Old Mutual Sweetens £650m Bid For Wealth Firm

By Mark Kleinman, City Editor

Old Mutual, the London-listed South African financial services group, is in advanced talks about a £650m takeover of the UK's second-biggest independent wealth manager.

Sky News has learnt that Old Mutual is closing in on an agreement to acquire Quilter Cheviot after sweetening its offer for the company by approximately £50m.

A deal could be struck within a few weeks, continuing a shake-up of the City's wealth management landscape at a time of substantial regulatory change.

Quilter Cheviot, which is owned by the private equity firm Bridgepoint, was the subject of an earlier bid from Old Mutual during the summer.

People close to the situation said that a deal between the two companies was not certain, adding that Bridgepoint was continuing to progress its plans for a stock market listing that would catapult Quilter Cheviot into the ranks of London's 350 largest listed companies.

Other prospective buyers, including Investec, are said to have examined a takeover of Quilter Cheviot although it was unclear whether any other formal offers have been tabled.

In a statement issued last month, Bridgepoint said:

"Inevitably when IPO plans are being prepared there is parallel speculation and rumours about alternatives. We never comment on such rumours."

The addition of Quilter Cheviot to Old Mutual's wealth management arm would create a more powerful platform for serving affluent clients at a time of consolidation across the sector.

Another big player, Bestinvest, was sold to Permira, another buyout firm, last year, with a follow-on deal taking the firm's assets under management to approximately £9bn.

A flurry of deals has been accelerated by regulatory reforms known as the Retail Distribution Review, which have altered the way that wealth managers are remunerated for their work, shifting from a largely commission-based system to one based on the volume of assets under management.

Quilter Cheviot, which manages approximately £16bn in assets, was formed in 2012 from the merger of Quilter & Co and Cheviot Asset Management.

The company traces its roots back to 1771, making it one of the UK's oldest financial services firms.

Evercore, an investment bank, is advising Bridgepoint, while Old Mutual is being advised by bankers at Rothschild on the talks, insiders said.

Old Mutual, which declined to comment, is interested in expanding its wealth management business at a time when it is also reshaping parts of its business.

On Thursday, the Anglo-South African group priced the New York listing of its US asset management business slightly below its target range.

Bridgepoint also declined to comment.

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Counting The Cost Of The Ebola Outbreak

The impact of the deadly ebola virus may cost West Africa £20bn, experts have warned.

The World Bank said the worst case scenario would see the wider region's lost GDP amount to 3.8%, with Liberia at risk of losing almost 12%.

Sierra Leone, which was forecast to have one of the top 10 growth economies globally in 2014, is also expected to see significant impact.

World Bank president Jim Yong Kim said: "The international community now must act on the knowledge that weak public health infrastructure, institutions and systems in many fragile countries are a threat not only to their own citizens.

"They are also to their trading partners and the world at large."

The spread of the deadly virus is the worst health scare since the outbreak of AIDS in the 1980s, according to a US official, overtaking the SARS crisis a decade ago.

"I would say that in the 30 years I've been working in public health, the only thing like this has been AIDS," US Centers for Disease Control (CDC) and Prevention director Thomas Frieden said.

"It's going to be a long fight," he told the heads of the United Nations, World Bank and International Monetary Fund gathered in Washington DC for an emergency summit.

The UN Food and Agricultural Organisation (FAO) also said the ebola crisis may impact food security.

This comes despite continuing price decline for most food items globally, bumper wheat production and huge rice stockpiles.

Tour companies and airlines have already been hit over Ebola fears

The FAO said the outbreak was a "hot spot" of concern since it was disrupting markets and farming activities "affecting food security and large numbers of people".

Meanwhile, the cost to other countries is yet to be accurately calculated.

Tour firms and airlines have already seen share prices fall as fears spread.

But specialist firms providing goods and services to help overcome the outbreak have seen benefits.

Phoenix Air Group, the world's only specialised highly contagious air transport service using Gulfsteam III jets, has been swamped with exclusive-use bids.

The UK, Canada, Mexico, Japan and the UAE have all tried to establish exclusive contracts, according to a US Department of State briefing document seen by Sky News.

The UN and World Health Organisation also tried to secure deals with Phoenix, the document revealed.

In response, the US offered Phoenix a $5m (£3m) six-month contract for medevac services for American government employees who may become infected.

