Obama's Starbucks Run: 'The Bear Is Loose!'

Barack Obama leaves the White House to take a rare stroll to a nearby Starbucks.

The president left without the travelling White House press pool, and photographers scrambled to catch up to him.

As he left the White House on Monday afternoon he joked: "The bear is loose!"

Mr Obama, accompanied by his chief of staff Denis McDonough, shook the hands of stunned bystanders outside Starbucks, smiling and waving.

He said he was drinking tea instead of coffee and made his way back to the White House.

It is Mr Obama's second foray recently from the presidential mansion. Last month he stunned sightseers by opting to walk to the Department of the Interior, a couple of blocks away.

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E3 Reveals Xbox One Call Of Duty Debut

By Tom Cheshire, Technology Correspondent

E3 has kicked off with announcements from rivals Sony and Microsoft.

The Seattle-based maker of the Xbox One was first to go at the games event.

Hours after the console went on sale for a reduced price of £349, Microsoft announced the Xbox One would be the first to get the next Call of Duty game - Advanced Warfare - ahead of other formats.

A gamer demonstrates Entwined during a media briefing

The company also emphasised the "hundreds" of independent titles coming to Xbox One.

And the previous Halo games will be remastered for the new console - at the same time as first look access to the new title, Halo 5.

There was also a strong emphasis on new games coming to the platform, including Assassin's Creed: Unity, Rise of the Tomb Raider.

The Xbox is the first to get Advanced Warfare

Sony's presentation was less focused on games themselves.

Instead, the company said it would be launching its PlayStation TV - a £60 device that connects to a PS4 and lets users play on a second TV - this autumn.

It will also come with access to video and music streaming services, as well as the 1,000 games on the PlayStation Network and streaming service PlayStation Now. 

A character from Titanfall on guard outside the E3 show

The Japanese company also had the premiere of Mortal Kombat X, the long-running, gory beat-em up title.

Sony also showed the PS4 versions of Batman: Arkham Knight and Grand Theft Auto V - the first showings of these titles, which will also come to Xbox One.

Sony closed its conference by showing off exclusive titles Uncharted 4: A Thief's End and LittleBigPlanet 3. 

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Manufacturing Growth At Three-Year High

There is further evidence the economic recovery is becoming more broad-based with industrial production and manufacturing growth figures hitting three-year highs.

The Office for National Statistics (ONS) measured a 3% jump in annual industrial production output in April while manufacturing growth topped 4.4% in the same 12-month period.

The performance adds to hopes overall GDP accelerated in the second quarter - with consumer spending continuing to dominate.

It was also seen as evidence the strength of the pound was yet to be significantly felt by exporters.

The ONS said it was the fifth period of month-on-month growth in a row - the longest run of continuous expansion since June 2010 - for manufacturing.

Main contributors included transport equipment as well as computer, electronic and optical products.

The sector remained 7.6% below its pre-downturn peak at the end of the first quarter of 2014.

David KeRN, chief economist at the British Chambers of Commerce, said: "The Government must keep boosting efforts to support UK exporters and improve access to finance for growing firms."

A Treasury spokesman responded: "Manufacturing grew at its fastest annual rate in three years in April.

"This provides further evidence that the Government's long term economic plan is working, laying the foundations of a broad-based recovery."

Ministers are under pressure to boost output and exports as part of efforts to make the UK economy less reliant on consumer spending.

There is concern high household debt levels will start to squeeze spending again - particularly when the base rate of interest starts to rise and the increases are passed on to borrowers, especially mortgage customers not on fixed rate tariffs.

The International Monetary Fund warned last Friday of risks to the UK's recovery from the housing market.

A separate study, released on Tuesday afternoon by the National Institute of Economic and Social Research, concluded that the economy had finally surpassed the pre-recession peak it reached in January 2008 - driven largely by consumers.

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Buyout Firms Battle For Housebuilder Keepmoat

By Mark Kleinman, City Editor

A pack of buyout firms is circling Keepmoat, one of the UK's biggest social housing providers, as George Osborne prepares to offer the housebuilding industry another big policy boost.

Sky News understands private equity funds including Apollo Management and Onex, a Canadian investor, are among the bidders which have tabled offers for Doncaster-based Keepmoat.

The company is one of a string of housebuilders which ended up in the control of Lloyds Banking Group, the taxpayer-backed lender, in the aftermath of its takeover of stricken rival HBOS.

Keepmoat, which employs more than 3,000 people across the UK, built, refurbished or repaired more than 350,000 properties last year.

The latest phase of its sale process comes as the Chancellor prepares to relax brownfield planning restrictions in order to accelerate the construction of new homes.

Mr Osborne is expected to announce details of the measures in his annual Mansion House speech on Thursday amid warnings about a nascent housing bubble, particularly in London and the south-east of England.

