A silly bid runs out of puff

THE silly season has come early to the Square Mile. First we have the 'now you see it, now you don't' bid for housebuilder Berkeley. Then we have the emergence of a character called 'Mr Angry' who appears determined to undermine the existing order at the London Stock Exchange.

Both cases deserve further scrutiny. The attempt by young property entrepreneur Tony K Pidgley to unseat his father at Berkeley, the company he founded, always looked bizarre.

But it was enough to send the group's shares racing away from 600p last week, when the first rumours of a bid emerged, to a peak of 711p before falling back after Pidgley the Younger (or Piglet as he was unfortunately called in a Cazenove note) retreated from the scene of battle.

But what made people think that Pidgley Junior could (a) run the company better than his Dad who founded it and steered it successfully or (b) could raise the readies needed to pursue a deal?

Nothing, it would seem, but the sheer joy of speculation and a trading opportunity in a market short of lively encounters.

Then there is the London Stock Exchange itself. One source of gossip about Clara Furse is, by common consent, a website based in Saffron Walden, Essex, and which features a character called Mr Angry. The site, run by former foreign exchange dealer Lee Oliver, is not without credibility. Even the LSE concedes that some of its material is credible.

But this does not include the scurrilous rumours about Furse, the LSE's chief executive. Mr Angry's rants would be far more effective if he were to concentrate on the failures of the Stock Exchange under her leadership, at a time when the reputation of Euronext/Liffe - run by Sir Brian Williamson - has been considerably enhanced.

Price fears
SO far, the decision of the Bank of England to lower interest rates to 3.75% is not looking like much of a gamble. The latest underlying inflation figures show prices running at 2.7%, ahead of the Government's central target of 2.5%.

But as governor-designate Mervyn King has explained, exceptional factors - namely a strong housing market and a surge in the price of oil - are fuelling the rise.

Strip these out and the picture is much more favourable. Food prices are under pressure, falling by 7.7%, clothing and footwear prices were still dropping in February - if not as strongly as in the previous month - and the inflation rate of services is moderating.

It is worth noting that in the sensitive area of housing, where the Bank has forecast that price growth will decline from 30% to zero over the next two years, there is growing evidence of a slowdown. Property website Rightmove reports that growth for the past 12 months dropped from 26.5% to 23.5% in February. Moreover, the number of properties on the market continues to increase, so the disparity between supply and demand is closing.

Nevertheless, more cautious commentators, such as Ross Walker at Royal Bank of Scotland, believe that underlying inflation could still rise to 3.5% by the middle of the year.

What does all this mean for interest rates? Having sent the market an easing signal, we can expect some pause from the Monetary Policy Committee.

But the global news is not getting any better, with industrial output in Europe down 1.5% in December for a year-on-year fall of 0.5%, showing the worsening conditions among some of our major trading partners.

Despite this and the continued uncertainty over Iraq, share markets are looking brighter, with the FTSE 100 closing up 37 at 3729.5 on Tuesday. But with Britain in the front line of the Gulf coalition, the pound looks increasingly unsettled. Last night it was trading at $1.59 and the euro had risen above 67p.

This ought to help our exporters - if they can find any customers as they look at an increasingly bleak global horizon.

Brown's turn
BELIEVE it or not, foreign-owned City firms have already begun to look forward to the post-Tony Blair era in the wake of the weekend's million-strong peace march.

Notes to clients from investment houses Nomura and WestLB suggest that once the Gulf crisis is over, Blair could be replaced as Prime Minister by Chancellor Gordon Brown. Saturday's march is being seen as Blair's poll tax - the issue that toppled Mrs Thatcher from her perch. The concern is that as PM, Brown will bring his 'fiscal fiddling' with him to Number 10.

And this, the brokers argue, could upset financial markets.