Friday evening business bulletin

Jun 13 2008 By Andrew Mernin

A volatile week for the FTSE 100 Index was underlined today after the index staged an 80 point turnaround to break back through the 5800 barrier.

Healthy recoveries for banks, housebuilders and retailers, who were all under the cosh earlier this week, helped wipe out a 70 point deficit in the top flight index.

Trading was boosted after US economic data suggested rate setters across the Atlantic may keep interest rates on hold this month rather than raise them amid fears of mounting inflation, buoying the Footsie to close up 12.3 points at 5802.8.

Halifax Bank of Scotland was the leading share riser in London, gaining more than 13% thanks to City watchdog the Financial Services Authority saying that it was cracking down on betting against big share price falls.

Shares in the bank, which has launched a £4 billion rights issue, plunged earlier this week below the discounted offer price of 275p, with ``shorting" thought to be a factor behind the movement.

All 300 workers at collapsed business-class airline Silverjet were laid off today after a rescue deal fell through.

Swiss investor Kingplace had provisionally agreed to take over the Luton Airport-based carrier after it fell into administration a fortnight ago.

But administrator Begbies Traynor said that, due to ``unusually complex negotiations" with third parties, Kingplace was ``no longer in a position to acquire Silverjet as a going concern".

``As a consequence, we have today had to make the entire workforce formally redundant, in line with our legal obligations as administrator," Begbies partner Mark Fry said.

The airline’s 300 employees were made redundant this morning, a spokesman for the administrator said, with Silverjet’s assets now likely to be sold off to raise money for creditors.

Inflation figures and trading updates from Sainsbury’s and Centrica should keep spiralling food and energy prices in the spotlight next week.

Bank of England governor Mervyn King may have to publish a letter to the Chancellor once the inflation figure for May is known on Tuesday.

Further rises in fuel and food prices mean the Consumer Price Index (CPI) is expected to rise above the 3% mark during May, the first time this has happened since March 2007.

It will trigger an open letter to Alistair Darling from Mr King, who has to explain why inflation has risen more than 1% above the 2% target, and what the Bank is doing to bring the measure down.

Inflation has been on a steady climb since last August, and jumped 0.5 percentage points last month to 3% - the biggest monthly rise for nearly six years. Surging gas and electricity bills, food prices and Budget tax hikes on alcohol and tobacco were blamed for the leap.

The pound at 5pm was US$1.9499 compared to US$1.9465 at the previous close while the euro at 5pm was £0.7884  compared to £0.7922 at the previous close.