There is widespread talk and concern of a possible housing bubble

A number of leading firms in the sector, including Barratt Developments and Crest Nicholson, met Mr Osborne last week to discuss his plans.

Having been in Lloyds' control since 2009, Keepmoat was later sold to Caird Capital, an investment firm started by the former heads of HBOS's private equity operation.

Caird then merged Keepmoat with Apollo, another housebuilder, before Lloyds again took a stake in October 2012 as part of a debt-for-equity swap, two of the people said.

The auction of Keepmoat, which may fetch in the region of £500m, is being overseen by investment bankers at JP Morgan.

A number of other housebuilders which had been in the bank's possession have since been sold or floated on the stock market, although one, Avant, which was previously known as Gladedale, is also in the process of being sold.

Many have since been restructured or sold, including Countryside Properties, McCarthy & Stone and Cala Homes.

Cala, also headquartered in Scotland, was bought by a joint venture between Legal & General, the insurer, and Patron Capital, the private equity group, in a £210m deal.

Countryside sold a large stake to Oaktree Capital, another investment firm, in February last year, while Crest Nicholson, a larger rival, floated on the London stock exchange.

The flurry of sales involving housebuilding groups backed by Lloyds underlines the extent to which HBOS became embroiled in excessive lending to the sector during the boom which preceded the financial crisis, a trend criticised in a report last year by the Parliamentary Commission on Banking Standards.

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Tycoons To Argue Case For Scottish Tax Revamp

By Mark Kleinman, City Editor

Scotland could become one of the world's five leading advanced economies if it adopts tax reforms designed to promote long-term investment, a group of economists and businesspeople will argue this week.

Sky News understands that N-56 will set out on Wednesday its argument for a series of measures that should be implemented regardless of the outcome of September's independence referendum.

Established by Dan Macdonald, the chief executive of property developer Macdonald Estates, N-56 is a new pro-business organisation which has consulted prominent researchers including Capital Economics about the viability of its proposals.

In a report called Scotland Means Business, the new group will call for the removal of tax disadvantages for equity versus debt financing in an attempt to promote long-term investment.

"(This would make) Scotland an attractive location for equity providers and other financial institutions; suppor the equity model of long term business finance, so providing long term patient finance; help to address the impact in pension funds of the removal of advance corporation tax in the UK; and encourage increased equity investment in growing Scottish businesses," according to a source with knowledge of the report.

Such a system could be structured through a 'dividend imputation system' such as that used in New Zealand which avoids the double taxation of dividend income.

N-56, which is named after Scotland's latitudinal position, is understood to be keen to remain distant from the politics of the intensifying independence debate.

One source said that the brother of Sir Nicholas Macpherson, the permanent secretary to the Treasury, was among those consulted about the new group's proposals.

Sir Nicholas was at the centre of a political row in April about a letter he wrote to rebuff Nationalists' claim that an independent Scotland would continue to use the pound.

He denied the SNP's suggestion that the Chancellor, George Osborne, had put pressure on him to argue against a continued currency union in the event of a 'Yes' vote.

"I would advise you against entering into a currency union with an independent Scotland. There is no evidence that adequate proposals or policy changes to enable the formation of a currency union could be devised, agreed and implemented by both governments in the foreseeable future," Sir Nicholas wrote in his letter.

N-56 will say in its report that it has examined the policy-making approach of successful economies including Denmark, Norway, Singapore and Switzerland.

A full list of founder supporters is likely to be published this week, which marks the milestone of 100 days until September's vote.

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Time Warner In Talks About $2.2bn Vice Deal

By Mark Kleinman, City Editor

Vice Media, the digital group which has mounted an aggressive assault on traditional news providers, is in talks to sell a major stake in itself to Time Warner.

Sky News has learnt that the two companies have been holding detailed negotiations about a deal.

One potential structure under discussion would see Time Warner injecting HLN, a news platform owned by its Cable operations, into Vice in return for roughly half the enlarged company.

A deal is expected to value Vice at roughly $2.2bn, about 50% more than last year's sale of a stake in the mini-conglomerate.

Sources said on Monday that talks between Time Warner and Vice were at an advanced stage but that some final details had yet to be agreed.

A deal could still fall apart, however, or assume a radically different structure, they added.

Founded in 1994 as a "punk zine" for music enthusiasts in Montreal, Vice has attracted huge attention from the global media industry with its provocative mix of content and rapid diversification: it now houses an advertising agency, a record label and a television show.

The company has built a significant presence in Shoreditch in London, one of 35 offices it now has around the world.

Among the "news events" for which it has become known was a TV show in which Vice's crew took the US basketball star Dennis Rodman to North Korea.

Shane Smith, the company's Canadian co-founder and chief executive, has repeatedly referred to Vice as "the Time Warner of the street" but has denied any intention of surrendering outright control of the group.

