Is it just Cityblogger or is every Tom, Dick and HBOS queuing up to do a rights issue at the moment? Bradford & Bingley annoyed investors yesterday by launching its own £300m issue. “Only a month ago there was no sign of a rights issue,” points out David Buik at BGC Partners. “Yesterday £300 million was required.  It’s not a king’s ransom but for B&B it’s very significant.”

And now Barclays has come out and refused to rule one out. At its first quarter trading update today the bank said it would not “rule in or rule out any option” as its core equity tier 1 ratio is now below its own target at 5.1 per cent. On the plus side, trading seems relatively healthy compared to its peers, although it took £1.7bn of asset write-downs in the first quarter relating to the credit crunch.

The morning the FTSE100 took a slight bashing as the Royal Bank of Scotland’s rights issue closed out, and banking stocks were hit by concerns over who could be next with a rights issue. Traders hope one from Alliance & Leicester won’t be on the cards given its strong deposit base. But rumours are circulating that Lloyds TSB could be in the frame, although Mr Buik believes this is unlikely considering its more modest exposure to bad debt.

Buying into banks could be tempting but City experts say steer clear. “Picking a low in the financials sector is a [foolish thing] to try and do right now,” Tom Hougaard, chief market strategist at City Index, told Cityblogger. “Earlier this week Barclays was at 480p and now it’s 413p. I think the financials are in a bear market and as long as they are in a bear market [the FTSE won’t recover].”

Certainly, Our Merv’s Bank of England Quarterly Inflation Report yesterday didn’t help, refusing to rule out a recession as inflation rampages. Thanks for the good cheer, Merv!

Meanwhile Mr Hougaard says he’s finding it difficult to read the FTSE100. “Who knows where the economy is going?” he says. “The politicians don’t know. The FTSE is just stalling and I can’t make up my mind if it’s going to go down or up. We’re in for a breather and it could be a bit longer than we think.”

However, if the FTSE goes above 6250 he will take this as a sign to go long on it, and if below 6100, as a sign to go short.

Elsewhere, activist investor Carl Icahn has snapped up a stake in Yahoo. Interesting times!

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Much to the chagrin of Tiddles, Cityblogger spent a sweltering Sunday perusing the stalls at a local dog show. As he wandered about enjoying a 99 (one has to when it costs an extortionate £2!), Cityblogger’s eyes were drawn to a ridiculous spectacle – a pink skinned hairless little creature strutting along in a bright pink collar and lead and adorned in a wet tea towel. And it was this image which Cityblogger recalled this morning as he examined Alliance & Leicester’s howler of a trading statement.

Stock market underachievers - ‘dogs’, as they are known in City parlance - are ten a penny in the banking sector. But A&L has grabbed the limelight after it became the latest bank to unveil hefty write-downs from the credit crunch. The credit squeeze cost the company £192m in write-downs on treasury and credit assets in the first four months of the year, and A&L is taking a further £199m post-tax asset write-down - higher than expected by analysts. What’s more, funding costs are also expected to rise to £150m this year. Unsurprisingly, the shares dipped by 7 per cent to 473.75p and are down a painful 60 per cent on the year. Ouch! Analyst James Hamilton at broker Numis described the trading statement as “terrible – as expected” and reduced his target price on the shares to 485p, stating that there is “better value elsewhere”. At least there’s no mention – as yet – of a rights issue…

Another canine on show was Enterprise Inns, which unveiled half-year figures. Shares in the pub operator are already down 34 per cent on the year, and fell another 4 per cent today after pre-tax profits dipped by 33 per cent. Yet chief executive Ted Tuppen said this was a “solid” performance given the tough trading environment right now. And Richard Carter, analyst at broker Numis, reckons the company is holding up better than many of its peers as consumer cut back on leisure spending.

A strong performance from European travel company TUI boosted the FTSE100 initially this morning, but worries about high UK inflation figures have pushed it back below the 6200 mark to 6144. Our Merv could soon have to put pen to paper and explain to Gordon Brown why inflation is so high.

But commentators say market falls below 6200 – as also seen on Monday - are unlikely to be serious. “Like other recent forays below this psychological level, so far this has proved to be short lived,” says David Jones, chief market strategist at IG Index. “Recent slides back towards the 6150/6180 area have brought the buyers back out in droves – and for now it looks like only a prolonged move below here would suggest that the positive sentiment is starting to fade.”

