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LONDON (Alliance News) - J Sainsbury reported a drop in retail sales and a sixth consecutive quarter of declining like-for-like sales in the first quarter of its financial year, as it continues to be hit by food-price deflation amid a highly competitive UK grocery market.

The company admitted that it is difficult to establish when sales will return to growth although its chief executive said he is encouraged by the "early trends" it is seeing.

Sainsbury's said that total retail sales in the 12 weeks to June 6 were down 0.6% excluding fuel, or 2.3% including fuel on the same period the year before, while like-for-like retail revenue was down 2.1% excluding fuel, or 3.7% including fuel. However, the 2.1% like-for-like fall excluding fuel was slightly ahead of the 2.2% consensus estimate, according to Brewin Dolphin.

On Monday, rival Wm Morrisons Supermarkets announced price reductions to a further 200 items, but Coupe maintained his confidence that Sainsbury's will outperform its peers in the sector, saying that its "prices have never been sharper".

“We will continue to always match our competitors and we’re in the process of reviewing whatever price cuts go on in the marketplace,” Coupe told journalists.

Sainsbury's shares, along with those of Tesco and Morrisons, are amongst the best-performing stocks in the FTSE 100 midday Wednesday.

Standard Chartered's capital strength is a top priority, Chief Executive Bill Winters has written in a letter to employees to mark his first day in the role, highlighting its importance as a competitive advantage for banks in tough economic conditions.

"Capital strength is a competitive advantage, especially in tough economic times. We are reviewing all aspects of our capital strength as part of our broader business review," Winters wrote in a letter seen by Alliance News. "We need to reinforce our foundations; streamline our business; strengthen our financial position; and re-orient the bank for better returns on our capital," the letter said.

UK Chancellor George Osborne is expected to set out plans to phase out the GBP3.5 billion bank levy when he delivers his annual Mansion House speech on Wednesday evening, The Times reported.

The Treasury is expected to replace the bank levy with a new corporation tax surcharge. Unlike the bank levy, which is imposed on global balance sheets, the new tax would apply only to banks' assets in the UK.

The bank levy has been a frustration for banks such as HSBC Holdings and Standard Chartered, both of which conduct the bulk of their business outside the UK.

Osborne's speech may also include further details of his plans for returning ownership of RBS to the private sector.

The chancellor will also attempt to bind future governments to maintaining a budget surplus when the economy is growing, the BBC reports. The move by Osborne will be viewed by many as an attempt to secure his legacy for balancing the books - a pledge he has made repeatedly since becoming chancellor in 2010, it adds.
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Markets: UK stock indices are higher, with Sainsbury's and Standard Chartered leading the blue-chip gainers. The pound is higher against the dollar after UK industrial production output beat analysts' expectations.

Futures point to a higher open for US stock indices, with the DJIA currently indicated up 0.3% and the S&P 500 and Nasdaq 100 both up 0.4%.

