Business Information Service: Last Week

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The Independent Online
UK SHARES plunged on renewed fears that the Government will be forced to raise interest rates from the current level of 10 per cent after sterling fell to just above its floor in its ERM band against the Deutschmark. At the same time, sterling hit dollars 2.00 for the first time since February 1991.

Insurance shares were driven lower on fears that UK firms will be exposed to high costs for the damage caused by Hurricane Andrew.

With City analysts predicting a pounds 75m loss from Amstrad for the year to June, it was suggested that the price of the firm's new range of Intel 486 business computers would have to be cut.

Ofwat, the water industry regulator, announced proposals aimed at preventing cross-subsidy between the core water and sewage businesses and other interests of privatised water companies at the expense of water customers. The proposals require water companies to disclose any expansion plans.

On Tuesday, it emerged that British Gas will cut domestic bills by 2 per cent from October to keep within the price cap (inflation minus 5 percentage points) set by Ofgas, its industry regulator. British Gas then announced a pounds 17m loss for the second quarter. It blamed the warm weather, vigorous competition and the recession. The loss compared with pre-tax profits of pounds 247m for the same period last year.

Shares in the food and drinks group Grand Metropolitan fell 33p to 379p, wiping pounds 700m off its stock market valuation after it warned profits would remain unchanged for the year at pounds 950m.

Car manufacturers' hopes that August would mark a turning point were dashed as figures for the first 20 days of the month showed 290,500 K-registration cars had been sold compared with 288,000 in the same period last year.

Despite announcing a pounds 2.7m loss on its 50/50 DIY stores venture with Boots on Wednesday, WH Smith reported an increase in group turnover of 8 per cent, reduced borrowings from pounds 232m to pounds 85m and met City expectations with pre-tax profits of pounds 112.7m for the year to 30 May, a 27 per cent rise.

There were further signs of improvements in the insurance sector when Guardian Royal Exchange became the third large insurer to report a return to profitable trading in the second quarter. However, it slashed the interim dividend from 4.4p to 2.5p to reflect a pounds 39m loss in the first six months of the year.

British Nuclear Fuels announced a cut of 3,000 contracting jobs as its current construction programme at Sellafield neared completion.

The news that Midland Bank is to make securing loans easier, with the emphasis on borrowers with business plans, was expected to inject new competition into banking.

On Thursday, Slough Estates cut the dividend payout for the first half of the year from 4.4p to 3.1p despite an increase in pre-tax profits from pounds 19.1m to pounds 33.6m. It reflected the feeling that a recovery in the property market was not 'just around the corner'.

Just to prove there are still recession-proof companies about, Weir Group, the pump and valves concern, revealed that half-year pre-tax profits had risen 23 per cent to pounds 18.5m. Shareholders were rewarded with an interim dividend of 3.5p, a 13 per cent rise.

The dire state of the world car market was made more apparent on Friday with the prediction from Nissan Motor that its parent company would this year make its first loss since 1951.

Meanwhile Jaguar, whose workforce has shrunk from 12,000 to 8,000 in two years, announced a cut of a further 700 jobs.

Bond-holders and trade creditors facing losses following the collapse of Mountleigh Group, the property company and retailer, were offered hope of seeing some of their money again by the company's creditors' committee.