Iraq Crisis Hits Airlines And Travel Firms

Airline and travel companies have seen their share prices fall in the wake of the latest violence to hit oil exporter Iraq.

EasyJet, IAG and TUI Travel, all operators of fuel-hungry aeroplanes, all saw their share prices fall on Monday.

The cost of a barrel of Brent Crude - used to price international oil - jumped sharply a couple of weeks ago when trouble first flared.

But has now risen even further to stand at above $115, close to Thursday's high and nearing the $115.71 reached on September 9 last year.

"Any spillovers of fighting into the oil-producing southern parts of Iraq will likely take oil, in particular the Brent prices up by another leg," Mizuho Bank analysts said.

Iraqi special forces during a patrol in Ramadi in central Iraq

Iraq is oil cartel Opec's second largest oil producer, pumping out more than 3 million barrels a day.

Global oil prices are close to breaking the nine-month high as Islamic State in Iraq and Syria (ISIS) militants took four more towns in western Iraq.

ISIS also took a border crossing into Syria on Saturday, amid reports indicating another crossing into Syria.

Sunni tribesmen have taken a border crossing into Jordan to halt it falling to ISIS.

Further pressure to oil prices on Monday came from China, as a report indicated increased output from its manufacturing sector.

HSBC's monthly China manufacturing survey showed activity expanded for the first time this year, indicating that the slowdown in the country's economy is bottoming out, which would lead to increased energy demand.

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Asos 'Loses 20% Of Stock' In Warehouse Fire

Asos has confirmed that a fifth of its stock was "compromised" after a fire broke out at its main distribution warehouse.

Police are treating the fire as deliberate. Pic: @mathew_hanley

The online fashion retailer said that at the end of May the company held £159m worth of stock at cost price, with 70% of it held at the warehouse in Barnsley.

Although the stock damage at cost price is estimated at around £20m, the value may exceed £30m at retail prices.

The company said in a statement: "None of the technology, automation or structure of the building has been affected by the fire.

"Our initial estimate is that approximately 20% of the total stock at the site has been compromised by fire damage and the sprinkler systems."

Firefighters outside the warehouse. Pic: Tim Ansell

"The clean-up process commenced on Saturday morning and progressed quickly.

"Consequently, at 2am this morning we recommenced taking orders. We are fully insured for loss of stock and business interruption."

In early stock market trades, shares were down more than 2% before bouncing back to above the session's starting price.

Customer Hannah Williams, from Birmingham, had ordered a top on Friday for next-day delivery.

"Obviously it didn't arrive on Saturday and I've since received a generic letter saying it's on its way," she told Sky News.

Firefighters battled the blaze into the early hours. Pic: @mathew_hanley

"I'm hoping it arrives today. It's pretty inconvenient, but I suppose worse things happen in life." 

The fire affected four floors of its warehouse in Park Spring Road, Grimethorpe, and led to 500 workers being evacuated after the alarm was raised at 9.50pm on Friday.

After initial investigations, South Yorkshire Police determined the fire was deliberately lit and have launched a criminal inquiry. The force appealed for anyone with information to get in touch.

Asos said it was "co-operating fully" with the investigation.

The warehouse is thought to handle over 10 million packages at any one time.

Asos has worldwide sales of £750m. Pic: @mathew_hanley

It is more than 60,000 square metres in size - bigger than seven football pitches.

In early June, the fashion giant's share price dropped 40% after the retailer issued an unexpected profit warning, wiping £1.2bn from its value.

At the time Asos said it would be less profitable this year due to higher promotional activity, the strong rate of growth in low-margin products, and foreign currency weakness because of the strong pound.

Previously, ever since it floated on the stock exchange in 2001, it had been a darling for investors who saw its value rise sharply.

Asos - which was originally called As Seen On Screen - has worldwide sales of £750m.

It has been one of the most successful businesses at capitalising on the large number of British consumers who have switched from high street shopping to buying clothes online.

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Morrisons Expands Supermarket Price War

Supermarket chain Morrisons has announced more price cuts as it attempts to halt a decline in sales.

It said more than 130 "everyday items" would see reductions and that the average price cut would be 14%, with some items discounted by more than 30%.

The news comes after the struggling supermarket announced a massive round of what it said were permanent price cuts to more than 1,000 items.

In a statement, Morrisons said: "Cuts will be across a mix of everyday products, predominantly in the grocery and household areas of store.