And suppliers of white anti-contamination suits have seen orders spike as governments increase their response.

Britain's Department for International Development has boosted suit orders from a Hull-based contractor, from 50,000 a month to 100,000.

The suits cost around £25 each and are worn for about one hour, before the contamination risk becomes too great.

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Microsoft CEO To Women: Rely On Karma For Pay Rise

The newly installed boss of Microsoft has come under fire for telling women they do not need to ask for pay rises, relying instead on "karma".

The comments were made by CEO Satya Nadella while he was speaking in Arizona at an event for women in computing.

Mr Nadella was asked at the conference to give his advice to women who are uncomfortable requesting a salary raise.

He replied that women should have faith that the system will give them the right raises as they go along.

"It's not really about asking for the raise, but knowing and having faith that the system will actually give you the right raises as you go along," Mr Nadella said.

"Because that's good karma... It'll come back because somebody's going to know that's the kind of person that I want to trust."

The comments by India-born Mr Nadella, who has a remuneration package of around $7m (£4.3m), caused a firestorm on social media.

Microsoft later posted an all-staff memo from the CEO on its website.

In it, Mr Nadella says he answered the question posed by interviewee Maria Klawe "completely wrong".

"Without a doubt I wholeheartedly support programmes at Microsoft and in the industry that bring more women into technology and close the pay gap," Mr Nadella wrote.

"I believe men and women should get equal pay for equal work.

"And when it comes to career advice on getting a raise when you think it's deserved, Maria's advice was the right advice. If you think you deserve a raise, you should just ask."

The remarks at the Grace Hopper Celebration of Women in Computing have the potential to harm both sales of Microsoft products and the appeal for female tech workers in Silicon Valley to work for the IT giant.

The controversy comes just days after reports of the deteriorating relationship between Microsoft founder Bill Gates and its former CEO Steve Ballmer.

Once close - Mr Ballmer was best man at Mr Gates' 1994 wedding - Vanity Fair said they no longer communicate as a result of the resignation.

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EDF Go Ahead for Hinkley Point Nuclear Reactor

French energy giant EDF has been given approval to build a new nuclear power station at Hinkley Point in north Somerset, it has been confirmed.

The new-build power station is part of a plan to replace 20% of Britain's ageing nuclear power infrastructure.

Approval for the construction has been confirmed by regulators at the European Commission, following prior approval by Competition Commissioner Vice-President Joaquin Almunia.

The EU examined the bid over concerns the UK Government was giving excess help to the plan.

Mr Almunia said: "After the commission's intervention, the UK measures in favour of Hinkley Point nuclear power station have been significantly modified, limiting any distortions of competition in the single market.

"These modifications will also achieve significant savings for UK taxpayers.

"On this basis and after a thorough investigation, the commission can now conclude that the support is compatible with EU state aid rules."

Britain has previously estimated the new build cost at £16bn but some forecasts have put the total price up to £25bn.

The EU said that under treaty rules, member states are free to determine their energy mix.

It said that the UK has decided to promote nuclear energy and this decision is within its national competence.

However, it insists that when public money is spent to support companies, the commission has the duty to verify that this is done in line with the EU state aid rules, which aim to preserve competition among member states.

Known as Hinkley Point C, it will replace the A station, which is being decommissioned, and the operational B station.

Video: Nuclear Deal 'To Boost Industry'

It is the first in a new generation of UK nuclear power stations.

EDF had earlier said: "A new nuclear power station at Hinkley Point will not only provide a clean, secure and affordable source of electricity for around five million homes, but it will also provide around 900 jobs at the new power stations for more than 60 years."

The lengthy building programme is expected to create 25,000 jobs for almost a decade.

The industry's trade body head, Lord Hutton of Furness, welcomed the decision and said: "The Nuclear Industry Association is pleased the deal for Hinkley Point C has been approved.

"This is an important step in securing the UK's home-grown low-carbon electricity generation while adding jobs and prosperity to the economy."

:: EDF Energy CEO Vincent De Rivaz will be interviewed by Ian King Live tonight at 6.30pm.

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High Street Decline Continues With Shop Closures

By Poppy Trowbridge, Consumer Affairs Correspondent

The decline of the high street has accelerated in the first half of the year, according to new figures.

Experts suggest betting shops and discount stores gained increasing footholds at the expense of traditional retailers.

