UK inflation may surpass 3 percent

A recent survey by Bloomberg News has revealed that the median of 39 forecasts indicated that inflation is likely to reach 3.2 percent which will be the highest rate since 1997.

As a result of this trend, analysts are signalling that Bank of England Governor, Mervyn King, may have to write to the Chancellor to explain the situation and why interest rates may not be enough to fend off inflation and avoid a recession.

According to the forecasts from the Confederation of British Industry, the economy is heading for its worst performance since 1992 and the battle Mervyn King faces fighting off record food and fuel prices and the faltering economy, simply cannot be ignored.

The Monetary Policy Committee has acknowledged the fact that the above-target inflation could create a high medium-term inflation expectation, as well as future inflationary pressures.

This has affected consumer confidence, as well as having political implications as support for Prime Minister Gordon Brown’s Labour government, is at its lowest ebb since polling began in 1943.

In a recent poll by YouGov Plc, 73 percent of people surveyed said that their financial position will worsen over the course of the year.

BHP leads miners higher as metals prices gain

Gains in metals prices once again helped equities markets in the Asia-Pacific region higher Wednesday.

In Australia, BHP Billiton (ASX: BHP; LSE: BLT; NYSE: BHP; JSE: BIBLT) rose to a two-week high and led other miners higher, while in China refiners saw gains.

Banks in the region were down on the session but shippers saw gains on the possibility that recent declines in shipping rates will reverse.

The main exception to the gains came in India, where the Sensex dropped 1.75 percent to 15,422.31; otherwise, the Taiex added 0.19 percent to 8,217.58, the Straits Times Index was up 0.39 percent to 3,040.09, the Hang Seng was 1.16 percent higher to 23,325.8, South Korea’s Kospi index gained 1.34 percent to 1,774.13, and the Shanghai Composite jumped 5.24 percent to 2,941.12.

In Australia, the S&P/ASX200 was 0.38 percent higher to 5,443.2 while the Sydney Ordinaries added 0.44 percent to 5,550.3.

Tokyo’s markets were also higher on the session, with the Nikkei 225 adding 0.73 percent to 14,452.82 while the Topix index was up 0.55 percent to 1,409.64 and the Mothers market gained 0.69 percent to 621.78.

The real estate sector saw gains, with Mitsubishi Estate (TYO: 8802) heading to a two-week high, while the semiconductors sector rose after NEC Electronics (TYO: 6701; NAS: NIPNY) received a “buy” recommendation, up from “neutral”, from Goldman Sachs (NYSE: GS).

Carmakers saw gains while insurers were the day’s biggest losers in Tokyo.

European equities declined on the session.

The FTSE Eurofirst 300 was down 1.47 percent to 1,250.2, with Frankfurt’s Dax falling 0.99 percent to 6,728.91 as the Paris CAC-40 was 1.44 percent lower to 4,618.75 and the IBEX dropped 1.97 percent to 12,631.5.

There were only six gainers on the CAC-40 and four on the Dax, mostly in the utilities sector, while banks, the semiconductors sector, and steel makers were lower and carmakers were mixed.

In London, the FTSE 100 fell 1.79 percent to 5,756.9 while the FTSE 250 dropped 1.94 percent to 9,534.8.

The oil sector was down on declined in oil prices, led by Royal Dutch Shell (LSE: RDSA, RDSB; NYSE: RDS.A, RDS.B) and BP (LSE: BP; NYSE: BP; TYO: 5051; TSX: BP.U), while the real estate sector was down on a downgrade for the entire sector from Credit Suisse (SWX: CSGN; NYSE: CS).

Banks and supermarkets were also lower, while gainers included medical device manufacturers and the pharmaceutical sector.

New York equities markets were lower in mid-afternoon trade, with the Dow Jones Industrial average down 1 percent to 12,038.99 at just past 2 p.m.

At the same time, the Nasdaq Composite had dropped 1.08 percent to 2,431.18 and the S&P 500 was 0.94 percent lower to 1,338.2.

