Hopes that the foot and mouth outbreak in Surrey had been contained were shaken last night when blood tests on sheep suggest a fresh case of the disease.

The Department for Environment, Food and Rural Affairs (Defra) said the affected livestock were sheep from a farm within the protection zone. All animals on the farm are to be slaughtered and further tests are ongoing, a spokeswoman said.

If the tests prove positive, it will be the third farm affected since the chief vet, Debby Reynolds, announced this month that she was satisfied the outbreak in August had been eradicated.

Farmer Derrick Pride, from Elstead, Surrey, whose herd was slaughtered in the August outbreak, said he sympathised with the new farmer’s predicament. “It’s utterly devastating,” he said. “I don’t know how you can take it really. I’m so disappointed that it has all broken out again. I pity the poor man - whoever it is - because we’ve been through it: your whole world seems to crash overnight. It’s a very emotional experience for all the family.”

Shadow Defra secretary Peter Ainsworth said: “This is disturbing news. All of us, especially in the farming community, have been hoping that the outbreak is now over.

“It was caused by negligence by the government and its agencies. We have to hope that the government will now be competent in dealing with the clean up.

“The big question that still remains is, how foot and mouth could ever have escaped from a government-licensed laboratory in the first place?”

Prof Hugh Pennington, emeritus professor of microbiology at the University of Aberdeen, said the new potential outbreak would put back efforts to eradicate the disease. “It just puts back the day we can declare this is over.”

He said it was “very difficult” to detect the disease in sheep which do not often show symptoms.

“Until one knows exactly how it is related to the other cases, and until we know when they were infected, it’s difficult to know what this means.

“It’s more likely to be something going back a while. Each time a new farm is affected then it has spread to neighbouring premises; if this is the same, we will have to see.”

Sarah Whitelock, head of communications at the National Farmers’ Union, said: “This case demonstrates the reason why the blood testing is a necessary tool as it picks up undisclosed cases.

“However, it is disappointing to learn of another case. It is vital that all livestock farmers are vigilant in their biosecurity measures at this difficult time.”

An official report into the August outbreak identified defective drainage pipes at the government-run animal health laboratory at nearby Pirbright as the likely source of the leak.

Restrictions were lifted on September 8, but a subsequent outbreak was reported in Egham, Surrey, four days later.

Sterling has roared past $2.07 to a new 26-year high against the dollar, ahead of a widely predicted cut in US interest rates tonight.

The pound gained nearly half a cent against the dollar in trading this morning, and had reached $2.0743 by 7.30am. Yesterday it climbed to $2.0693, its highest level since 1981.

The dollar also weakened against the euro this morning. At $1.4444, it was closing in on its all-time low against the European currency of $1.4447.

The pound’s rise against the dollar has been fuelled by an expectation that US interest rates are going to fall, but much less certainty over the timing of any cut in UK rates.

The Federal Reserve ends a two-day meeting this afternoon. Having cut rates by 0.5% in September, it is expected to lop off another quarter-point in an attempt to bolster the faltering American economy.

The strength of the pound against the dollar has left «business.guardian.co.uk» and tougher export markets. But there are already signs that the Bank of England’s monetary policy committee will leave rates unchanged at 5.75% when it meets next week.

Kate Barker, one of the swing voters on the MPC, indicated last week that the recent financial turmoil has not had sufficient impact on consumer confidence to encourage her to vote for a cut.

However, David Blanchflower, the only member of the MPC to back a cut last month, said last night that the flow of immigrant workers into the UK has helped to ease inflationary pressures.

“We have all been exposed to stories of Eastern European migrants moving en masse to the UK, ready to work longer hours and for less money than Britons. And there is some truth to these stories. But I believe these flows have been very good for the UK economy, not bad as some would have us believe,” Mr Blanchflower told an audience in Lancaster.

“I believe that there is considerably more slack in the labour market at present than is popularly held to be the case,” he added.

PARIS: French-American telecommunications giant Alcatel-Lucent said Wednesday it is slashing an extra 4,000 jobs after CEO Patricia Russo said earnings remain unsatisfactory.

The cuts are in addition to the 12,500 announced in February and will help save an additional \400 million (US$578 million) by 2009, the company said.

Three profit warnings this year have put pressure on Russo, who took over after a US$13-billion merger of Frances Alcatel SA and Lucent Technologies Inc. of Murray Hill, New Jersey, finalized last November.

Russo denied reports that she had been given an ultimatum by the board, saying it is “fully supportive” of her plans to expand the current three-year, \1.7 billion (US$2.45 billion) cost-cutting program.

She also announced that Chief Financial Officer Jean-Pascal Beaufret will be stepping down in the “next weeks.” He will be replaced by Hubert De Pesquidoux.

Russos new “three-point action plan” will streamline the core carrier business, create a more “offensive market strategy” by focusing on higher-margin businesses, and simplify management, she said. A seven-person management committee is being charged with implementing the plans.

“Volumes we are seeing are not what we expected,” she said in a conference call with journalists. “These are difficult but necessary decisions, and we will manage these reductions with care.”

Russo said she would not “at the moment” specify where the job cuts would take place.

The announcement came as Alcatel-Lucent reported a third-quarter net loss of \258 million (US$373 million), compared with a pro forma \532 million net profit in the same period a year ago. The loss is slightly larger than analysts expectations.

Unions in France were pressing ahead with a one-hour strike Wednesday, which had already been announced Monday in anticipation of bigger cutbacks.

Russo announced the new round of job cuts after saying earnings were “still not at a level that we are satisfied with.”

Alcatel-Lucent already said Sept. 13 that third-quarter operating profit would be “around break-even.”

In the fourth quarter, Alcatel-Lucent said it expects a “solid ramp-up in revenue.” For the full year, revenues are likely to be nearly flat, the company said, admitting that the result is at “the low end of the range previously provided.”

Alcatel-Lucent is not alone in downgrading its earning forecasts.

In announcements over the past two weeks, Swedish wireless equipment maker LM Ericsson AB posted a 36 percent drop in third-quarter earnings and stunned the market with a hefty profit warning. Ericsson blamed a decline in high earnings activities, such as mobile-network upgrades and expansions.

Nokia Siemens Networks, the troubled networks division set up by Nokia and Siemens, had an operating loss of \120 million ($170 million) in the third quarter on sales growth of 7 percent.

Alcatel-Lucents share price has dropped over 39 percent so far this year, as the profit warnings scared off investors. Alcatel-Lucent shares closed Tuesday down 0.15 percent at \6.63 (US$9.55) in Paris.