While the recession has hit high street businesses hard, the changes have been put down to the rise of digital commerce.

The collapse of Phones 4u has added to the overall rise in shop closures

Matthew Hopkinson, director of the Local Data Company, told Sky News: "Significant changes are continuing to take place across Britain's town centres.

"It reflects the reality that shops need to become experiential destinations.

Video: High Street Woes Means More Pop Ups

"The transaction element is between people and not on product.

"The UK leads in terms of the impact online."

Town centres saw 406 net store closures compared to 209 in the same period last year, research from accountancy firm PwC, compiled by the Local Data Company, showed.

The collapse of businesses such as Phones 4u and lingerie chain La Senza saw this rise to 964 for the year to date at the end of September - two-and-a-half times the number for the whole of 2013.

There were 953 net closures in the first half of 2012 which reflects a closure rate of about 16 shops each day.

Traditional goods retailers such as shoe and clothes shops saw a net decline of 365 in the first half while leisure chains - encompassing food, beverage and entertainment - grew outlets by a net 215.

About 80% of the UK's national output comes from services, which includes retail, hospitality and financial industries.

The figures showed the changing face of the high street with coffee outlets, banks, pound shops, charity shops and convenience stores on the rise, together with American-style eateries.

Meanwhile, video libraries were wiped out, as were many mobile phone shops.

Mark Hudson, retail leader at PwC, said: "This data shows that we are now really starting to see the full effects of the digital revolution and consequent change in customer behaviour play out on the high street.

"We're heading for a high street based around immediate consumption of food, goods and services or distress or convenience purchases."

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New Plans To Decrease Payday Loan Charges

The competition watchdog has revealed new plans to help consumers using payday lenders.

The Competition and Markets Authority (CMA) said the rules could save borrowers up to £60 a year.

Details of the sector overhaul were first revealed by Sky News City Editor Mark Kleinman on Wednesday.

The CMA said it wants to protect consumers from excessive charges imposed when making short-term loans.

Key to the proposal is the development of a "high quality" comparison sector between lenders to help would-be borrowers.

The CMA said: "As a condition of participation in the market, payday lenders would be required to provide details of their products on accredited price comparison websites.

"That will allow people to make quick and accurate comparisons between loans."

The CMA said it would help stimulate competition in the sector and make it easier for new companies to offer better rates.

It is also pushing for so-called lead generators - middlemen websites which sell potential borrowers' details to lenders - to increase transparency about their role.

"The CMA has found that many borrowers believe that lead generators are themselves actually lenders rather than simply intermediaries," it said.

"Even where this is understood, there is very little transparency about the basis on which lead generators pass borrowers' details on to lenders."

It also wants more details given to customers about fees, help them shop around without affecting their credit rating, and be given details to repeat borrowers of accumulated costs.

The CMA said a recent study showed the typical loan was £260, taken out for just over three weeks.

On average this would cost a borrower around £63 in charges.

It also said the typical payday loan borrower used the services of lenders around six times a year.

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HSBC Directors Quit In Protest At Jail Threat

By Mark Kleinman, City Editor

Two directors of HSBC's UK arm are poised to quit in protest at new Bank of England rules that pave the way for lengthy jail sentences to be imposed on senior managers of failed lenders.

Sky News can exclusively reveal that Alan Thomson, a member of the audit and risk committees of HSBC Bank plc, has tendered his resignation and will leave the board at the end of October.

John Trueman, the deputy chairman of the legal entity that manages the UK high street and commercial bank, is also understood to be on the verge of resigning, despite having only taken on that role in December last year.

Sources close to the situation said that the likely departures of both men were a direct consequence of Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) proposals to strengthen accountability for senior bankers.

A public filing about Mr Thomson's exit will be made by the end of the month, with a separate one about Mr Trueman following if his resignation becomes official.

The likely exits of the two HSBC directors over the proposed regulatory reforms has caused deep disquiet both there and among senior executives elsewhere in the sector, according to insiders.

They are the first bankers to have decided to relinquish their roles because of the impending regime.

"This is just the tip of the iceberg," said a lawyer close to another major UK bank.

Under proposals on which the PRA is consulting until the end of this month, bank directors and other top executives could face a new criminal liability if they were deemed to have taken reckless decisions which led to the collapse of their employer.