Investment banks declined after Morgan Stanley (NYSE: MS) reported that earnings were down 57 percent in the most recent quarter and on investor comments in Monaco that there are more write downs to come related to the credit crisis.

Carmakers and railroads saw declines, while the parcel delivery sector was lower after FedEx (NYSE: FDX) reported a loss in its fiscal 4th quarter.

Jaguar Land Rover announces 600 new jobs

Jaguar Land Rover has announced it is to create 600 jobs with the majority to be based at its development centre in Warwickshire.

The news follows the £700 million investment a few weeks ago when the brands were bought by India’s top vehicle maker, Tata Motors for £1.2 million.

The recruitment drive is designed to attract engineers to develop new technology aimed at reducing vehicle emissions.

Furthermore, Jaguar Land Rover is introducing a graduate programme for over 80 graduates who will join the business in the autumn.

The graduates will be involved in a number of activities and events over their 2-year development period, while at the same time integrating themselves into their chosen department.

Commenting on the recruitment drive, newly-appointed CEO David Smith, said the new jobs demonstrate Jaguar Land Rover’s confidence in our future.

The company is entering an exciting era with new models and ambitious technologies. This is a great time to be a part of the British car industry and is an exciting time for Jaguar Land Rover, added Mr Smith.

Jaguar Land Rover’s HR Director, Des Thurlby, added that the company has a bright future and is a very attractive place to work for the best in our industry here in the UK.

The company has locations at Solihull and Castle Bromwich in the West Midlands, Whitley in Coventry, Gaydon in Warwickshire and Halewood in Merseyside.

Crude oil prices rise on disruptions, Nigeria news

After being down for most of the day, crude oil prices rose at the close of the session on news of supply disruptions due to bad weather in Iraq and Kuwait and on new problems in Nigeria, where white-collar oil industry workers have threatened to strike against Chevron (NYSE: CVX) and a militant group said it would not participate in a peace summit next month.

The Energy Information Administration reported that crude oil stockpiles in the US were down 1.2 million barrels to 301 million barrels last week, less of a decline than was expected, while gasoline stockpiles also dropped 1.2 million barrels against an expected rise, while distillates added 2.6 million barrels to storage, more of a gain that had been anticipated.

Meanwhile, US President George W. Bush asked Congress to permit more domestic drilling for oil to lessen dependence on foreign oil and bring down prices, but Democrats in Congress rejected the call.

Near the close of floor trade on the New York Mercantile Exchange, July contracts for West Texas Intermediate crude had added $2.68 to $136.69 per barrel while Brent crude had gained $1.91 to $135.63 per barrel on the ICE Futures Europe in London.

Nymex July gasoline was up 2 cents to $2.44 per gallon while August heating oil was down 5 cents to $3.80 per gallon and August natural gas also gained 2 cents to $13.06 per million British thermal units.

Most metals prices were higher Wednesday.

August gold was up $6.20 to $893.10 per troy ounce in New York while July silver was 26 cents higher to $17.33 per troy ounce and July platinum gained $27.60 to $2,091.90 per troy ounce.

Base metals prices were higher as well, with the exception of nickel, which fell to $23,150 per tonne in London.

Copper added 9 cents to $3.74 per pound in New York while three-month copper was up $155 to $8,243 per tonne in London on cuts in production in Peru due to protests there.

Lead jumped $20 to $1,885 per tonne while zinc gained $100 to $1,970 per tonne, aluminium added $55.50 to $3,092 per tonne and tin gained $525 to $22,550 per tonne.

Grains prices were mixed in afternoon trade.

December wheat on the Chicago Board of Trade was up 6 cents to $9.45 per bushel and CBOT December corn gained 4 cents to $7.80 per bushel, but November soybeans dropped 10 cents to $15.43 per bushel.

Pound gains on euro, USD

The pound strengthened Thursday on a report from the Office for National Statistics which revealed that UK retail sales were up 3.5 percent in May against an expected decline and after the governor of the Bank of England said that the Bank will do anything necessary to return UK inflation to its 2 percent target.

In midday trade in New York the pound traded at 78.51p to the euro and it took $1.9742 to buy a pound.