Vice operates some of Youtube's most popular channels and has content partnerships with a broad range of digital media providers, including Facebook and Twitter.

Its digital channels now include The Creators' Project, Motherboard and Noisey, a music discovery platform.

"I want us to be the next MTV, ESPN and CNN rolled into one - and everyone always rolls their eyes," Mr Smith told a newspaper last year.

"The reality is that MTV was bought by Viacom and CNN went to Time Warner. We have set ourselves up to build a global platform but we have maintained control."

Vice's management, led by Mr Smith, are expected to retain operational control of the business as part of a deal with Time Warner.

It was unclear on Monday how Vice's existing minority shareholders, which include WPP, the FTSE-100 marketing services group, would respond to a transaction.

Vice's other investors also include 21st Century Fox, which acquired a 5% stake last year in a deal valuing the company at $1.4bn, and Raine, a New York-based merchant bank.

The increase in Vice's purported value since then underlines the extent to which major media groups are keen to forge an alliance with the company.

The original Vice magazine now accounts for less than 5% of the company's revenues, which reached $175m in 2012, with video content dominating its business model.

A deal with Time Warner would provide Vice with the ability to expand its international operations more quickly.

Mr Smith has signalled his desire for Vice to make a significant impact in fast-growing markets such as China, India and South Korea, where multinational consumer brands are keen to align themselves with youth-focused content platforms.

Time Warner and Vice both declined to comment on their talks.

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Tesco Bank Challenges High Street Rivals

Tesco Bank has launched its first current account, claiming it will bring competition back to a market offering "ridiculously poor value" to consumers.

The bank's chief executive Benny Higgins said its first foray into the current account market would challenge the dominance of the major players on the high street despite having only a minimal branch presence.

Tesco said it was launching an account without the "smoke and mirrors" offerings, such as charges and introductory deals, used by others.

It would give 3% interest on balances but would charge a £5 fee unless holders paid in £750 a month.

Benny Higgins is Tesco Bank's boss

The account, which Tesco said could only be opened and managed online but with telephone support, would also allow deposits to be paid at 300 Tesco stores.

It aims to capture business from the six million existing customers who already use its savings, insurance and loans but also has its parent supermarket's 16 million Clubcard holders also in its sights.

Debit card spending on the current accounts will offer Clubcard points, both at Tesco and elsewhere.

Mr Higgins said it would bring a "fiercely competitive" customer focus from the retail sector which did not exist in banking.

He saw Tesco's offering as a rival to the so-called 'big four' of RBS, Lloyds, HSBC and Barclays - brands which have endured a public backlash for mis-selling in the wake of the financial crisis.

Another challenger bank will be TSB, which is being spun off from Lloyds in a flotation.

Mr Higgins said: "It is a market dominated by smoke and mirrors and we have tried to be as transparent as possible.

"The vast majority of current accounts are languishing with ridiculously poor value.

"There is still very little switching taking place in the UK and it's because people think that all the banks are the same."

Tesco chief executive Philip Clarke added: "Customers have told us that in banking they want us to deliver in the same way we do for millions of customers across the UK every day."

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Donald Sterling Says LA Clippers Not For Sale

Los Angeles Clippers owner Donald Sterling has pulled his support from a $2bn (£1.2bn) deal to sell the team to former Microsoft CEO Steve Ballmer.

Instead the embattled Mr Sterling will pursue his $1bn (£595m) federal lawsuit against the NBA, his lawyer said.

"From the onset, I did not want to sell the Los Angeles Clippers," the 80-year-old Mr Sterling said.

The Clippers are not for sale, Sterling says

The sale was negotiated by his estranged wife Shelly Sterling, co-owner of the franchise, after Mr Sterling's racist remarks to a girlfriend were publicised and the NBA banned him for life.

But he says in his lawsuit that the league violated his constitutional rights because the racist remarks came from an "illegal" recording that publicised comments he made to a girlfriend.

The lawsuit also said the league violated antitrust laws by trying to force a sale.

"I have decided that I must fight to protect my rights," Mr Sterling said.

"While my position may not be popular, I believe that my rights to privacy and the preservation of my rights to due process should not be trampled.

Steve Ballmer had agreed to the deal, which would have been an NBA record

"I love the team and have dedicated 33 years of my life to the organisation. I intend to fight to keep the team."

Mr Sterling had agreed to ink the deal and drop the suit last week assuming "all their differences had been resolved", his lawyer said.

But the AP news agency said he decided to not sign the papers after learning the NBA would not revoke its lifetime ban and fine.

"There was never a discussion involving the NBA in which we would modify Mr Sterling's penalty in any way whatsoever. Any suggestion otherwise is complete fabrication," NBA spokesman Mike Bass said.

