The Telegraph Citybriefing -June 23, 2014-.


The Telegraph
 
Citybriefing 
LOUISE ARMITSTEADCHIEF BUSINESS CORRESPONDENTFollow Louise on TwitterLOUISE ARMITSTEAD
TOP OF THE AGENDA
How do you boost the economy in the North? That's the question George Osborne wants to tackle today - and part of his answer is more high speed rail. In a speech in Manchester, the Chancellor will set out proposals to a third high speed rail link to create a "northern powerhouse" that can "take on the world." Britain's northern cities are "collectively not strong enough" to challenge London but with better communications, they could be far more powerful. Mr Osborne has told Radio 4 this morning that northern cities each need to have strong mayor to champion their causes, as in London. He says we need a "more geographically balanced UK." Although the speech will "start a conversation", Mr Osborne has insisted "work is already underway" since Sir David Higgins, boss of HS2, is investigating the plans. The idea won't be universally welcomed: HS2, which plans to run trains at 225mph from London to Birmingham by 2026 is going to cost £50bn, has met stiff resistance. We'll have the reaction on our website here. 

On the markets, two companies are set to dominate trading this morning: Asos,the online retail struck by fire on Friday; and Shire, the target in a takeover battle that's beginning to look like Pfizer/AstraZeneca all over again. Asos has released a statement following the fire at its Barnsley Distribution Centre. The online retailer has said that approximately 20pc of the total stock has been affected by the fire but has said it is fully insured. South Yorkshire police are "treating the incident as deliberate and have commenced a criminal enquiry." Still traders will be wary of the impact on the company which has already issued two profits warnings this year. 

Traders are also watching Shire today after weekend reports that Flemming Ornskov, chief executive, is preparing to unveil his plans to immunise the company from a £27bn takeover by America's AbbVie. In a webcast expected at 1pm, the pharmaceutical boss is expected to promise investors it can double sales to $10bn by 2020. AbbVie's advances, motivated in part by the UK tax system, have been rejected so far but Shire's shares jumped 17pc on Fridayafter the American company's ambitions were revealed. Ornskov's position is strengthened by a 116pc rise in Shire's share price this year, as well as a veteran deal maker in its chairwoman, Susan Kilsby. Even so, the market is wondering if this could trigger another Pfizer/AstraZeneca popular row.
 
Meanwhile, just to re-emphasise the difference of doing deals in France: the board of Alstom is scheduled to meet to review the rival offer from General Electric and Siemens. Progress has been stalled by meetings with French politicians who have the power to block any takeover on the grounds of strategic importance.

In other company announcements, River & Mercantile, the fund management group founded by Sir John Beckwith, has priced its IPO at 183p a share, giving it a market value of £150m. And the owner of the AA has its IPO has been oversubscribed despite the jitter in the markets. It's the first day of trading following the FTSE's quarterly reshuffles with 3i Group and Intu Properties joining the FTSE100 and Melrose Industries and William Hilldropping out. Zoopla is expected to start unconditional trading today. 

Britain's small businesses are being held back by the UK tax system, according to a report by the CBI and Grant Thornton this morning. The so-called Voice of Business and the accountancy firm are calling for the Government to to change the tax system, including broadening the access to R&D tax relief and providing more incentives to export. The Federation of Small Business is releasing its Small Business Index, a quarterly macroeconomic view of the UK economy from SMEs. 
   
In economics news, China's manufacturing activity returned to growth in June. HSBC's PMI data shows growth in the powerhouse economy of 50.8 this month compared to 49.4 in May. Here at 930am, the Bank of England's Bank Liabilities Survey is due which monitors funding and capital levels in the  UK financial institutions. 
 
The President of the European Council, Herman van Rompuy is expected to meet David Cameron in Downing Street today to sooth the mounting "Juncker Crisis". EU leaders are due to meet later this week amid the row over who is appointed as the next EC President. The Lords Science & Technology Committee is holding a session on whether the law needs to be tightened to protect users of social media from being exploited by corporates that currently use popular sites to harvest valuable data. The G20 finance and central bank deputies meeting concludes in Melbourne, Australia.  
 
The Queen and Prince Philip after off to Heathrow today to officially open "Terminal 2 - The Queen's Terminal." The terminal was re-opened earlier this month after a £2.5bn renovation project. 
 
And the tennis championships at Wimbledon get underway today. Andy Murray's quest to defend his title starts this afternoon with his first round match against David Goffin of Belgium. 
QUOTE OF THE DAY
 "If you compare London to other cities around the world, actually it’s not the most expensive city in the world and maybe it should be."
Alex Chesterman, chief executive of Zoopla, tells the Telegraph that London is not in a property bubble
FIGURE OF THE DAY
€12.35bn
The sum GE, the US engineering conglomerate, will pay for French rival Alstom after clearing the final hurdles to a deal late on Sunday night
IN THIS MORNING'S TELEGRAPH
Szu Ping Chan reports that Bank of England policymaker David Miles has said interest rates should rise in the coming months to reflect the stronger economy
Scott Campbell writes that private bank Coutts has been forced to issue a denial that it had links with Osama bin Laden, the former al-Qaeda leader
BEST OF THE SUNDAY PAPERS
Sunday TelegraphThe Bank of England must act quickly and decisively to rein in UK mortgage lending if it is to prevent another housing crash, two of Europe's top policymakers have warned.
Sunday Times (£): Directors will have to tell investors how long they think their company will remain viable under a new corporate governance code that could come in from October.
Mail on SundaySpy agency GCHQ is to provide classified information to private companies thought to include BT and Vodafone to guard against cyber attacks, but the move has raised security fears.
THE EQUITY MARKETS
The FTSE 100 rose 0.7pc last week to 6,825.20.
The Dow Jones climbed 1.02pc to 16,947.08.
More on the markets here
COMMODITIES
Gold gained 3.1pc to $1,313 an ounce last week and Brent crude oil was up 2.09pc to $114.81 a barrel. More here.
THE MONEY MARKETS
Sterling rose against the dollar last week, adding 0.57 cents to $1.7018. It dipped 0.01 cent against the euro to €1.2536. For the latest on the currency markets, log on here

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