Business Information Service: Last Week

Uncertainty over the future of European currencies and economic policies ahead of the French vote on the Maastricht Treaty today kept equity, foreign exchange, and money markets so volatile that they threatened to smother the release of UK economic indicators and company results announced during the week.

The Government's commitment to sustain sterling's value came under pressure on Monday after a cut in German interest rates. Efforts to shore up sterling within the ERM reached an impass on Wednesday before interest rate rises finally forced it beyond the reach of its trading range.

The Chancellor, Norman Lamont, announced the suspension of sterling's membership of the ERM. The next two days witnessed a 188-point surge in the FT-SE 100 index on the view that a lower pound would leave greater room for cutting interest rates and enhance earnings for UK firms with overseas revenue, while making it cheaper for foreign buyers.

Smith New Court, the stockbroker, extended its dealing service to encompass more firms, including small and rarely traded companies. SNC said it hoped the move would help to stimulate the market and make the firm some money.

Food manufacturer, Dalgety improved on analysts forecasts to report an increase in pre-tax profits from pounds 111m to pounds 117m, helped by a healthy demand for its snacks, which include Golden Wonder.

Official figures released on Tuesday revealed sales of manufactured goods in the UK had risen by 0.1 per cent in August as a growing number of businesses were forced to lower prices to stimulate demand.

From the US, a further slackening in economic recovery was reported by way of disappointing retail sales figures for August, which fell 0.5 per cent.

Kingfisher surprised the stock market with a 4 per cent rise in pre-tax profits from pounds 62.5m to pounds 64.9m in the six months to 1 August, despite a fall in profits contribution from its B&Q do-it-yourself chain. It raised the interim dividend to 4.2p (4p).

On Wednesday, news that UK retail sales had increased by 0.8 per cent in August, above the 0.5 per cent forecast by City economists, almost passed unoticed. The figures indicated a degree of consumer confidence had returned to the high street, helped by end-of-summer sales and price cutting by businesses to remain competitive.

Shares in Body Shop, the international group of franchised cosmetic shops, plunged 108p to 158p after the company warned that profits for the six months to August would reflect disappointing summer takings in its UK shops.

Thursday brought news of unchanged UK manufacturing output for the three months ending July. Meanwhile unemployment levels reached their highest level for five years at 2.81 million.

Bristol & West, the tenth largest building society in Britain, was reported to have suffered a significant setback in profitability, gravely affected by provisions against property values, and is likely to show a reduction in profits of up to 75 per cent when its results are announced on Monday.

UK publisher, Reed International and Dutch publisher, Elsevier, announced they were merging to create a business that will be worth pounds 5.3bn and the most profitable media group in the world when the deal is completed. It still awaits shareholder approval.

On Friday, shares in TVS were suspended at 18 3/4p amid speculation that the group was about to be taken over by a religious broadcasting network headed by the Rev Pat Robertson.

The stock market made an 83-point gain, while and the pound continued to fall against the dollar and mark.