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Business Information Service: Last Week

JOHN MAJOR'S comments last weekend ruling out a sterling devaluation did little to calm market fears or to silence Euro-sceptics. As the week progressed, rumours began to spread of a double-dip recession as well as a rise in interest rates.

The situation improved slightly for sterling after Thursday's decision by the Bundesbank to increase the German discount rate but not the key Lombard rate. The UK equity market responded positively to the news and closed slightly higher. But any opportunity for a cut in UK interest rates before the end of the year was considered unlikely.

The following day, the full impact of the German rate rise was felt in London and New York. The FT-SE 100 fell by 51.5 points to close at 2431.9, while Wall Street's Dow Jones declined by almost 30 points. Sterling lost further ground against the Deutschmark to fall below DM2.85 and remained firmly pinned to the bottom of the exchange rate mechanism.

On Monday, the pounds 158m public offer of shares in the MFI furniture group flopped, with only 15 per cent taken up. The failure of the MFI issue, following the unsuccessful flotations of the Daily Telegraph group and Anglian, cast further doubt over the success of the upcoming pounds 3bn offer of shares at Wellcome Trust.

It emerged that first-half operating profits at WPP would be almost wiped out by professional fees incurred as the advertising group put together a refinancing plan.

Tuesday brought evidence of renewed economic weakness after official government figures showed manufacturing output had fallen 0.6 per cent in May, with the rise in April of 0.2 per cent revised to 0.1 per cent.

At an annual shareholders meeting, Lord King formally announced that he was stepping aside as chairman of BA after 11 years and giving way to Sir Colin Marshall, his second in command.

On Wednesday, Hongkong and Shanghai Banking Corporation confirmed the appointment of Keith Whitson, a general manager of HSBC, as the new deputy chief executive at Midland Bank, in the first stage of its reorganisation.

Shares on offer in Taunton Cider had only 30.1 per cent taken up.

HP Bulmer Holdings continued to outperform the drinks market with a 19 per cent rise in pre-tax profits to pounds 17.1m for the year to 24 April.

On Thursday, convictions against four financial advisers in the Blue Arrow affair were quashed. The judgment follows the the collapse of the second Guinness trial earlier this year.

Mirror Group Newspapers launched an internal inquiry into how two of its most senior executives were able to move their own pension funds from one scheme to another after Robert Maxwell's death.

Lloyd's chairman, David Coleridge, decided not to seek re-election as head of the insurance market. His decision came after the whole membership of the Lloyd's Underwriters Association, representing the marine market, resigned.

National Home Loans, the mortgage lender, revealed pounds 85.9m pre-tax losses for the first half of 1991. NFL was hit by bad debt provisions at its commercial lending arm.

On Friday, more than 2,000 members whose affairs were managed by the Gooda Walker agency failed in their attempt to gain a judicial review into the background of their losses. The judgment means that Gooda Walker's syndicates can no longer seek court orders to stave off demands to meet their pounds 491m losses.

Marks & Spencer refused to sanction Taurus, the Stock Exchange's proposed electronic share certificate system, on the grounds that it was still an untested system.