Monday lunchtime business bulletin

May 12 2008 By Andrew Mernin

Nationalised mortgage lender Northern Rock reported an increase in arrears today, but said it was making "solid progress" with its business plan.

Northern’s executive chairman, Ron Sandler, said economic conditions combined with a shrinking loan book meant mortgages three months in arrears rose to 0.95% at the end of April, compared with 0.57% at the end of December.

However, he added that the overall credit quality of the loan book remained satisfactory and at a level assumed in the bank’s strategic plan.

Banking giant HSBC said today that a "resilient" performance had helped lift first-quarter profits despite an extra £3bn in credit crunch losses.

The bank took the losses on bad debts from its US consumer finance business and write-downs on mortgage-backed investments hit by the financial turmoil.

HSBC said it had increased pre-tax profits in all major emerging markets such as Asia and the Middle East - but added that the outlook for 2008 was "unusually difficult" to predict and said a US recession was ``increasingly likely".

Shares in retail stocks jumped ahead today as investors reacted to speculation over possible takeover interest in B&Q owner Kingfisher.

Kingfisher shares rose 5% or 7.8p to 154.1p, while Marks & Spencer, Next and Argos owner Home Retail Group occupied the next three positions on the FTSE 100 Index risers board.

Oil prices holding firm near record levels of 125 US dollars a barrel also benefited the Footsie, with progress from BP and BG Group leaving the top flight index 33.8 points higher at 6238.5 by mid-morning. BP was 10p higher at 623p, while BG Group added 26p to 1367p.

The pound at noon was US$1.9598 compared to US$1.9484 at the previous close while the euro at noon was £0.7887  compared to £0.7932 at the previous close.