Evening Standard (London): International Power set to look good under new rules

INTERNATIONAL Power, the modern incarnation of the overseas arm of National Power, will be the first major utility and one of the first big British companies to publish IFRS accounts when it releases first-quarter figures on Thursday.

They should make pleasant reading, says Goldman Sachs, which has pencilled in a year-on-year earnings leap of 14%, because of acquisitions last year and a recovery in UK dark spreads - the difference between the price at which the company sells electricity and the cost of the coal to generate it.

Bid rumours may stoke up additional interest. Touted as a buyer is Centrica, under pressure yesterday after making disappointing comments about its trading outlook.

Although its first-quarter numbers were sound, its customer base continues to shrink. That saw WestLB downgrade Centrica's shares to underperform from neutral and prompted cautious comments from Merrill Lynch and Cazenove.

Takeover talk is still rippling through the retail sector as well.

Kingfisher shares rose yesterday as investors continued to bet on a bid emerging. Even though the company denied being in talks with US-based Home Depot, merger speculation looks unlikely to go away.

If the prospect of takeovers seems like the only force that could lift the retail sector, downtrodden by the slump in High Street trading, Merrill Lynch has sounded a note of optimism.

The broker believes that by the middle of the year, the UK consumer outlook will be "better than the current data and sentiment might suggest". It expects real disposable incomes to "hold up reasonably well this year" amid a tight labour market and rising wages. "In our view this should provide support to the UK consumer and prevent a severe slowdown in consumption growth," it says.

Those planning to spend their disposable income playing touchscreen roulette machines may soon find it less easy to do so. A report by gambling charity GamCare claims almost a quarter of first- time callers are seeking help with addiction to fixed-odds betting terminals (FOBTs), a figure thought likely to prompt the Government to regulate the machines more closely. That could stem an important stream of revenue for betting groups.

Hilton, which owns the Ladbrokes chain, Stanley Leisure and William Hill have hit the jackpot with the machines, which have generated Pounds 20 billion in bets a year, producing Pounds 500 million a year in bottom-line profits for bookies.

The Wall Street Journal is gambling on a new, compact formula for its its Asian and European editions. That, investors fear, ups the competitive ante with the WSJ's arch-rival, the Financial Times - a potential headache for FT owner Pearson.

Although British American Tobacco's recent strong performance has prompted ABN Amro to downgrade it to add from buy, the broker remains hooked on the stock. "We continue to regard BAT shares as win-win for investors - either BAT's own management narrows the performance gap, over time, or a bidder intervenes," it says.

In New York, the Dow closed up 38.94 points at 10,384.34 on optimism generated by a flurry of merger activity. Hong Kong's Hang Seng index was down 22.32 points at 14,062.77 as traders took profits in a number of bluechips. Tokyo's Nikkei Average ended 11.86 points lower at 11,159.46.