Monday evening business bulletin

May 12 2008 By Andrew Mernin

Takeover talk surrounding B&Q owner Kingfisher gave momentum to retail shares today as the London market traded in positive territory.

Kingfisher was the FTSE 100 Index’s leading riser - up almost 5%, or 7p to 153.3p - as rumours of interest from private equity firm Blackstone and US giant Home Depot encouraged traders.

The speculation helped propel Marks & Spencer, Next and Argos owner Home Retail Group up the risers board as the Footsie gained 29.4 points to 6234.1 by the mid-session.

Next rose 20p to 131p, Marks & Spencer added 10.75p to 409.5p and Home Retail lifted 5.75p to 271.25p, while in the FTSE 250, Currys owner DSG International gained 5.5p to 76p.

Nationalised bank Northern Rock said today that arrears had risen since the start of the year as mortgage borrowers struggled to pay higher rates caused by the credit crunch.

And the group warned that arrears levels could rise further amid an ``uncertain" mortgage market. Northern has seen the percentage of mortgages three months in arrears rise to 0.95%, up from 0.57% at the end of December.

But Northern’s executive chairman Ron Sandler gave an assurance that the overall quality of the group’s mortgage book was ``satisfactory" and that he was making "solid progress" with plans for the Newcastle-based lender.

The UK’s biggest care home group said today it had agreed fee increases averaging 5% on more than 85% of its beds this year.

Southern Cross Healthcare said the figure was ahead of expectations and followed negotiations with local authorities. Underlying weekly fees, which strip out the impact of acquisitions and new care homes, rose 6% to £515 in the six months to March 30.

It said its size, with 37,000 beds and more than 720 homes, had given it the competitive advantage to increase fees for private customers and local authorities.

News of the fee increases came as Prime Minister Gordon Brown pledged fundamental reform to social care of the elderly and disabled amid Government warnings that the system is facing a £6bn funding gap within 20 years.

The pound at 4:30pm was US$1.9609 compared to US$1.9484 at the previous close while the euro at 4:30pm was £0.7911 compared to £0.7932 at the previous close.