Airline Food Can Be Bad For You

*** The end of cheap milk?

*** A big Yahoo! for Chinese internet users

*** The Sea Turtle who floated Baidu...will US housing rust or bust?... it's banker beware' when it comes to China...and mor --------------------- The high oil price started to impinge on the City's happy world of surging stocks yesterday as mid-cap milk group Arla Foods was forced to warn on full-year profits. High oil and correspondingly rising energy costs are hurting its margins, and the group saw shares plunge 8% to 64p, leaving it as the main FTSE 250 faller.

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One struggling milk producer does not a crisis make but with oil hitting another record at $66 a barrel in New York, and breaching $65 on this side of the Atlantic, other firms must be feeling the pain too. No wonder then that the FTSE 250 fell 0.5% to 7,695.

Meanwhile, although oil heavyweights like BP, Royal Dutch Shell and BG Group edged a little higher on crude prices, the FTSE 100 still shed 18 points to 5,358. Why? Well, oil-dependent stocks weren't happy - cruise operator Carnival fell 3%, while the insurance sector was pulled lower by results from Aviva and Royal & Sun Alliance.

It wasn't just oil that left a bad taste in British Airways' shareholders' mouths - the group saw shares fall 1% as it had to cancel all flights out of Heathrow after ground staff walked out in support of 800 employees sacked by BA's in-flight meal provider, the cash-strapped Gate Gourmet.

Double-digit growth in continental Europe helped insurance group Aviva to first-half pre-tax profits of £1.4bn from £428m last year, while profit margins rose to 3.2% from 3% over the same period last year.

That all sounds good so why, then, did Aviva's shares shed 2% to fall to 644p? For one, profits in its key UK market fell 5% as sales dipped to £4.2bn from £4.3bn last year. Moreover, profit margins are set to come under pressure in the short-term, the group said: markets remain competitive and look like being "more of the same" for the rest of 2005.

Royal & Sun Alliance also saw a jump in first-half pre-tax profit, from £74m last time to £238m as profitability in the UK and Canada improved. But with the shadow of asbestos-related litigation connected to the group's US unit still hanging over the stock, investors decided to bank some profits after a 21% run- up since the start of this year. Shares closed 2% lower at 92p.

Amid all that fretting about oil, the price of gold shot up to its highest level since December, reaching the $445 an ounce mark, as the dollar weakened after US retail sales data came in below expectations.

Through the Chunnel, European economic growth in the second quarter was broadly as expected not particularly good. The 12-country eurozone posted GDP growth of just 0.3% over the second three months of the year, giving an annual rate of 1.2% compared to 1.4% last quarter. But this is "likely to be as bad as it gets," said Capital Economics' Julien Seetharamdoo.

Although German GDP did not grow at all over the quarter, domestic demand improved, suggesting the country is "over the worst." And the European Central Bank itself expects the region to achieve 0.4% growth in the third quarter, rising to 0.6% by the end of the year.

The big news from across the Atlantic: the US might not like it when the Chinese try to pitch a tent on their turf, but there were no such reciprocal qualms when internet giant Yahoo confirmed it has forked out $1bn for a 40% stake in Chinese business website Alibaba.

The widely anticipated deal will see Yahoo turn over its Chinese business to Alibaba, which operates online auction site Taobao.com as well as core trading site Alibaba.com, which helps small businesses find customers worldwide. It also has an online payment system, Alipay, which is in competition with eBay's PayPal system for dominance in China. But is Alibaba's Eastern promise all it's cracked up to be?

The Sea Turtle Behind Baidu.com Shares in Chinese internet stock Baidu.com gained 354% on the first day's trading, the biggest IPO surge since the dotcom days. So who is the man behind "China's Google" and why do the Chinese call him a "sea turtle"?

Will the US Housing Market "Rust or Bust?" US housing market activity is closer to bubble territory, but growth seems to be decelerating, and the decline will be gradual rather than explosive, argues Richard Berner of Morgan Stanley. Though MoneyWeek is more bearish on property prospects than Berner, his thoughts make interesting reading.

Banking on China Might Not Be Such A Good Idea China is home to 1.3bn people, the economy is growing at breakneck speed so any bank worth its salt should have exposure to that kind of potential market for finance products, right? Not necessarily, says Bedlam Asset Management. The debt-riddled Chinese system is "wandering into a banking crisis" and it could pull down eager Western investors with it.