They would also be subject to disciplinary action from the City regulator for up to six years, twice the current time-limit, and be obliged to certify that all customer-facing staff and material risk-takers are competent to perform their duties.

Crucially, the new measures would be framed on a 'guilty until proven innocent' basis, according to lawyers, making it more difficult for bank bosses to clear their names if their organisation failed.

The PRA is also introducing new rules next year forcing bankers to defer bonuses for seven years from the point of award, creating the toughest pay framework of any global financial centre.

George Osborne, the Chancellor, pushed for the more stringent regime in the aftermath of the banking crisis and the conclusions last year of the Parliamentary Commission on Banking Standards, set up following the Libor rate-rigging scandal.

The resignations of the HSBC directors are, however, expected to throw the reforms into a sharper light at a time when bank boards are struggling to identify suitably qualified directors.

The PRA document published in June made it clear that the FCA would be responsible for oversight of banks' non-executive directors under a significant management functions regime.

On Monday, the PRA set out further details of its plans to ring-fence high street lenders from the same groups' investment banking arms by 2019.

This structural overhaul will entail banks recruiting separate boards for the different entities within their businesses, further increasing the need for individuals willing to serve as directors.

Mr Thomson and Mr Trueman, along with boardroom colleagues, are understood to have been briefed on the implications of the new rulebook by HSBC compliance staff in the weeks after the PRA and FCA outlined their regulatory framework at the end of July.

That explanation of the Senior Managers Regime is said to have prompted them to reconsider their roles as directors.

Mr Trueman is an experienced banker, having been a director of HSBC Bank plc since 2004 and previously the deputy chairman of SG Warburg.

Mr Thomson has a portfolio of jobs: since stepping down as finance director of Smiths Group, the FTSE 100 engineering business, he has become chairman of Hays, the recruitment agency, as well as Bodycote and Polypipe, two industrial groups.

HSBC's UK arm is the country's fourth-biggest lender, reporting a pre-tax profit of £3.3bn last year, and also manages some of its international assets in overseas markets.

HSBC and the PRA declined to comment on Tuesday.

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Cable Turns Up The Heat On All-Male Boards

By Mark Kleinman, City Editor

Britain's biggest pubs operator and one of the country's largest sportswear retailers are to be targeted by Vince Cable in a renewed focus on bolstering boardroom diversity.

Sky News understands that the Business Secretary plans to write to the chairmen of approximately 30 FTSE-350 companies which have all-male boards more than three years after an initiative was launched to increase the number of women directors.

Among those which continue to have only men on their boards are Enterprise Inns, JD Sports Fashion, 3i Infrastructure and HellermannTyton, an industrial group.

Since Glencore, the mining and commodities giant, became the last FTSE-100 company to appoint a female director earlier this year, the number of all-male boards among the next 250 largest businesses has fallen from almost 50 to 30.

Mr Cable is expected to express frustration that the remaining laggards have not done more to bolster diversity.

His latest intervention will coincide with the publication of a half-yearly progress report on female representation in boardrooms.

New figures due to be published on Thursday are likely to show that only a couple of dozen further appointments need to be made by FTSE-100 companies during the next 14 months in order to meet the original target of 25% female directors by the end of 2015.

The diversity initiative was spearheaded in 2011 by Lord Davies, the former Standard Chartered chairman and trade minister who is among the UK's most respected businessmen.

Mr Cable and Lord Davies have both backed a voluntary approach to the issue, arguing that quotas would do little to address challenges such as the number of women in senior executive posts at major companies.

The Business Secretary is now turning his attention to other areas of diversity in business, arguing recently that ethnic minority representation in boardrooms remains weak.

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FirstGroup Loses ScotRail Franchise

Transport giant FirstGroup has lost its renewal bid for the ScotRail franchise, it has been confirmed.

The company will continue to operate First ScotRail until the new contract starts on 1 April, according to Transport Scotland.

An announcement by Scottish government officials is expected to be made at 9.30am this morning.

The new franchisee for the £2.5bn contract is Abellio, an offshoot of the Dutch national railways.

Confirming the franchise loss, FirstGroup said: "As one of the most experienced rail operators we are actively participating in a range of rail franchise competitions with the objective of achieving earnings on a par with the last round of franchising.

"(We) remain in discussions with the Department for Transport in respect of a potential longer direct award for our largest franchise First Great Western, during the period when the substantial programme of infrastructure upgrades will take place on the network."

