncertainty surrounding the US budget, higher tax rates and looming federal spending cuts that took effect in March.

Yet the latest jobs report indicates job creation is speeding up.

However, early 2011 and 2012 also saw hiring jumps only to see the figures die back as the year went on.

White House economist Alan Krueger noted in a statement that the new unemployment rate was measured before $85bn (£56bn) in automatic budget cuts started taking effect.

The administration has warned that the cuts could have a negative impact on employment and economic growth.

It is urging Congress to move toward a "sustainable federal budget" by closing tax loopholes, enacting entitlement reforms and cutting spending.

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Vince Cable: Tories Waging 'Economic Jihad'

Vince Cable has accused right-wing Conservatives of waging "idealogical jihad" on public spending and warned the Liberal Democrats would block efforts to implement some cuts.

Speaking at a fringe event on the eve of the party's spring conference in Brighton, the Business Secretary also warned that Tory efforts to reduce immigration were "causing a great deal of harm to the economy".

He said: "What we have to make absolutely clear is that there is a difference between managing public spending, controlling public spending in that context - having that financial discipline - and the kind of thing that a lot of right-wing Conservatives are wishing for, which is a kind of British Tea Party."

"A kind of ideological jihad against public spending and public services."

Kicking-off the gathering last night, party leader Nick Clegg denied the Lib Dems were in crisis in the wake of sexual harassment allegations and the conviction of ex-Cabinet minister Chris Huhne.

Deputy PM Nick Clegg admitted the party had 'let people down'

But the Deputy Prime Minister did admit the party had recently "let people down" and needed to take a "long, hard look in the mirror".

"No doubt you will be aware of the recent allegations that have been made about sexual harassment in our party.

"When concerns were brought to the attention of members of my team we acted to address them.

"But this should not have just been the responsibility of a few individuals acting with the best of intentions.

"It must be the responsibility of the party as a whole to make sure we have the processes and support structures in place now and in the future.

Disgraced MP Chris Huhne was praised for his constituency record

"We didn't, and as a result we let people down. Liberal Democrats, that is not acceptable to me."

Delegates gave disgraced former energy and climate change secretary Huhne a round of applause after Baroness Shirley Williams praised his record as a constituency MP.

She described as "domestic tragedy" the situation of Huhne and Vicky Pryce, his ex-wife, who was found guilty of perverting the course of justice after she took speeding points on his behalf.

"We can only say of them that this is a tragedy that sometimes overcomes people; not least those in public life," she told the conference.

The party is bracing itself for showdowns with activists next week over so-called secret courts legislation and the coalition's economic strategy.

Labour has also challenged Mr Clegg to break coalition ranks by supporting the introduction of a mansion tax - long favoured by Lib Dems - in a Commons vote next week.

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More Than 400 In Barclays Millionaires' Club

By Mark Kleinman, City Editor

More than 400 staff at Barclays earned pay deals worth more than £1m last year, a reduction on 2011 but a substantial number for a year in which the bank's reputation was dragged through the mire.

According to Barclays' annual report, which was published on Friday morning, the number of employees paid more than £1m fell from 473 in 2011, with proportionately larger falls in the number paid more than £2.5m and in excess of £5m.

The disclosures are the most detailed given yet by Barclays and are designed to demonstrate a new commitment to transparency in the way it pays its top staff.

The 356-page annual report confirmed Sky News' revelation last month that Barclays had imposed around £450m of financial penalties on staff because of the Libor-rigging scandal through a combination of clawback and bonus reductions.

Barclays said it had decided to comply ahead of schedule with new Government requirements for companies to publish a single figure for the total remuneration of executive directors.

By one measure, this showed that Antony Jenkins, the new chief executive, earned a total of £1.129m in 2012, although this excludes a long-term share award valued at £1.467m.

The bank did not identify the pay package awarded to Rich Ricci, the chief executive of its investment bank, who was one of four executives to forego their annual bonus because of the Libor scandal, although he is thought to have received less than £3.5m in total.

Five employees were paid more than £5m in 2012, although the bank declined to identify them or specify what their total remuneration had been.

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