Wednesday lunchtime business bulletin

May 7 2008 By Andrew Mernin

MPs today gave their backing to Bank of England Governor Mervyn King but said he would need all his skills to steer through the current financial turmoil.

The Treasury Select Committee’s report on the re-appointment of Mr King for a second five-year term said he ``had fulfilled his responsibilities very well".

But it added: "The skills, qualities and experience which Mervyn King brings to his role will be greatly needed and tested in facing the challenges of his second term, not least the challenges arising from the current market turmoil and from anxieties over inflation."

Today’s report praised Mr King’s ``professional competence and personal independence", but the MPs have previously voiced criticisms of the Governor’s handling of the credit crunch which hit financial markets last August.

Positive first quarter results and the impact of high oil prices on energy firms meant the London market resumed its upward path today.

Cigarette companies Imperial Tobacco and British American Tobacco featured on the risers board after the latter firm said it had made a ``great start" to the year with first quarter profits up 18%.

The FTSE 100 Index, which ended the session marginally lower last night, rose 38.2 points to 6253.4 by mid-morning.

Soaring personal injury claims look set to push up motor insurers’ claims costs by 28% during the coming five years, a report said today.

The amount motor insurers pay out in claims looks set to jump from £8.5bn in 2007 to £10.9bn by 2012, according to market analyst Datamonitor.

The main factor diving the rise is the increased cost of personal injury claims arising from road traffic accidents.

The group said that although improvements in road safety had reduced the number of accidents there were each year, insurers were still seeing their payouts rise due to increases in medical and legal costs.

The pound at noon was US$1.9579 compared to US$1.9741 at the previous close while the euro at noon was £0.7883  compared to £0.7879 at the previous close.