E-therapeutics Share News (ETX)

LONDON (Alliance News) - Bank of England Governor Mark Carney Friday signaled that rising productivity will now be the key factor that decides when the central bank will start to tighten monetary policy, and any tightening will be a slow, gradual process.

In a speech at the World Economic Forum in Davos, Carney effectively confirmed that the Forward Guidance the bank had previously given is no longer relevant after unemployment fell far faster than the central bank anticipated when the policy was introduced in August. He signaled that interest rate rises were still some way off because the rise in numbers in work wasn't being matched by increased productivity.

"It now seems likely that the rate of unemployment consistent with stable inflation in the medium term is somewhat lower than the (monetary policy committee) assessed back in August," the Governor told the Davos CBI British Business Leaders lunch.

Carney said he believes that factors including progress in the banking sector, the potential for skilled workers to return to higher-productivity jobs, and anticipated economies of scale, will boost productivity as the recovery continues, but he cautioned that the recovery will need to be sustained for longer if productivity is to grow "in earnest".

"Even though unemployment is falling faster than expected, the recovery has some way to run before it would be appropriate to consider moving away from the emergency setting of monetary policy," Carney said.

The Bank of England policy setters will adapt its Forward Guidance to "changing circumstances" in its February Inflation Report, the governor added.

"The MPC will consider a range of options to update our guidance, recognising both what we have learned about the behaviour of aggregate supply in the economy as well as the more benign inflation outlook," Carney said.

In corporate news, Royal Mail has reported a 2% increase in like-for-like revenues for the first half of the year, driven by continued growth in its parcels revenues. However, the company said parcel volumes were flat for the period as its new size-based pricing meant some customers decided not to send some larger items via Royal Mail.

Overall, like-for-like parcel revenues were up 8% over the nine months to end-December, driven by the new pricing structure, with parcels now accounting for 51% of group revenue. It said it handled 115 million parcels in December alone.

However, Royal Mail's overall revenues were also up 2% for the six months to the end of September, while parcel revenue growth at that stage was 9%, meaning that growth in that crucial business slowed in the Christmas quarter despite retailers reporting a boom in online sales.

Cairn Energy has become the latest company to be contacted by the Indian tax authorities, following in the wake of the likes of Vodafone Group, Royal Dutch Shell and IBM.

Cairn said it is now talking with the tax man about its accounts for the year to end-March, 2007, and is providing authorities with the necessary information. It said it has been instructed to keep hold of the 10.3% stake it still owns in Cairn India while the discussions take place.

In political news, tensions are rising in Egypt after a car bomb exploded outside a Cairo police headquarters and another bomb rocked a subway station in the Egyptian capital, killing at least five people, state media reported.

The Syrian government and the opposition are sitting at the negotiating table for the first time ever Friday in a bid to bring an end to the three-year-old conflict. They are meeting at the UN's offices in Geneva, where it is believed talks will centre on the release of prisoners and detainees and the possibility of opening besieged towns and villages to humanitarian aid deliveries. The two sides clashed openly over the conference's focus at a launch ceremony Wednesday in the Swiss town of Montreux.

Thailand's Constitutional Court has ruled that it is legal to postpone a general election scheduled for February 2. The court judges ruled that a postponement of the polls would not be a breach of the constitution. "The responsibility for postponing the elections lies jointly with both the prime minister and the chairman of the Election Commission," the court said. The Election Commission asked the court for a ruling in light of months of mass anti-government protests in Bangkok aimed at toppling the government of caretaker Prime Minister Yingluck Shinawatra.

Anti-government protesters in Ukraine have vowed to carry on their protests after President Viktor Yanukovych failed to make major concessions in late-night talks with opposition leaders. The promises came as the administration made another move likely to raise tensions. Yanukovych on Friday appointed his hardline Security Council Secretary Andriy Klyuyev as his new chief of staff. The president fired Serhiy Lyovochkin, who was regarded as relatively liberal, from the post January 17.