"The announcement comes in the same week as a sharp fall in inflation and the first decrease in food prices for eight years."

In March the chain, which has suffered amid strong challenges from discounters and because of its slow response to the online grocery and convenience markets, confirmed a pre-tax loss of £176m for 2013/14 after profits of £879m in the previous 12 months.

Chief executive Dalton Philips subsequently waived his £374,000 bonus.

The company later revealed a like-for-like sales decline, excluding fuel, of 7.1% in the 13 weeks to May 4.

Morrisons has seen its share price tumble by around a third in the last year.

The supermarket chain recently embarked on price cuts of £1bn over three years to take on the flight to discounters, which has affected sales at the so-called 'big four' chains.

Mid-market supermarkets have suffered in recent years amid the rise of German discount chains Aldi and Lidl at one end, and premium outlets M&S and Waitrose at the other.

On Friday, Sainsbury's announced a tie-up with Danish discounter Netto in a trial return to the UK market.

Last week, Morrisons also confirmed plans for 2,600 job cuts.

A statement detailing the changes said the losses, representing 2% of its workforce, would result from cutting tiers of in-store management.

But the company insisted it could improve customer service at the same time, because more staff would be focused on serving shoppers.

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Twitter Founder Rejected $500m Facebook Bid

Twitter founder Biz Stone has told how he turned down a $500m (£290m) offer from Facebook to buy the firm – and watched as its value later soared to billions.

He told Sky News Digital View how he and co-founder Evan Williams travelled to a meeting with Facebook boss Mark Zuckerberg several years ago.

Neither really wanted to sell the company, he said, so they decided to come up with a number "so big", that "no-one would ever say yes to it".

He said they came up with $500m, and "laughed so hard at that".

But despite Mr Zuckerberg saying it was a "big number", an offer was drawn-up later that day.

Facebook founder Mark Zuckerberg

The pair turned it down, saying they felt like they were "just getting started" with the business.

He added that he did not get on with the Facebook founder.

"I like him, and I respect him, it's just that we didn't click," he told Sky's Ian King.

"I'm a jokey guy and he's a very serious guy so every joke I made – it was a tough crowd."

He also commented on the use of Twitter by extremists in Iraq and beyond, saying he still believed the social network was a tool for good rather than evil.

"When you create a large-scale platform where hundreds of millions of people have freedom of expression, you have to take the good with the bad.

"If you're going to tout the fact you're encouraging free speech then you can't curate it. As soon as you do that you lose the trust."

He also said the growth of Twitter into a $23bn (£13.5bn) company feels "strange".

"I've come to terms with it but I wouldn't call it surprised - it feels strange in a good way to go to the shopping mall and see the little bird I drew," he said.

"It doesn't seem that long ago that we were just a rag tag group of guys."

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Bank Body Urges New Help For Challengers

By Mark Kleinman, City Editor

Challenger banks should be aided in their attempts to rival established high street players by effectively forcing public sector bodies to deposit funds with them, a report by the industry's main lobbying group will say this week.

Sky News understands that in a report on competition to be published on Tuesday, the British Bankers' Association (BBA) will promote a package of measures including fair access to the payments system and "proportionate regulation".

A draft press release circulated to banks last week said that the BBA's report would also call for a "levelling of the capital playing field" which currently forces smaller banks to hold significantly more capital against loans than high street giants such as Barclays and Lloyds Banking Group.

The BBA report will be published to coincide with a summit on industry competition, which will include contributions from the Conservative Treasury minister Andrea Leadsom and her Labour shadow.

Political pressure to improve competition on banking is growing, despite the advent of a new seven-day switching system for current accounts.

The BBA is expected to dismiss calls for a move to full mobile phone number-style account portability, saying in its draft press release that "nearly six times as many customers (57%) believe that banks offered them enough choice of products and services than did not think so (10%)".

The lobbying group is also expected to compare the banking industry to airlines and supermarkets, which it will say have benefited consumers through the growth of companies such as easyJet and Lidl.

A swathe of new banks, such as Metro Bank and Aldermore, has emerged in the last three years although none which has started from scratch has gained a significant market share to date.

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France Warns Airlines Over Six-Day Strike

France has urged airlines to cut plane traffic to key airports by up to a fifth, ahead of a week-long air controllers' strike.