FTSE 100: up 0.4% at 6,782.30
FTSE 250: up 0.5% at 17,925.81
AIM ALL-SHARE: up 0.3% at 774.58
GBP: up at USD1.5453
EUR: up at USD1.1288
GOLD: up at USD1,185.88 an ounce
OIL (Brent): up at USD65.86 a barrel
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Other Top Corporate News
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Deutsche Bank, Barclays Bank and the Royal Bank of Scotland Group were among a handful of European banks downgraded on Tuesday by Standard & Poor's, amid concern that state support in a crisis is now 'uncertain', the FT reported. Analysts with the rating agency warned that it was unclear what support even systematically important financial institutions in the UK and Germany would receive, following the recent implementation of the European Union's Bank Recovery and Resolution Directive, the newspaper said. S&P lowered the counterparty credit rating of Barclays Bank one notch to 'A-', with Deutsche Bank and RBS cut to 'BBB+' from 'A' and 'A-', respectively. RBS confirmed the downgrade in a statement.
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Weir Group said it expects its full-year revenue, margins and profit to be weighted more towards the second half than in previous years. Chief Executive Keith Cochrane said the second quarter is proving to be "very challenging" for its oil and gas division, with the US rig count continuing to decline, though at a slower rate over the past month.
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Rolls-Royce Holdings said it has agreed to create a 50:50 joint venture with Liebherr-Aerospace to develop manufacturing capability and capacity for the power gearbox for Rolls-Royce's new UltraFan engine. The venture will be located in Friedrichshafen in southern Germany and will provide production engineering for the power gear drive train components for the new engines. The manufacturing of the components will initially be done in existing Liebherr facilities, but as production volumes increase, the joint venture will look at options for creating a standalone manufacturing infrastructure, Rolls-Royce said.
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Vodafone Group launched broadband and home phone services in the UK, as it continues a push to diversify from its mobile offerings in a market that's increasingly offering a full range of mobile, broadband and TV services. The company's UK unit said it will start rolling out its Vodafone Connect high-speed broadband and home phone services from Wednesday, and said it is investing significantly in the project.
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FirstGroup reported higher profits for its last financial year as its improvement plan delivered higher margins in its US First Student and UK bus operations, and while it expects its plan to drive further improvements in most businesses in the current year it is also facing a hit to its UK rail unit after it lost two key franchises. It reported a pretax profit of GBP105.8 million for the year to end-March, up from GBP58.5 million a year earlier, while the closely-watched figure excluding amortisation charges and some other items rose to GBP163.9 million, from GBP111.9 million, meeting analysts' expectations for a figure of around GBP160.0 million.
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SOCO International is considering the options for its African portfolio, including rationalisation and farm-out of all or part of its asset base in the region, as the oil and gas exploration and production company maintained production guidance for 2015. In an update ahead of SOCO International's annual meeting of shareholders, Chief Executive Ed Story said that more stable Brent crude oil prices, in the USD60 to USD65 range, mean the company can evaluate the "economic attractiveness" of significant investments in future projects.
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Key shareholder meetings are to be postponed as Synergy Health and STERIS Corp respond to the US Federal Trade Commission's plans to block the combination of the two businesses. The news comes almost two weeks after the revelation that the US Federal Trade Commission intends to block STERIS Corp's proposed USD1.9 billion cash and share takeover of Synergy, a result of concerns relating to competition in the market for contract radiation sterilisation services. STERIS and Synergy Health are contesting the FTC's move.
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AIM Movers
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Kimberly Enterprises shares have more than doubled, but the Netherlands-based real estate company said it is not aware of any reason for a jump in its share price. Reach4entertainment Enterprises shares have risen strongly after it reached a deal with AIB Group to restructure and payoff its GBP14.8 million loan facility with the bank, and will replace it in part with new debt from new lenders at lower cost. 1PM shares are up by over a fifth after it said it expects pretax profit for its recently completed financial year to be significantly ahead of market expectations, with revenue slightly ahead, due to strong demand for finance from small- and medium-sized enterprises and lower costs from bad debts. Toumaz is another gainer after it inked a co-development deal with US technology giant Google Inc that will benefit thecompany's connected audio business. It said the agreement will see the inclusion of Google's cast-for-audio technology in its own proposition. Ensor Holdings is up after it reported higher profits and revenue for its last financial year and said the current year has started well. DDD Group is down as the shares give back some of the strong gains registered on Tuesday. The company closed up 29% on Tuesday after it said that trading in the first quarter of 2015 was in line with the board's expectations, and that it is getting an initial positive response from prospective licensees and distribution partners to its TriDef SmartCam product for Windows.
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Top Economics And General
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UK industrial production grew at a slower pace in April, data from the Office for National Statistics showed. Industrial output increased 0.4% month-on-month in April, weaker than March's 0.6% growth, but better than the expected growth of 0.1%. At the same time, manufacturing output dropped unexpectedly by 0.4%, offsetting a similar 0.4% rise seen in March. Economists had forecast a 0.1% rise. On a yearly basis, industrial output growth edged up to 1.2% in April from 1.1% in March. At the same time, manufacturing growth eased notably to 0.2% from 1.2%. Economists had forecast 0.6% rise in industrial production and 0.4% increase in manufacturing output.
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Greek Prime Minister Alexis Tsipras is due to meet with German Chancellor Angela Merkel and French President Francois Hollande on the sidelines of an EU-Latin America summit starting Wednesday, as they seek to end a stand-off on Greece's bailout programme. The meeting comes at a time when fundamental differences remain about how to prevent Greece from defaulting on its debt and possibly leaving the eurozone, and amid continued scepticism by European officials about the country's economic reform proposals.
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The EU's legislature postponed a planned vote on a mammoth free trade deal being negotiated with the US, amid disagreement over a controversial mechanism to settle trade disputes. If approved, the Transatlantic Trade and Investment Partnership (would create the world's largest free trade zone and could help boost the EU economy. But the deal has been bogged down by concerns that it could allow corporations to challenge national laws.
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French industrial and manufacturing output declined unexpectedly in April, the statistical office Insee revealed. Industrial output dropped 0.9% from March when it remained flat. This was the first decline in five months. Economists had forecast production to grow 0.4%.
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US President Barack Obama has asked the military for recommendations on how to make the effort to train and equip Iraqi security forces more effective, the chairman of the Joint Chiefs of Staff said in Jerusalem Tuesday. "What he's asked us to do is take a look at what we've learned over the last eight months in the train-and-equip program and make recommendations to him on whether there are capabilities that we may want to provide to the Iraqis to actually make them more capable," Army Gen. Martin E. Dempsey told reporters traveling with him.
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Afternoon Watchlist (all times in BST)

15:00 US Business Inventories
15:00 UK NIESR GDP Estimate
15:30 US EIA Crude Oil Stocks change
19:00 US Monthly Budget Statement
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Thursday's UK Corporate Events

Home Retail Group - Q1 Interim Management Statement
WS Atkins - Full Year Results
PZ Cussons - Trading Update
Halma - Full Year Results
Hardy Oil and Gas - Full Year Results
Mulberry Group - Full Year Results
Real Estate Credit Investments PCC - Full Year Results
Volex - Full Year Results
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Thursday's Key Economic Events (all times in BST)

00:01 UK RICS Housing Price Balance
00:50 Japan BSI Large Manufacturing
n/a China New Loans
06:30 China Retail Sales
06:30 China Industrial Production
06:30 France Consumer Price Index
06:45 France Current Account
13:30 US Retail Sales
13:30 US Jobless Claims
14:30 US Export/Import Price Index
15:00 US Business Inventories
15:30 US EIA Natural Gas Storage change
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