Business and City in Brief

Midland cuts interest rate

Midland Bank announced a 2 per cent cut in interest rates on loans up to pounds 5,000, with a further reduction for larger advances. The new rates are available until 30 September.

The annual interest rate for loans between pounds 500 and pounds 2,990 is now 18.4 per cent, falling to 16.4 per cent APR on sums up to pounds 4,990. Sums above that will cost borrowers 15.9 per cent APR.

Market Report, page 34

Compaq performance

Compaq Computer reported very strong profits for its second quarter, on record sales of its personal computers, desktops and notebooks. Net income was dollars 423m, more than double the dollars 204m in 1993. Compaq is expected to replace Apple Computer as the second-largest PC manufacturer this year.

Microsoft gain

Microsoft reported net profits of dollars 362m for its fourth quarter, ahead of analysts' expectations. Excluding a dollars 20m extraordinary gain this was 29 per cent up on the same quarter in 1993. Full- year net income rose 20 per cent to dollars 1.15bn, on sales of dollars 4.65bn.

More compensation

The Investors Compensation Scheme paid compensation of more than pounds 25m to 2,276 investors in the year to 31 March, according to its annual report. The previous year it paid pounds 18.6m to 1,723 investors. Last year the ICS helped the customers of 39 failed investment firms. These bring the total number of failures since the scheme started in 1988 to 132.

Seat strike

Spanish unions have called a 24-hour strike at Seat for next Tuesday. The company has proposed a 10 per cent wage cut, while unions are seeking a rise of about 3.5 per cent.

German price rise

Western German producer prices fell a monthly 0.1 per cent in June but were 0.4 per cent higher year- on-year. Analysts had predicted that prices would rise 0.2 per cent on the month, giving an annual increase of 0.7 per cent.

Merck growth

Merck, the US drugs group, reported net profits of dollars 1.44bn in the six months to June compared with dollars 1.31bn in 1993. Second-quarter profits were up from dollars 694m to dollars 764m. It said the purchase of Medco was the principal reason behind sales growth and dilution in earnings.

Pillsbury purchase Grand Metropolitan said its Pillsbury subsidiary paid dollars 170m for Tuesday's purchase of Martha White, the US dessert and baking mix business. The business is being acquired debt-free.

WORLD MARKETS

New York: Stocks tumbled after the Federal Reserve chairman, Alan Greenspan, raised the spectre of interest rate increases. The Dow Jones Industrial Index fell 21.04 points to close at 3,727.27.

Tokyo: Investors heartened by the dollar's rise sent the Nikkei average up 5.6 to 20,780.76.

Hong Kong: Profit-taking pared the Hang Seng index back to 9,188.82, up 43.81 points.

Sydney: After an early fall the All Ordinaries index closed 1.3 points firmer at 2078.6.

Bombay: Late price changes lowered the index to a provisional 4,110.86, down 3.99 points.

Johannesburg: Shares finished mixed in slow trade with the overall index up 31 at 5,579.

Paris: The CAC-40 share index recovered from a sharp fall to finish down 8.61 at 2,043.72.

Frankfurt: Traders were looking for a new rate cut and the DAX index closed up 9.86 at 2,138.65.

Zurich: Shares ended off the day's high. The Swiss Performance Index rose 23.19 to 1,695.78.

London: Report, page 34.