The ScotRail loss is another blow to the revenue potential of FirstGroup.

In May, FirstGroup discovered it had lost out on the new seven-year Thameslink, Southern and Great Northern (TSGN) franchise into London, which was won by Go-Ahead-owned Govia.

A week later it was revealed troubled outsourcing firm Serco won a 15-year contract to operate the Caledonian Sleeper.

The overnight service runs from London Euston, northwest England and more than 40 destinations in Scotland, including Edinburgh, Glasgow, Fort William and Aberdeen.

Last year, shares in the company plunged by 30% after it announced a £615m fund-raising rights issue in a bid to reduce its heavy debt burden.

The RMT rail union said the new contract was a "scandalous" development, insisting it was the ideal opportunity to bring the franchise back into public ownership.

And the TSSA rail union described the Abellio win as "a slap in the face for Scots rail passengers".

TSSA boss Manuel Cortes said: "Only a few weeks ago, the Scottish people were promised the power to run a publicly owned railway which would put them first, ahead of private rail firms.

"Now the Scottish government wants to hand that railway to a firm run by Dutch state railways.

"So Scots passengers will now effectively subsidise Dutch rail passengers so fares can be lower over there."

The news comes as FirstGroup released a trading update for the six months to the end of September, with bus revenue expected to rise 2.1% and rail revenue by 6.5% in the period.

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Samsung Pledges New Phones As Profits Drop 60%

Electronics giant Samsung has forecast a profit plunge of almost 60% in the last quarter but promised it would soon release a new range of smartphones with "innovative designs".

The South Korean firm is struggling to maintain dominance in the ultra-competitive smartphone sector.

It said estimated operating profit for the July to September period was 4.1 trillion won (£2.4bn), down 59.6% from the third quarter last year.

Samsung said sales were estimated at 47 trillion won (£24.9bn), down 20.4% from the 2013 figure.

Its phone sector has come under pressure because of increased advertising spend and lower retail pricing, squeezing margins for the firm.

Video: Users Complain Of 'Bendy' iPhone 6

Samsung said "operating margin declined due to increased marketing expenditures and a lowered average selling price, driven by reduced proportional shipments of high-end models coupled with price decreases for older smartphone models".

The company is the world's biggest smartphone maker and unlike key competitor Apple, produces its own components for devices.

It warned that uncertainty in the mobile sector would carry through into the fourth quarter.

But it promised to release a new range of top-end smartphones featuring "new materials and innovative designs".

Video: Aug 2014: Samsung Boss On Trends

The mobile market, which has been the key driver of Samsung profits in recent years, has become increasingly saturated.

In addition to Apple's 'bendy' iPhone 6 release, competition has intensified from cheaper Chinese handset makers such as Huawei and Lenovo.

In July, Samsung reported a 20% drop in net profit for the second quarter.

Shares in Samsung are currently sitting at a two-year low.

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Rio Tinto Rejects Glencore's £100bn Merger

Mining giant Rio Tinto has rejected a potential merger with key competitor Glencore, which would create the world's biggest commodities firm.

Rio Tinto, which is based in Australia and Britain, said it had rejected a July approach from its Switzerland-based rival, communicating the decision in August.

The merged companies would be valued at around $160bn (£100bn).

The announcement comes after reports that Glencore was in talks with major shareholder Chinalco, which owns 9.8% of Rio Tinto stock.

The Anglo-Australian firm also insisted there were no ongoing talks with Glencore about such a bid.

In a statement, the company said: "The Rio Tinto board, after consultation with its financial and legal advisers, concluded unanimously that a combination was not in the best interests of Rio Tinto's shareholders."

Chairman Jan du Plessis added: "Under the leadership of Sam Walsh and Chris Lynch, Rio Tinto has made significant progress in refocusing and strengthening its business.

"The board believes that the continued successful execution of Rio Tinto's strategy will allow (it) to increase free cash flow significantly in the near term and materially increase returns to shareholders.

"Rio Tinto's shareholders stand to benefit from the very considerable value that this will generate."

Bloomberg said Glencore had approached Rio shareholder Chinalco, China's largest alumina producer, about its interest in a possible deal.

Rio Tinto is the world's second largest miner and has a market capitalisation of AUD$107.7 billion (£60bn).

