Global Overview

LONDON (ShareCast) - Banks took centre stage on a difficult week for the FTSE 100, with Barclays (LSE: BARC.L) and Bradford and Bingley (LSE: BB.L) rallying on expectations of funding, but seeing these hopes fade towards the end of the week.

FTSE 100 was down points on the week at 5,529.

Equities
Barclays unveiled a £4.5bn fundraising at only a modest discount to the current share price. A group of Middle East and Far East (5029.KL) investors are backing the deal, with existing shareholders also able to give the bank some more cash, at 282p a time, if they want to. The bank (TBHS ) 's stock fell Friday though after Citigroup (ASFZ.PK ) said its £4.5bn fundraising falls about £9bn short of what it really needs

The embattled mortgage bank Bradford and Bingley was said to be close to opening its books to Resolution, the investment company backed by insurance entrepreneur Clive Cowdery, after rejecting its first offer, but slumped Friday after Resolution walked away.

Punch Taverns (LSE: PUB.L ) rushed out a trading statement to dispel fears that it is close to breaching its banking covenants. Punch said its balance sheet is strong, business performance is in line with expectations and it remains confident of meeting full-year profit expectations.

Department store group Debenhams (LSE: DEB.L ) was another company plagued by rumours of imminent breaches of banking covenants, and also suspicions of poor trading performance. The company attempted to pacify the market by reporting that like-for-like sales have grown by 1% in the past ten weeks. No changes have been made to supplier terms outside the ordinary course of business, it added.

Thomas Cook (LSE: TCG.L ) gave travel groups a boost with its reduced first half losses and comments that it remains confident of meeting expectations for the current year with trading for summer 08 strong in all major markets.

Economic
The Bank of England's Monetary Policy Committee (MPC (A050540.KQ ) ) voted 8-1 to hold rates at 5% earlier this month, according to minutes released Wednesday. David Blanchflower was the only committee member to vote for a quarter-point cut, arguing that there is a "small but growing risk of a very negative outcome that would cause inflation to undershoot." Minutes showed that inflationary pressures also prompted some of the other committee members to consider an immediate rise.

Speaking after the minutes were released, Bank of England governor Mervyn King said he expects inflation to return eventually to the long-term government target of 2%, but not before it climbs above 4%. He told MPs on the Treasury Select Committee King that high food and fuel prices would push inflation up this year, possibly to above 4%, and that it would need an economic slowdown to bring it down again.

It's a different story in the property sector though. HBOS (LSE: HBOS.L ) , Britain's biggest mortgage lender, expects UK house prices to fall by 9% this year compared with its previous prediction of a "mid-single digit" fall. In a trading update, HBOS added that the number of housing transactions this year would also be down by 45% on 2007's level.

Further evidence that the UK housing market is drying up emerged when figures revealed a drop in mortgage lending during May and an annual slump of 19%. Gross mortgage lending came in 2% lower at £25.5bn last month, according to the Council of Mortgage Lenders (CML) and down from £31.5bn in May 2007.

International
The Anheuser-Busch saga continues brewing. The Budweiser brewer Friday sought to placate investors after rejecting Stella Artois maker InBev (Brussels: INB.BR ) 's $46.3bn hostile takeover bid by announcing plans to cut up to $1bn in annual costs.

US car giant General Motors (NYSE: GM ) is following the lead of Ford Motor Company and cutting back on production levels of gas-guzzling pick-up trucks and sports utility vehicles. The cut-backs are part of a programme of changes announced today by GM, which is in danger of losing its position as number one in the US market to Japanese manufacturer Toyota.

Goldman Sachs (NYSE: GS ) painted a gloomy picture for some of America's biggest investment banks, predicting billions of dollars of fresh write-downs for both Citigroup and Merrill Lynch (NYSE: MER ) . The second quarter could see Citigroup, added to the broker's "Americas conviction sell" list, suffer an $8.9bn write-down, which may lead to another cut in the dividend. The country's second largest bank could be forced to issue common stock or sell assets to bring in cash as regulators may stop it from issuing preferred or convertible securities.

Kroger (NYSE: KR ) , the largest grocery chain in the US, pleased the market with forecast-beating first quarter figures. Net income in the three months to 24 May rose to $386m, or 58 cents a share, from $446.6m, or 47 cents a share, in the corresponding quarter of 2007.

Moving back across the Atlantic, shares in Fortis (Amsterdam: FOO.AS ) plummeted Thursday after the Belgian-Dutch financial services group announced plans to strengthen its capital base by €8.3bn.

Source: http://uk.biz.yahoo.com/080627/214/i2gz7.html