Tuesday morning business bulletin

May 13 2008 By Andrew Mernin

A leading housebuilder painted a bleak picture of the property market today after revealing a "marked increase" in cancellation rates since Easter.

Redrow said trading conditions had deteriorated to an even greater extent than forecast in late February, with legal completions in the current financial year now likely to be 10% lower than estimates made at that time.

The UK’s seventh largest housebuilder by market value said cancellations had been running at just over 20%, but added there had been a pick up since Easter as nerves over the health of the property market intensified.

It added in a trading update: "It is becoming increasingly difficult to predict accurately reservation and cancellation rates."

Thomson and First Choice owner TUI Travel today said trading remained ``buoyant" as households showed no sign of ditching summer travel plans.

TUI revealed holiday sales in the UK for the past six weeks were up 8% on a year earlier, with 61% of its UK programme now booked.

The group added that medium and long haul trips from the UK performed strongly, with sales up 21% and 8% in the six week period. Greece, Turkey, Egypt, the US, Dominican Republic and Mexico have been the most popular destinations.

TUI Travel chief executive Peter Long said there was no evidence of deteriorating consumer sentiment in its booking patterns, or in the average holiday duration booked, average selling price or cancellation rates.

``This confirms our research that the annual holiday is an important component of the family budget," he said.

Shares were up almost 5% today.

The future of more than 700 jobs at a factory which makes Italian ready meals for Marks & Spencer looked bleak today after managers announced plans to stop production at the site.

Northern Foods said its Fenland Foods site in Grantham, Lincolnshire, would be "mothballed" from August. It is currently looking for other customers to fill the gap left by the withdrawal of M&S product lines at the plant.

A 90-day consultation process will begin today with the 730 workers at the business, which broke even after £45m of sales during the last financial year.

Northern Foods chief executive Stefan Barden said: "Our immediate task is to support our loyal employees through the consultation period."

The pound at 9am was US$1.9529 compared to US$1.9617 at the previous close while the euro at 9am was £0.7954  compared to £0.7920 at the previous close.