News round up: Lloyds, RBS, Greece, Welfare cuts, Manufacturers, AstraZeneca and JP Morgan.

The Government may need to sell a stake in Lloyds Banking Group plc (LON:LLOY) or Royal Bank of Scotland Group plc (LON:RBS) at a loss before it can attract more investors to buy into later share offerings, Rothschild's joint head of equity advisory, Adam Young, told MPs on the Treasury Select Committee yesterday.

"It is a good strategy to start a disposal programme with the first tranche at the lowest price," Mr Young said. "The loss is worth taking today because it is part of a programme."

The Government has held talks to sell part of its 82 per cent stake in Royal Bank of Scotland to Abu Dhabi investors in a deal that could lose taxpayers billions of pounds, although a sale is not imminent, writes the Independent.

Greece

As leaders in Athens accepted the need for a new general election to end a national stalemate, the International Monetary Fund said Europe’s leaders should prepare for the possibility of a Greek departure from the single currency. Christine Lagarde, head of the IMF, warned she was "technically prepared for anything" and said the utmost effort must be made to ensure any Greek exit was orderly.

The effect was likely to be "quite messy" with risks to growth, trade and financial markets. "It is something that would be extremely expensive and would pose great risks but it is part of options that we must technically consider," she said. Raising tensions still further, Germany warned Greek voters that the wrong result in next month’s election will force their country out of the single currency, according to The Telegraph.

Welfare cuts

David Cameron is considering ordering billions of pounds in extra welfare cuts proposed in a confidential Downing Street policy paper, The Daily Telegraph can disclose. The plans include a new crackdown on housing benefit and a "mark two" system of universal credit to help push people off benefits back into full-time, rather than part-time, work.

There are also understood to be a range of measures to encourage more women, particularly single mothers, to return to work. The proposals have been drawn up in a policy paper for the Prime Minister presented by Steve Hilton, the outgoing Number Ten director of implementation, and Iain Duncan Smith, the Work and Pensions Secretary, The Telegraph reports.

Manufacturers

Manufacturers have delivered a withering judgment on the Government’s industrial policy, accusing the coalition of empty rhetoric that has delivered stagnating economic growth. According to one of the largest studies of Britain’s engineers and manufacturers, an overwhelming majority believe that the Government is not delivering the right policies to support industry.

In the survey of 1,500 employers by the consultancy BDO, only 26% believe the coalition is adopting the right strategies to support and develop UK manufacturing. Half of manufacturers do not anticipate the sector increasing its share of GDP, nor are they confident that it will have become a core part of the economy in ten years’ time, The Times reports.

AstraZeneca

AstraZeneca is understood to be considering a potential $4bn bid for an American maker of diabetes medicines. The Anglo-Swedish drug group is believed to be among a number of the world’s largest pharmaceuticals companies to have requested financial information on Amylin Pharmaceuticals. Amylin, which is based in San Diego, makes the diabetes drugs Bydureon and Byetta, has a market value of more than $4bn (£2.5bn) and generated $650m of sales last year.

It appointed Credit Suisse and Goldman Sachs to assess takeover interest this year and first-round bids are understood to be due in the next two weeks. The American companies Pfizer, Bristol-Myers Squibb and Merck are said to be interested, as are Sanofi of France, the Japanese group Takeda and Roche of Switzerland, says The Times.

JP Morgan

JP Morgan's Jamie Dimon was hit with a fresh blow on Tuesday after the Federal Bureau of Investigation launched a criminal investigation into the bank's $2bn (£1.2bn) trading loss that has stunned Wall Street. The FBI and the US Department of Justice are examining whether there was any criminal wrongdoing in losses that have damaged the reputation that JP Morgan and Mr Dimon have built for risk management.

America's largest bank by assets has been battling to contain the fallout from the losses, which Mr Dimon described as "self-inflicted". Yesterday, at the bank's annual shareholder meeting in Tampa, Florida, the banker admitted: "It should never have happened. I can't justify it," writes The Telegraph.