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Wednesday newspaper round-up: Neil Woodford, MPC, US rating

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UK's biggest fund manager announces shock exit; Monetary Policy Committee warns housing scheme will push up prices; US triple A credit rating on negative watch.

One of the most successful stock-pickers of the past 25 years took the City by surprise yesterday and unnerved his thousands of retail fans by announcing that he is to leave his employer and set up his own business. Neil Woodford, of Invesco Perpetual, who has produced a 23-fold return for his earliest backers, has dominated retail fund management for years, with private investors piling into his funds, writes The Times.

Concern at the Bank of England about the impact of the government’s Help to Buy mortgage scheme came to light on Tuesday as official figures showed the British property market has exceeded its 2008 peak. Martin Weale, one of nine members of the Bank’s rate-setting Monetary Policy Committtee (MPC), warned that the scheme to underwrite home loans could push up prices, The Times explains.

Fitch Ratings placed the triple A credit rating of the US on negative watch, as efforts to end the budget impasse faltered during a day of drama on Capitol Hill capped by the reopening of talks in the Senate late on Tuesday. Spokesmen for Harry Reid, the Democratic majority leader in the Senate, and Mitch McConnell, the Republican minority leader, said after talks in the House had broken down that they had resumed negotiations and were “optimistic” about success, the Financial Times says.

The world’s PC makers are not betting on much of a rebound in their flagging market in the final months of this year, despite earlier hopes that a new wave of cheaper, more versatile machines would reignite interest among buyers. That is according to Intel, the US chipmaker, which on Tuesday issued a downbeat fourth-quarter financial forecast of its own and trimmed its capital spending plans amid the continuing slump in PC demand, The Financial Times reports.

The importance of Alibaba to the turnaround underway at Yahoo! was underlined last night as the American internet group revealed that it would keep a larger stake than initially agreed after the Chinese e-commerce site goes public next year. In a move that will allow it to piggyback the Chinese juggernaut’s future growth at the same time as receiving a huge cash injection, Yahoo! said that it would sell up to 208m of the 523.6 m shares it owns in Alibaba, either directly back to the company or through the initial public offering, less than a previously agreed maximum of 261.5 m. Yahoo! holds a 23.5% stake in Alibaba, according to The Times.

Analysts describe rebound of world’s second largest economy, China, as “unhealthy” and likely to wither over coming months as Beijing is forced to tighten policy. Borrowing by all levels of the Chinese government has soared to unprecedented levels and is now one of the highest in the world, vastly complicating efforts by Beijing’s new leadership to keep growth on track. Data from the International Monetary Fund shows that China’s budget deficit reached 9.7% of gross domestic product last year if regional spending is included and one-off land sales are stripped out. This is higher than previously thought and above levels in the US, India, or Southern Europe’s debt-stricken crisis states, The Daily Telegraph explains

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