Glencore became the world's fourth-biggest commodities company after merging with resources giant Xstrata in May last year.

Tactically, a Glencore takeover of Rio would give it presence in the iron ore market, one commodity that it does not have sizable operations in.

Rio has significant iron ore mining interests, particularly in Australia, which have fed demand in China for industry and construction.

Shares in Rio Tinto were up around 5% in early London trades on the news.

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Tesco Suspends Fifth Exec Over Finance Woes

Tesco has confirmed a fifith executive has been suspended over a £250m blackhole in its financial accounts.

It is understood to be group commercial director Kevin Grace.

Mr Grace has been on the executive committee since December 2011 and has worked at the retailer since 1982.

Four executives were originally suspended following the revelation that Britain's biggest retailer had overstated its profit by £250m.

The company commissioned an independent inquiry into the causes behind the accounting error.

The City watchdog, the FCA, said it would also launch its own "full investigation" into the issue.

Tesco said it is co-operating fully with the watchdog.

The chain said it would update the City on its own internal investigation into the error when its full-year results are released on 23 October.

The four senior executives previously suspended included UK managing director Chris Bush, pending the outcome of the probes.

On 22 September Tesco announced the accounting error, after it issued a profit warning in August.

It also emerged the company had not had a finance chief in place for months.

The £250m figure relates to how it logs suppliers' rebates and if they were reported in the correct accounting period.

More follows...

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Lib Dems Want Council Tax Rise For Rich

The rich should shoulder more of the burden for cutting the deficit and pay higher council tax, the Chief Secretary to the Treasury has said.

Danny Alexander said Liberal Democrats would add extra bands to the council tax structure to ensure those living in expensive homes paid more.

Mr Alexander said it was "an outrage" those living in £50m homes paid the same as people in £500,000 homes and if the party was to be part of another coalition it would expect the wealthy to help pay down the deficit.

The pledge, unveiled at the Lib Dem conference in Glasgow, came after Labour disclosed it would introduce a mansion tax for homes over £2m to help fund the NHS.

David Cameron and Nick Clegg: Is the 'bromance' over?

Nick Clegg's party had previously toyed with the idea of a mansion tax but the Lib Dem leader said it had been dropped in favour of the council tax plan.

Mr Alexander said: "We will introduce a new levy on the highest value properties - new bands on top of council tax to end the outrage that a £50 million pound property can currently pay the same as a half million pound home. This new tax will be fair, affordable, and will generate funds that will help our nation to live within its means.

Video: Lib Dems 'Wrote' Economic Recovery

"But I also need to be clear. The entire deficit cannot be removed through taxes on the wealthy. Far from it. Departmental spending will see further reductions, and we will have to keep social security bills under control. We've proposed stopping winter fuel payments to the wealthiest pensioners."

Mr Alexander accused the Tories of pinching the Liberal Democrat's 'tax cuts for millions' plan and claiming all the credit for the economic recovery.

He said the Tory plan unveiled by David Cameron as the middle class centrepiece giveaway of the party's conference was a Liberal Democrat policy.

Mr Cameron said by 2020 he would increase to £12,500 the amount people could earn free from income tax – effectively delivering a tax cut for 30 million people.

Ahead of his speech, Mr Alexander told the Murnaghan Programme the Tories had lurched further and further to the right leaving an "ever-widening gap" between the two parties.

He said the Conservatives had lost all the compassion promised ahead of the 2010 General Election and it had been replaced with a "nastier" approach.

Video: Farron On Lib Dem Bedmates For 2015

The Liberal Democrats have made clear their red lines in the event of another coalition after the General Election in May.

Nick Clegg said there was no way his party would support George Osborne's plans for a two-year freeze on working age benefits or Mr Cameron's announcement he would scrap the Human Rights Act.

In a speech on Saturday he accused Mr Cameron would end up trapped between a "poor man's Margaret Thatcher and a rich man's Nigel Farage".

Tim Farron, the party's president, said the Tories had returned to the "nasty party" as set out by the Home Secretary Theresa May, who slammed the Liberal Democrats in her conference speech.

He said the Liberal Democrats would be prepared to go into coalition with the party the electorate gave the greatest number of votes to.

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Oil Drops To Two-Year Low Amid Rising Output

The price of oil has hit a two-year low, after the dollar rallied in response to a strong US jobs report on Friday.