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Grid To Pay Firms To Prevent Winter Blackouts

National Grid has begun offering to pay firms to manage their electricity use from this winter to help prevent the "lights going out".

The company, which runs the power network in England and Wales, is asking the largest energy users to agree to cut their usage at peak times over the next four winters.

But the move was seized upon by a body representing big industry as proof that its earlier warnings to successive governments on a lack of spare capacity risked harming consumers and businesses.

National Grid said any requests to reduce power consumption would apply between 4pm and 8pm on winter weekdays and would add no more than £1 annually to the average household energy bill.

The Demand Side Balancing Reserve service (DSBR), as the scheme is being called, would only be enacted on a voluntary basis, the company insisted.

Industry groups argue too much focus has been placed on renewable energy

National Grid was also looking, from winter 2015/16,  to boost capacity from electricity generators that would otherwise be closed or mothballed between the hours of 6am and 8pm on winter weekdays.

Both initiatives followed a consultation exercise on the best way to tackle the growing threat of blackouts.

Worries about power shortfalls have grown in recent years following the closure of many old generators under European emissions rules.

Threats of oil and gas supply disruptions remain a concern given limited storage space while energy firms have warned their levels of infrastructure investment are unclear in an environment of hostility towards rising household bills.

It was anticipated, the power operator said, that both its initiatives would not be required in 2018/19 because the Government was introducing reforms to ensure sufficient capacity was available to meet future demand.

National Grid's Peter Bingham said: "It's our job as electricity system operator to make sure we've got all the right tools at our disposal to balance supply and demand on the electricity network, 24 hours a day, 365 days a year.

"For winter 2014/15 we are inviting providers of demand side response services to offer a small volume of demand reduction capability to pilot the new DSBR service.

"For winter 2015/16, we will tender for both services. This offers generators an incentive to make their power stations available in winter where they might otherwise be unavailable."

The Energy Intensive Users Group (EIUG), which represents major industry, said the measures were avoidable.

Its statement said: "EIUG has warned for many years, the reason we are facing this situation is because of the flawed energy policy followed by successive governments, overly focused on costly intermittent renewables like wind and solar, which are inherently incapable of providing secure electricity supplies.

"The government has belatedly realised the urgent need to enable investment in secure generating capacity from nuclear and gas-fired power stations, but past mistakes mean this investment will arrive later than needed, leaving consumers at unacceptable risk of price spikes and blackouts, and jeopardising the investment in manufacturing industries needed to continue the economy recovery."

The Energy Secretary Ed Davey told Sky News the measures were an environmentally-friendly way of ensuring energy security.

He said: "It's a much cheaper way than building power stations. This is a process which is used at the moment in Britain ... so this is a tried and tested approach.

"It's voluntary, it's very cost- effective and it's green", he insisted.

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Investors Seek AstraZeneca Talks With Varley

By Mark Kleinman, City Editor

John Varley, the former chief executive of Barclays, will be thrust back into the City spotlight as investors seek assurances that AstraZeneca will link boardroom pay to targets used to rebuff a recent £69bn takeover bid.

Sky News understands that a number of big AstraZeneca shareholders have requested meetings with Mr Varley, who chairs the pharmaceuticals group's remuneration committee, to discuss a revised set of criteria for executives' long-term share awards.

The talks follow the collapse last month of Pfizer's £55-a-share offer for the British company, the board of which said it was unwilling to enter formal talks about a deal unless it was pitched at at least £58.85-a-share.

Investors including Legal & General Investment Management (LGIM) told AstraZeneca directors that they were keen for it to use both that figure and a $45bn long-term revenue target to determine pay awards.

In an interview with the Financial Times last week, however, Pascal Soriot, AstraZeneca's chief executive, suggested that such a connection would be "crude".

"Our long-term incentive programme is already aligned with growth targets and pipeline delivery. If the stock market goes up, you can get to the target relatively easily. If it goes down, it becomes very hard," he said.

Some investors were disappointed at AstraZeneca's rejection of Pfizer's final takeover proposal and are keen for the two companies to restart talks later in the year.

The meetings with Mr Varley will catapult the former Barclays chief into his most active City engagement since he left the bank in 2010.

A member of AstraZeneca's board since 2006, he has not taken on another prominent role since stepping down from Barclays.

Mr Varley is reportedly facing a Serious Fraud Office interview under caution in relation to the agency's inquiry into fees paid by the bank to Middle Eastern investors as Barclays sought to avoid a state bailout in 2009.

Under rules supervised by the City takeover watchdog, Pfizer is now effectively prohibited from making a further offer for AstraZeneca for six months.

However, the British group, which has sought to justify the rejection by setting out further details of its cancer drug pipeline, could approach Pfizer to enter talks in three months' time.

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