Thursday evening business bulletin

May 8 2008 By Andrew Mernin

A reassuring update from fashion chain Next saw retailers shrug off wider lacklustre trading on the London market today.

The FTSE 100 Index was down nine points at 6252 in mid-session trading, with the Bank of England’s decision to keep interest rates at 5% hitting banking stocks.

A near-2% fall in the Dow Jones Industrial Average also weighed heavy on UK sentiment, coming after the previous session’s Wall Street sell-off.

But UK blue-chip retailers were striding ahead thanks to an update from Next that suggested trading had picked up in recent days.

The group’s shares soared 6%, or 70p to 1298p, after it said the warm weather offset a tough first quarter of the year, keeping it on course to meet forecasts for full-year profits. Rival retailer Marks & Spencer also rose on the news, ahead 12.25p at 407.75p, or 3%, while Argos owner Home Retail Group cheered 8.5p to 276.5p.

As well as the boost from Next, investors cheered better-than-expected performances from accountancy firm Sage and consumer products giant Unilever. The pair were up by 7% and 5% respectively.

Europe’s largest maker of polythene film, bags and sacks highlighted the current squeeze on manufacturers today after warning on profits.

British Polythene Industries (BPI) said interim results would be ``somewhat behind" last year as the firm struggles with soaring energy and raw material costs.

Official figures recently showed manufacturers’ input costs rising at their highest rate since records began in 1986. Costs have surged 20.6% in the year to March, driven by a 62.5% jump in crude oil prices.

Two European energy firms were today thought to be putting the final touches to bids for Britain’s up-for-sale nuclear power provider British Energy.

Spain’s Iberdrola, which owns Scottish Power, and French nuclear giant EDF are expected to provide detailed offers to investment bank Rothschild, broker Charles Stanley said today.

The proposals could be between 600p and 700p a share, Charles Stanley said, which is at the lower end of analyst expectations and gives the company a market value of between £6.2bn and £7.2bn. The range is below the current share price of 720.5p.

Charles Stanley analyst Tina Cook said a full blown bid from British Gas owner Centrica was unlikely.