Here’s hoping!

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It’s not always an exact science to try to second guess the Bank of England’s Monetary Policy Committee decisions. But on this occasion, as Cityblogger’s contacts had predicted, the MPC left rates on hold yesterday at 5 per cent, despite some last minute rumours that it could cut them by a quarter of a per cent.

So, sadly Cityblogger’s ‘gift’ to the MPC of used fivers didn’t pay off. But let’s not be too despondent. After all, Edward Menashy, chief economist at broker Charles Stanley, reckons investors should actually take heart from the MPC’s lack of action because he thinks it means the UK economy is not in such a “parlous condition” that it requires “back to back” rate cuts. “The bears of the economy believe that the UK is heading into recession and that base rates are heading to 3.5 per cent by the end of 2008,” he says. “Recent Bank of England statements have been positive regarding both the UK economy overcoming the worst of the credit crunch and the state of the housing market. This view goes a long way to suggest that despite enduring sweat, blood, toil and tears to secure a livelihood, the UK can emerge out of the morass without sustaining a recession.”

Comforting words! Meanwhile, although the FTSE100 has dipped around one per cent this morning following a weak performance from the banks due to continued worries about the mortgage market, on the bright side the index remains comfortably above the 6,000 level at 6215 this morning. For now at least!

Cityblogger wishes you a good weekend.

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All eyes are on the Bank of England’s Monetary Policy Committee this afternoon to see if its boffins will deign once again to get out their big scissors and cut interest rates to prop up the economy. But Cityblogger isn’t holding out much hope that he’ll see a drop in his mortgage payments, despite the fistful of used fivers he sent to the Old Lady of Threadneedle Street yesterday, strapped to Tiddles with a begging note….Er…only kidding! There are, of course, few spare used fivers in the Cityblogger household anyway…!

The widely held feeling in the City is very much that the MPC will keep rates on hold, with possibly a cut expected next month. Although some weak economic data out this week led to some traders holding out faint hope for a quarter per cent cut in the base rate. “The consensus is that interest rates are not moving,” Howard Wheeldon, senior strategist at BGC Partners, told Cityblogger this morning. “[Although] there was a bit of a wobble yesterday with the Pound that suggested more bad economic news [might lead to a cut]. I’d probably be very surprised if we don’t see a 25 per cent cut next month, however. There’ll be another month of economic data and 90 per cent is likely to be bad, so there’ll be pressure on the bank to react.”

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The sun may be shining as though the height of summer is upon us – Cityblogger already boasts some colour on his usually pasty-looking limbs - but in some City hearts it might as well be snowing. With the pleasant May bank holiday already a distant memory, UBS has set about once more with its axe. The Swiss banking giant says it is to trim another 2,600 jobs by next year due to heavy losses sustained in the US subprime mortgage debacle. The bank made a $11bn loss in the first quarter and has been one of the biggest casualties of subprime, swallowing write-downs of $19bn and planning to shed a total of around 5,500 jobs. Merrill Lynch and Citigroup also announced major job cuts last month and no doubt this is the tip of the iceberg for City workers. The boffins at the Centre for Economic Research expect 11,000 job cuts this year and another 9,000 in 2009. Razor blades, anyone?

More gloom was forthcoming from Bovis Homes, too, as the housing market continues to deteriorate. Reservation levels at the housebuilder are down 30 per cent compared to the same period last year, and the company says half-year profits will now be significantly lower than analysts’ forecasts. However, Chris Millington, analyst at broker Numis, maintains his buy recommendation on the shares, pointing out that while Bovis is, like Persimmon, finding it tough out there, it still has strong operating margins and low debt levels compared to some of its peers.

Meanwhile, over the weekend Microsoft dramatically pulled out of takeover talks with Yahoo and is now thought to be cosying up to AOL already. How heartless! Some Yahoo shareholders are said to be unimpressed by chief executive Jerry Yang’s failure to cement a deal with Microsoft, with some commentators wondering if Microsoft’s action is deliberately designed to galvanise shareholders into action to rekindle the deal. “Yahoo!’s shareholders will be furious, forcing Jerry Yang’s team to think again, or return $4 billion to shareholders,” says one. Yahoo shares fell 15 per cent on Monday.

On the bright side, after faltering initially, the FTSE is up almost 2 per cent ahead of lunchtime, with oil stocks boosted by record crude prices and news that Tullow has stuck oil in Ghana.

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