In early Monday trades Brent crude was less than $92 (£57.60) a barrel, while the US benchmark West Texas Intermediate - for November delivery - was down 18 cents at $89.56 (£56.07).

Prices have been on the slide for several months and have fallen by around 16% since July.

The downward pressure is due to the strengthening dollar, increased production and weakening demand.

A slowdown in Chinese economic production has been a key driver.

Oil production has also risen in the US due to the fracking revolution, weakening foreign demand.

Exports are also on the rise in Russia, Libya and Kurdistan.

The OPEC cartel's leading producer, Saudi Arabia, has also cut prices for the fourth straight month as it seeks to defend its market share.

This also suggests it is unlikely to cut production any time soon.

"Oil prices are likely to keep falling for the rest of the year as global supply is outstripping demand," Mitsubishi oil risk manager Tony Nunan said.

"Supply of US shale gas alone can cover global demand this year, and unless OPEC countries reduce their production, or unless a fresh geopolitical concern occurs, the best estimate now is a bearish market."

On Friday, official US data showed its September unemployment rate had dropped to 5.9%, the lowest level since July 2008.

The news increased the likelihood the US Federal Reserve will hike interest rates earlier than expected.

The dollar has been floating at six-year highs against the Japanese yen and two-year highs against the euro.

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House Prices To Fall In 2015, Survey Says

House prices are set for their first decline since 2011, according to a new survey.

The Centre for Economics and Business Research (CEBR) said the fear of impending rate rises and tightening of mortgage affordability tests have dampened price growth expectations for 2015.

It has forecast that average growth this year of 7.8% would be followed by a contraction of 0.8% next year.

"Tougher mortgage eligibility criteria, high deposits requirements and concerns about the future rate rises are starting to take steam out  of the UK housing market," the CEBR said.

But the independent research body described the drop as a rebalance rather than a bubble bursting.

Video: Aug 29: Young Unable To Buy Homes

Prices in the London and the South East have seen double digit growth in the last year, far outstripping some other regions.

"Price falls next year will be modest and we shouldn't be too worried about this - we are not anticipating a crash," CEBR head of macro-economics Scott Corfe said.

"The market is adjusting after getting ahead of itself in the first half of 2014."

The Mortgage Market Review (MMR), brought in at the end of April, has increased lenders' scrutiny of prospective mortgagees, making them account for a wide range of outgoing monthly costs.

Would-be borrowers have been quizzed on how much they spend each month on items such as toiletries, gym fees and hobbies, to stress test their outgoings ahead of an increase in the historic base rate low of 0.5%.

"Affordability has become such an issue on the more expensive regions of the UK that buyers are starting to balk at high prices," the CEBR said.

In addition to the MMR pressure, there is increasing belief the Bank of England will raise the base rate before the end of 2014.

But governor Mark Carney has tried to soothe the market by saying there would not be a sharp ramp up in rates to pre-crash days.

In a separate study, the Intermediary Mortgage Lenders Association said less than half of surveyed lenders and brokers believed there was an improvement in lending conditions in the last three months.

The equivalent survey at the beginning of the year found that nearly all brokers and lenders believed the housing market was improving.

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US Jobless Rate Now At Lowest Since July 2008

The unemployment rate in the United States has dropped to 5.9%, the lowest level since July 2008.

The jobless rate dropped by 0.2% from the August figure.

Official data showed that the US economy created 248,000 non-farm jobs in September.

The Labor Department said employers added 69,000 more jobs in July and August, higher than the government had previously estimated.

It said job creation was strongest in the restaurant industry, health care, food and beverage stores and administrative services.

More modest additions were recorded in construction and government hiring.

The improved figures come after President Barack Obama touted his administration's economic achievements in a speech on Thursday.

The economy is one of the top issues in voters' minds as the November mid-term elections near.

The lower jobless rate, combined with the surge in hiring, could ratchet up pressure on the Federal Reserve to raise its benchmark interest rate earlier than expected.

Most economists have predicted that the Fed would start raising rates in mid-2015.

"This number will continue to support the notion that the economy is growing ... (but) isn't so strong that the Fed will raise rates anytime soon," Kingsview Asset Management portfolio manager Paul Nolte said.

With rate hike expectations mounting, the dollar pushed higher on foreign exchanges after the figures were published at 1.30pm BST.