--------

FTSE 100: down 0.9% at 6,709.85
FTSE 250: down 1.5% at 15,737.50
AIM ALL-SHARE: down 0.8% at 863.94
GBP-USD: 1.6521
EUR-USD: 1.3710
GOLD: USD1,270.21 an ounce
OIL (Brent): USD106.70 a barrel

--------

KEY UK CORPORATE NEWS:

FTSE 100: Weir Group has won a USD98 million, or GBP59 million, two-year contract to provide general maintenance services on Lukoil's West Qurna-2 oilfield in southern Iraq. GlaxoSmithKline has received a recommendation for marketing authorisation for its Eperzan treatment for type 2 diabetes from the European Medicines Agency's Committee for Medical Products for Human Use. Shire has completed its tender off for the US's ViroPharma Inc, with 79.5% valid acceptances. BT Group will invest a further GBP50 million into its commercial fibre broadband programme over the next three years, with the goal of making high speed broadband available to more than 400,000 additional homes and businesses.

FTSE 250: Close Brothers Group is expecting a strong result for the first-half of its financial year, as the recovering economy boosted all three of its divisions. It said its positive first-quarter performance has so far carried on into the second quarter, adding that it is confident in its outlook for the full financial year. Workspace Group said its like-for-like rent roll increased 1.8% in the third quarter, and 7.6% to GBP56.7 million in the first nine months of its fiscal year. 3i Infrastructure said its European portfolio continued to perform well operationally and financially in its fiscal third quarter as it moves forward with its objective of paying a dividend of 5.5% of opening shareholders' equity for the full year. Essentra has now opened its new principal European components distribution facility in Kidlington in the UK, allowing to expand its product range and improve its next-day delivery process. Intellectual property business IP Group said the nanopore sequencing technology access programme carried out by its portfolio firm Nanopore Technologies Ltd was heavily oversubscribed.

AIM: Victoria Oil & Gas is a big gainer after it signed a settlement agreement with RSM Production Corp in relation to its cash-call dispute for the Logbaba gas project in Cameroon. Victoria said that the parties have agreed to an independent audit to determine the final balance payable by, or to be refunded to, RSM. ITM Power is up after it won a contract with AMEC and National Grid to assess efficient usage of Power-to-Gas energy storage. Stadium Group is doing well after it said it had delivered "significantly improved" profits in the second half as it began to see benefits from its restructuring programme. President Energy is another gainer after the results of an independent audit of its prospective resources came in substantially better than expected. The company said its three drilling target prospect areas in Paraguay are now estimated to have a gross mean unrisked prospective resource of 1.09 billion barrels of oil equivalent, more then double the 500 million barrels it had predicted. Stellar Resources is also up after the Gold Mines of Wales venture in which it owns a 49.9% stake, agreed a 12-month extension to its exclusive option agreement with the Crown Estates. Strategic Minerals is a big faller. It experienced a 94% increase in its share price in the week between January 15 and January 22, but said it knows of no reason for Friday's sharp drop. Akers Biosciences is down after it recommenced trading following its announcement of the price for its upcoming public offering on NASDAQ. E-Therapeutics is another faller after it announced the temporary halt of recruitment into ETS2101 cancer trials because of a drug supply issue. Biome Technologies is down after it said it expects to meet forecasts for its full-year results, but warned that its Stanelco RF Technologies business had seen a subdued end to the year due to turbulence in the Chinese fibre optic market.

--------

AFTERNOON WATCHLIST: World Economic Forum, Davos.

--------

Monday's Key UK Corporate Events

Apr Energy Trading statement
Whitbread Trading statement
Porvair Full Year Results
Aveva Interim Management Statement

-------

Monday's Key Economic Events

07:00 UK Nationwide Housing Prices
09:00 Germany IFO
15:00 US New Home Sales
15:30 US Dallas Fed Manufacturing Business Index

-------

By Steve McGrath; steve.mcgrath@alliancenews.com; @stevemcgrath1

Copyright © 2014 Alliance News Limited. All Rights Reserved.