The country is braced for travel chaos after the strike's scheduled start on Tuesday.

No-frills carrier Ryanair has already announced on its website that 26 flights to France have been cancelled on June 24 and others overflying the country may be affected or delayed.

British Airways told Sky News it has cancelled several flights and expects "knock-on delays to some other short-haul" destinations.

It added: "We will look to use larger aircraft where we can to help affected customers on cancelled flights so they can rebook free of charge to alternative flights.

"We would urge customers to keep checking our website during the week for the very latest information about their specific flights."

Easyjet said it has cancelled 32 non-UK flights to and from six French airports.

The industrial action is expected to last six days and the civil aviation body wants flight cuts to Paris and some other cities.

The agency assured travellers by saying around three-quarters of flights would be operational.

"Flights to southern France, Spain, Portugal, Morocco, Tunisia and Algeria leaving from Paris" would be slightly less affected, with services reduced by 20%.

France is the world's most popular tourist destination and the strike comes amid the peak of the travelling season.

It also follows a rail protest that affected services to foreign countries as well as domestically. Not all train services have yet returned to normal.

France's two biggest air controllers' unions, SNCTA and Unsa-ICNA, had arranged to strike for six days and warned of "heavy disruption".

SNCTA later called off its action.

Next week, France has a deadline to give Brussels details of its five-year budget plan for the sector.

The strikers are protesting against cuts due to come into force between 2015 and 2019.

Unions say they will threaten the "necessary performance and modernisation needed to ensure an efficient air navigation service in France".

The reductions are part of a European Commission plan known as Single Sky Europe, which is to restructure airspace into operational units rather than national borders.

But the unions say the plan will create "forced low-cost" ethos in air traffic.

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Hedge Fund Loses Millions In Hacking Attack

A US hedge fund lost millions of dollars over a two-month period after hackers installed software to steal trade secrets, it has been revealed.

In a rare raid on the financial services sector, the criminals delayed the fund's trades whilst stealing their profitable company secrets.

BAE Systems Applied Intelligence said the attack cost the unnamed fund millions of dollars and the identity of the attackers is still unknown.

It is understood the attackers lifted information on complex, high-speed trades from the firm, then sent the details to external servers using malware which was installed on the victim's network.

BAE product director Paul Henninger has hinted that it could be an example of corporate espionage by a smaller firm.

He said the attacks began with a successful phishing email attack against a staff member.

The scam happened last year and the company's board was quickly alerted.

Mr Henninger told CNBC: "This was something that was getting reviewed at the board level of this hedge fund precisely because it was having a material impact on performance across the portfolio."

It is not known whether the hack was reported to the Securities and Exchange Commission or FBI.

It is rare for details of hedge fund attacks to be made public.

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Fears Of Exploding Airbags: Major Car Recall

Nearly three million Hondas, Nissans and Mazdas are being recalled worldwide over defective Takata airbags that could potentially explode.

The news comes after Toyota announced a similar recall earlier this month for 2.27 million vehicles.

A fire was reported relating to the defect, but no one was injured in the incident, the carmaker said.

It was also investigating a crash in Puerto Rico where the driver suffered a minor cut on the forehead which may have been caused by an "abnormal passenger-side airbag deployment".

No accidents have been reported relating to the latest recall, which affects around two million Hondas manufactured in 2000-2005.

The airbags are made by Takata

They include 1.02 million in North America, nearly 669,000 in Japan and over 45,000 in the UK.

The models include the Fit, Element, CR-V, Accord, Civic, Jazz and Stream and follows the recall of a million vehicles by Honda last year for similar Takata airbag problems.

Nissan has called back 755,000 vehicles globally, including the Cube, X-Trail and some Infiniti models, manufactured from 2001-2003.

Toyota is among the carmakers using Takata airbags

Nearly 160,000 vehicles - the Atenza and RX-8 manufactured from 2002-2004 - are affected including 8,500 in the UK.

Like Honda, both Nissan and Mazda announced recalls last year, but in smaller numbers.

A Honda spokesman told Sky News: "An airbag supplier (Takata) has informed Honda of the occurrence of an airbag failure, involving a non-Honda vehicle.

"The airbag in question, did not belong to the range of vehicles for which a recall was conducted in the past. Therefore, Honda has contacted authorities to initiate a recall on potentially affected vehicles."

Takata recently realised the earlier recall had not included all of the problem airbags, the carmakers said.

