Wednesday morning business bulletin

Jun 18 2008 By Andrew Mernin

A weak session on Wall Street ensured yesterday’s 1% rise for the FTSE 100 Index proved short lived.

The Footsie, which had risen on hopes that policymakers will not tackle inflation with higher interest rates, gave back a large chunk of Tuesday’s improvement by falling 42.5 points to 5819.4 in the first hour of trading today.

The Dow Jones Industrial Average fell by more than 100 points last night amid fears that US banks may be forced to raise additional capital.

The biggest corporate story in London involved Sainsbury’s after the supermarket chain reported a 3.4% rise in like-for-like sales. That was broadly in line with City forecasts, but the fact that the figure was down on its previous update still spooked investors, causing shares to fall 6.5p to 329.5p.

Housebuilders were also under pressure following a review of the sector by investment bank UBS. Persimmon, which is due to leave the FTSE 100 Index this week, was off more than 4% or 18.5p to 394.5p.

Retailer Woolworths today revealed the departure of its chief executive and said high street sales fell 2.2% in the first 19 weeks of its financial year.

Woolies said it had agreed with Trevor Bish Jones that it was the right time to look for new leadership. He will leave in three months’ time after making a ``significant contribution" during six years in charge, the chain said.

In a trading update, the company described the 2.2% fall in like-for-like sales at its retail arm as broadly in line with internal expectations.

National Savings and Investments today announced it is increasing the interest it pays on its fixed rate investments by up to 0.75%.

The rise in returns, which is the second this year, follows a further increase in gilt yields since the rates were last changed in May.

The new rates come into force from today and apply to new investments in fixed interest savings certificates, index-linked savings certificates, children’s bonus bonds, guaranteed income bonds and guaranteed growth bonds.

The biggest change is to the rates paid on one-year and three-year guaranteed income bonds, which are rising by 0.75% to 4.65%, and one-year and three-year guaranteed growth bonds, which are also increasing by 0.75% to 4.75%.

Index-linked savings certificates are rising by the smallest amount, increasing by 0.3% to 1% above inflation as measured by the Retail Prices Index.

The pound at 9am was US$1.9533 compared to US$ 1.9533 at the previous close while the euro at 9am was £0.7945  compared to £0.7938 at the previous close.