Monday lunchtime business bulletin

Apr 21 2008 By Andrew Mernin

A luke-warm response to the Bank of England’s £50bn bail-out for the banking sector left the London market treading water today.

The FTSE 100 Index pared back earlier gains after the Bank announced its asset-swapping scheme for banks to trade their riskier investments for Government-backed bonds to ease the impact of the credit crunch.

Initial disappointment over the one-off nature of the Bank’s scheme filtered through to markets, with the Footsie just 10.9 points higher at 6067.4.

With the main details of the scheme trailed well in advance, there were few surprises for investors and the FTSE 350 banking sector was more than 1% down following the move.

The leading faller in the sector was Royal Bank of Scotland, which fell more than 2%, or 8.75p, to 375.25p after confirming that it was considering asking shareholders for more cash in a rights issue later this week.

Other major banking stocks which slipped after early gains included Barclays, off 9.75p to 486.25p. while Halifax Bank of Scotland was unchanged at 558p after gains of 18p earlier.

An advertising campaign fronted by pop group Girls Aloud today helped Nestle achieve strong first-quarter sales growth.

The food giant hailed the launch of chocolate bar KitKat Senses in the UK - which featured an advert with band member Sarah Harding unwrapping the hazelnut-cream bar on a red carpet, watched by photographers.

Nestle reported a 6% rise in first-quarter revenue to £12.7bn, compared to last year.

The Swiss-based firm, owner of the Nescafe coffee brand, said like-for-like group sales increased 9.8%, with the UK seeing ``near double-digit organic growth".

Nestle’s strong quarterly figures come despite soaring world prices for staple ingredients such as wheat and rice.

Retailer Moss Bros was today reportedly looking for help from a major supplier to fend off a £40m takeover bid from Icelandic investment firm Baugur.

The menswear chain is hoping that tailor Berwin & Berwin will buy Baugur’s 29% stake in the business to thwart its 42p-a-share offer, according to the Daily Telegraph.

The Moss and Gee founding families behind the chain - who own more than 25% - are said to be opposed to the Baugur takeover and Berwin & Berwin could offer the Icelandic investor more than 42p for its stake, the report said.

Baugur, which also owns chains such as Karen Millen, Oasis and House of Fraser, is currently carrying out due diligence following its indicative approach to the company in February. Moss Bros declined to comment.

Moss Bros has been at the centre of takeover speculation since Baugur first signalled its interest at the end of last year, while homewares and fashion firm Laura Ashley has also built up a near-6% stake.

The pound at 10am was US$1.9887 compared to US$1.9962 at the previous close while the euro at 10am was £0.7978  compared to £0.7888 at the previous close.