Wednesday lunchtime business bulletin

Jun 18 2008 By Andrew Mernin

London’s leading share index plunged 1.5% into the red today with disappointing first quarter figures from Sainsbury’s and Woolworths hitting retailers hard.

The FTSE 100 Index dropped 90.2 points to 5771.7 in mid-session trading, with the retail woes compounding a sell-off sparked by a more than 100 point drop overnight on Wall Street’s Dow Jones Industrial Average.

Housebuilders joined retail stocks in London feeling the heat today after Goldman Sachs said the market was only at the start of a deep downturn, which could last up to three years.

Prospects for the sector were also impacted by minutes of the last Bank of England meeting on interest rates, which put back further any hopes for a cut as it revealed some policymakers mooted a rise.

Meanwhile a savage set of sector downgrades from Merrill Lynch also added to troubles in the housebuilding sector.

An internet networking site aimed at professionals today said a £27m cash injection from investors would help its expansion in Europe.

Silicon Valley-based LinkedIn, which has one million of its 23 million members in the UK, said the cash boost offered the chance to roll out new services and platforms. It intends to invest in its Soho-based European headquarters, including through the creation of 20 new jobs.

LinkedIn plans to invest in the development of Facebook-style applications, such as a virtual conferencing program that aims to improve communication between business professionals.

The five-year-old site generates revenues through advertising, subscriptions, job listings and direct recruitment.

LinkedIn’s European managing director Kevin Eyres said: ``Seventy-five per cent of our members are university educated - it’s a sought after group of people. We know what industry people work in and what position they have.

The City watchdog was today criticised for failing to protect the interests of policyholders in with-profit funds.

The Treasury Select Committee said the Financial Services Authority (FSA) was not providing a robust enough framework to manage the conflicts of interest relating to so-called inherited estates.

The term inherited estate refers to money that has built up in with-profits funds over the years that is surplus to what is needed to meet the fund’s liabilities.

The money accumulates because insurers withhold a proportion of investment returns during good years to pay out in bad ones.

But companies’ use of inherited estates has been the subject of controversy in recent years, with consumer groups arguing that they should not be allowed to use the money to meet mis-selling claims, pay shareholders’ tax and subsidise new business.

The pound at 2pm was US$1.9518 compared to US$1.9533 at the previous close while the euro at 2pm was £0.7930  compared to £0.7938 at the previous close.