The US dollar was stronger in relation to the euro as the gains in UK retail sales sent investors selling the euro in order to buy the pound, with the greenback trading at $1.5500 to the euro as gains were limited by another contraction in manufacturing activity in the Philadelphia region in June.

The Swiss franc was weaker in relation to the euro and the US dollar after the Swiss National Bank left interest rates there steady at 2.75 percent and after the Bank’s president made comments indicating that he expects inflation there to return to its 2 percent target.

The franc traded at SFr1.6223 to the euro and at SFr1.0467 to the US dollar at midday in New York.

Gains in commodities prices sent the Australian and New Zealand dollars higher in relation to the US dollar, with the greenback trading at 94.97 cents US to the Australian dollar and at 76.13 cents US to the New Zealand dollar.

2,440 jobs go at Imperial Tobacco after take-over

Imperial Tobacco Group has announced it is to cut 2,400 jobs worldwide following its acquisition of French-Spanish tobacco firm Altadis back in January.

Imperial Tobacco is the world’s fourth-largest cigarette company and purchased Altadis for 12.6 billion euros (£9.9 billion).

The restructure will be implemented over the next 3 years and will result in the closure of six factories within its portfolio of 58 sites.

The group will axe 870 jobs in Spain, 250 in Germany and 100 in Russia as well as 1,060 jobs in France.

The tobacco giant said its factory in Nottingham will axe 210 jobs, while its cigar factory in Bristol, which employs 75 people, will close down and cigar production will be transferred to Spain.

However, the restructuring will create in an additional 200 jobs in Poland.

A spokesperson for the group said it was regrettable that the Bristol factory had to close but the industry is under a severe amount of pressure.

Iain MacLean, of the Unite union, said it’s early days but we will be fighting for every job and there will be absolutely no acceptance of any compulsory redundancies.

Together, the firm’s brands include Lambert & Butler, West and Gauloises.

Crude oil, base metals, grains prices all decline

Crude oil prices fell Thursday after China announced that it will raise fuel prices starting on Friday.

The reports of the price hikes said that the price of gasoline will go up 16 percent and the price of diesel will rise by 18 percent, while prices for aviation kerosene and electricity will also rise.

July contracts for West Texas Intermediate crude had dropped $4.74 to $131.94 per barrel by the end of floor trade on the New York Mercantile Exchange, while Brent crude was down $2.61 to $133.83 on the ICE Futures Europe exchange in London.

Nymex July gasoline futures were down 9 cents to $3.38 per gallon while August heating oil was also down 9 cents, to $3.76 per gallon and August natural gas dropped 28 cents to $12.92 per 1,000 cubic feet.

Besides the news from China, gains for the US dollar as well as comments from Iraq several Western oil companies that will return them to activity there helped push prices lower, while little attention was paid to another attack on an oil facility in Nigeria.

In separate reports, the US Energy Information Administration reported that natural gas inventories were up by 57 billion cubic feet last week while the US Transportation Department reported that demand for gasoline fell in the United States in April as Americans drove 1.4 billion fewer highway miles compared to the same month last year.

Most precious metals prices rose Thursday while most base metals prices fell on the session.

August gold was up $10.50 to $904 per troy ounce in New York, while July silver added 13 cents to $17.47 per troy ounce but July platinum dropped $36.10 to $2,055.80 per troy ounce.

September copper was up 3 cents to $3.78 per pound in New York while three-month copper added $71 to $8,310 per tonne in London, but otherwise base metals prices saw declines.

Zinc was down $65 to $1,925 per tonne on a substantial gain in inventories, while aluminium was $20 lower to $3,072 per tonne, lead fell $38 to $1,822 per tonne, tin was $75 lower to $22,375 per tonne and nickel dropped $650 to $22,350 per tonne.

Grains prices were also down, with September wheat on the Chicago Board of Trade falling 23 cents to $8.98 per bushel on reports that Oklahoma’s winter wheat yield will likely be up from last year.

CBOT December corn was down 18 cents to $7.61 per bushel, while November soybeans dropped 21 cents to $15.21 per bushel.