...the main headlines..........
Stocks rally on US GDP boost
Stocks rallied on Thursday after revised numbers showed that the US economy grew faster in the second quarter than forecast. Analysts had expected a 2.7 per cent increase in the period, but the revised figure grew to 3.3 per cent. Stronger exports and better inventory numbers helped the rise, despite severe problems in the housing industry, increasing unemployment and tight credit conditions. The Dow-Jones index closed up 212 points with economists pointing to the fact that US growth is now the strongest in the G7.
Credit crunch will get worse before it gets better 
Spanish banks suffer on mortgages
Ratings agency Fitch has downgraded mortgage securities issued by Banco Santander in a sign that Spain’s property crash is feeding through to lenders, said The Daily Telegraph. The Spanish government had previously claimed it had avoided the sort of mortgage problems experienced elsewhere but these vehicles were packaged in the same way, and the pattern is “eerily similar to the final stages of the US sub-prime debacle”. Arrears on the most recent tranches have reached 7 to 8 per cent, with “high levels of default” among foreign residents.
Sainsbury’s shares soar on bid hope
Shares in the UK's third-largest supermarket were up almost 8 per cent yesterday as rumours circulated of a possible bid. Talk of an offer priced around 500p sent its shares up to 344p, with traders pointing to the Qatari Investment Authority as being a likely buyer, in conjunction with property tycoon Robert Tchenguiz. The QIA scrapped a previous bid after the credit crunch hit, but it retained its 25.3 per cent shareholding and has since increased it to more than 27 per cent. Tchenguiz has 10 per cent.
Profits collapse at Savills
High-end property company Savills announced that profits at its real estate arm fell 88 per cent in the first half of the year, on a "significant" drop in commercial and residential sales volumes. The company - which employs 3,000 staff in the UK and 20,000 globally - said it would be forced to make job cuts across a number of areas of its business. Earlier the National Association of Estate Agents said that 98 per cent of its members blamed government indecision on stamp duty for the continuing downturn.
Indian growth slows
India’s economy grew at the slowest rate in four years in the last quarter. In the three months to the end of June its gross domestic product was up 7.9 per cent from the same period last year, down from 8.8 per cent the previous quarter. Consumer spending has been hit by inflation, which has tripled this year to 12.4 per cent, forcing the central bank to hike interest rates three times and pushing borrowing costs up. India is now expected to be narrowly overtaken for growth this year by Russia.
Allianz set to offload Dresdner
The German banking landscape seems set to change as Allianz prepares to sell Dresdner Bank to Commerzbank for 9 billion euros, reported the Financial Times. Allianz and Commerz both said they would hold extraordinary meetings on Sunday to try to “seal the deal”. If completed, it would create the second biggest bank behind Deutsche, and the country’s largest branch network. Allianz had previously planned to break Dresdner up or sell it to China Development Bank, but Commerz is now the front runner.
...in brief..................
Zoom fails and Merrill falls
Low-fare airline Zoom has collapsed, leaving hundreds of travellers stranded. The airline, based in the UK and Canada, grounded all its flights last night as it prepared to go into administration. The company failed to reach agreement on a re-financing package that would have kept it flying…………
Troubled mortgage lender Bradford & Bingley reported that it moved into the red in the first half of the year. It lost £26.7m, versus profits of £180.4m in the same period last year. The company said it continues to expect arrears and repossessions to increase…………
Bertelsmann, Europe’s biggest media company, said it might sell a stake in TV group RTL to finance an acquisition, feeding speculation it might move to buy ITV. RTL is currently worth 10bn euros and the sale of a 15 per cent stake would realise £2.2bn, ITV’s current value…………
Nintendo raised its full year net profit forecast by 26 per cent, on a weaker yen and buoyant sales of its DS and Wii players. The world’s biggest maker of game machines said that net earnings would rise to 410 billion yen versus the 325 billion yen previously forecast…………
PPR, owner of Gucci, reported that first-half profit more than doubled on strong sales of luxury goods. So far its high quality items appear to be immune to the economic slowdown, while the sale of its YSL Beaute unit to L’Oreal also bolstered results…………
Merrill Lynch’s losses over the past 18 months have wiped out about a quarter of the profits it has made in 36 years as a listed company, according to the Financial Times. The $14bn it has lost in since the credit crisis began compares to the $56bn it has made since 1971…………