Toyota's affected models include the Corolla, Matrix, Tundra, Yaris and Camry.

It is checking 97,400 vehicles in the UK.

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Building Firms Hit By Possible Rate Rise

Housebuilders and property management firms have seen their share prices drop, amid rising fears of a base rate rise.

The dip comes after the Chancellor once again backed the governor of the Bank of England's plans to raise the base rate of interest.

Housebuilder Barratt Developments was the worst performing FTSE stock in percentage terms, declining by 3.5%, Persimmon fell 2.1% and building supply company Travis Perkins fell 1.79% in late afternoon trades.

Governor Mark Carney said just over a week ago that rates might rise sooner than markets had expected, and many in the financial markets now think a hike could come before the end of the year.

On Monday morning Chancellor George Osborne told the BBC that he welcomed the bank's efforts to communicate its policy stance.

Mr Osborne said: "I think it is a good thing we actually have a bank governor who goes out and does a lot of television and radio and the like, and seeks to communicate clearly to people about the future path of interest rates."

The companies were also hit after weekend comments from Bank of England (BoE) policymaker David Miles.

Considered one of the BoE's most dovish members, he said it was increasingly likely he would vote to raise interest rates before leaving the BoE's monetary policy committee next May.

The housebuilding and property sector has been one of the best performing segments of the UK stock market over the last year.

Record low interest rates and home-buying incentives have pushed the FTSE 350 Construction & Building Materials Index up 23.4% in the last year.

However, the likelihood that interest rates may rise over the coming year has since tempered its performance.

As a result the materials index fell 1.5% on Monday.

JNF Capital trader Rick Jones said: "Interest rates may be rising sooner rather than later, and that's been the cause for a bit of a backlash for the housebuilders."

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FCA Hires Leeson Law Firm For Insurance Probe

By Mark Kleinman, City Editor

The law firm which advised the world's best-known rogue trader has been drafted in to represent the boss of the City watchdog in a probe into a bungled media briefing which wiped billions of pounds from insurers' share prices.

Sky News has learnt that Kingsley Napley, which advised Nick Leeson after the collapse of Barings Bank, is acting for Martin Wheatley, the Financial Conduct Authority (FCA) chief executive and a number of other senior managers during the investigation.

Their legal bills, which are being paid by the FCA, are likely to run to tens of thousands of pounds, industry sources suggested.

Mr Wheatley is said not to have been directly involved in a newspaper briefing about an FCA inquiry into roughly 30 million policies held in so-called 'zombie' insurance funds.

Along with senior colleagues including Clive Adamson, the FCA's director of supervision, he has been interviewed as part of the investigation, which is being led by a partner at Clifford Chance, a top City law firm.

The FCA briefing in March sparked a one-day panic among investors, with billions of pounds being wiped off the value of major insurance companies such as Aviva, Friends Life and Legal & General.

Some companies issued statements during the day complaining that a false market had been allowed to develop in their stock.

The FCA took more than six hours to issue a clarifying statement about the terms of its review, after which many of the companies saw their shares rebound.

After the stock market closed, the regulator issued a further statement in the wake of an emergency board meeting which is said to have been demanded by furious Treasury officials.

"The FCA Board acknowledges the concerns of the market regarding today's press coverage of the FCA's proposed supervisory work on the fair treatment of long standing customers in life insurance. The FCA put out a statement of clarification this afternoon," it said.

"The board will conduct an investigation into the FCA's handling of the issue involving an external law firm, and will share the outcome of this work in due course."

Reports have suggested that Mr Wheatley's position could be threatened by the fiasco, but this is now seen as likely, with insurers and fund managers privately happy to await the outcome of the investigation.

There has, however, been considerable political pressure applied to the FCA, with both Chancellor George Osborne and Andrew Tyrie, chair of the Treasury Select Committee, calling for a rigorous independent probe.

Kingsley Napley's role advising Mr Wheatley is intriguing because the firm's name is one of the most eye-catching in the City.

As well as Mr Leeson, it also acted for the UBS rogue trader Kweku Adoboli, who was sentenced to seven years in prison for unauthorised trading which led to $2.3bn in losses.

In total, the FCA has set aside £1.7m for the cost of the inquiry into its mishandled media briefing, although it has spent only a small fraction of that sum so far.

The FCA and Kingsley Napley declined to comment.

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