Markets across Europe except Germany's DAX, which was closed for the day, jumped on release of the new data.

In broader economic news, officials said the US trade gap narrowed in August to $40.1bn (£25bn).

The Commerce Department said the revised figure was $200m (£125m) down on the first estimate.

Economists had expected the trade gap to have grown to $40.9bn.

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John Lewis Boss Sorry For 'Hopeless' France Jibe

The boss of the John Lewis Partnership has apologised to France, after saying the country was "finished".

Managing director Andy Street held up an olive branch after a series of negative comments about the country were published on the front page of The Times.

He had made critical comments at an event for entrepreneurs in London that included a competition for start-up businesses.

Mr Street described France as "sclerotic, hopeless and downbeat," and urged British business people with investments in the country "to get them out quickly".

He had said: "I have never been to a country more ill at ease … nothing works and worse, nobody cares about it."

Mr Street is the most senior executive in the partnership, which shares an equal percentage of profits amongst all workers.

He joked to the audience that an award given to the company at the World Retail Congress in Paris was "made of plastic and is frankly revolting".

"If I needed any further evidence of a country in in decline, here it is. Every time I (see it), I shall think, 'God help France.'"

However, on Friday, Mr Street said in a statement to Sky News that his comments "were supposed to be lighthearted views, and tongue in cheek".

He added that "on reflection I clearly went too far. I regret the comments, and apologise unreservedly".

But the Gallic wrath may already be building, despite there being no John Lewis or Waitrose store presence in France.

After informing readers that Mr Street called the Eurostar terminal of Gard du Nord the "squalor pit of Europe", Les Echos called his comments "bitter and angry".

It then warned readers that John Lewis has plans to roll-out a website catering for French customers, with pricing in euros.

Les Echos then quipped: "The fuss is already assured."

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Labour Peer McFall Joins Digital Bank Atom

By Mark Kleinman, City Editor

Lord McFall, a former chairman of the Treasury Select Committee, is joining the board of Atom, the first British digital-only bank that hopes to launch next year.

Sky News understands that the Labour peer is among a crop of directors being appointed by the new venture, which is being set up by the co-founder of Metro Bank and former boss of First Direct.

Lord McFall, who will become Atom's senior independent director, was also previously a director of NBNK Investments, which was set up after the banking crisis to buy assets from the UK's bailed-out banks.

NBNK was trumped in the auction of 630 Lloyds Banking Group branches by the Co-operative Group, a deal which collapsed as the mutually-owned lender came close to implosion amid the scandal over Paul Flowers, its former chairman.

Lord McFall's appointment will be announced shortly, according to an insider, alongside those of Jon Hogan, a former executive at ANZ Bank and First Direct; and Bridget Rosewell, a director of Ulster Bank and Network Rail.

Atom is awaiting regulatory approval from the Financial Conduct Authority and the Prudential Regulation Authority but hopes to launch next year.

The new business will not have any physical branches and will be primarily accessible through the internet and digital apps.

Anthony Thomson, Atom's chairman, and Mark Mullen, its chief executive, are understood to be planning to offer a full range of products aimed at personal and small business customers.

These will include current and savings accounts, as well as loan products.

It is not clear whether the pair have secured external financial backing for Atom, which headquartered in northeast England, close to the Newcastle base of Virgin Money, which this week announced plans to float on the stock market.

The plans for Atom come amid an explosion in the demand for digital banking services and a commensurate decline in footfall at thousands of retail bank branches.

Earlier this year, the British Bankers' Association (BBA) published research showing that UK-based customers conducted almost 40 million mobile and internet banking transactions each week last year.

The BBA insisted that branches would "remain at the heart of banking in the 21st century", but it emerged just days later that the taxpayer-backed Royal Bank of Scotland was closing 44 branches, sparking a fresh political row.

Under revised rules aimed at bolstering competition, the FCA has pledged to decide on banking licence applications within six months.

The process historically took several years, frustrating Treasury officials in the aftermath of the 2008 banking crisis, which sparked the merger of Lloyds TSB and HBOS, and the disappearance of several other UK banks.

Some applicants, such as Home & Savings Bank, a telephone and internet-based lender, were effectively forced to abandon their plans because of difficulties securing regulatory approval.

Metro Bank's launch in 2010 as the first new high street bank for more than a century came after a similarly tortuous process.

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