Tuesday lunchtime business bulletin

Jul 1 2008 By Andrew Mernin

Investors headed for the exit today as a sharp sell-off left the London market nursing falls of more than 2%.

The minor rally of yesterday’s session proved short-lived as a welter of poor economic news and high oil prices combined to undermine blue chips.

The FTSE 100 Index - which rose almost 2% in the previous session - gave all this back and more to stand 144.6 points lower at 5481.3 by the mid-morning. Just two stocks were in positive territory.

Early declines gathered pace throughout the morning as expectations of a poor start on Wall Street grew, while oil prices rose above 142 US dollars a barrel.

Meanwhile Nationwide figures showed an eighth month of falling house prices and a survey revealed the lowest activity among manufacturers since the aftermath of 9/11.

The poor sentiment caused indiscriminate damage in the Footsie, although losses for heavyweight banks and miners in particular dragged the index lower.

Royal Bank of Scotland fell 10p to 205p, Barclays slipped 9.25p to 282.25p and HSBC fell 23.75p to 752p, while among the miners Eurasian Natural Resources lost nearly 5%, or 63p to 1270p.

The UK’s second-largest cinema chain hopes to recover from a ``challenging" summer with a string of box-office hits due for release this autumn.

Cineworld hopes that blockbusters such as Harry Potter and the Half-Blood Prince and new James Bond movie Quantum of Solace will draw film fans back to the cinema after the hot summer months.

The group, which operates 74 cinemas across the UK, today said total revenues for the first half of 2008 were up by 0.7% on the same period last year.

Cineworld has also managed to maintain its 23.6% market share, despite data released by the Film Distributors’ Association indicating that UK cinema admissions are around 7% below last year’s figures.

The company attributed its success to a ``reasonably strong" release schedule in the first half of 2008, with films such as Sex and the City and The Incredible Hulk drawing in cinema-goers.

The group described the outlook for the remainder of 2008 as ``encouraging", but acknowledged that it will be difficult to replicate the success of summer 2007, when several blockbusters were released.

House prices fell for the eighth month in a row during June, while annual growth fell at its fastest rate since the 1990s crash, figures showed today.

The average cost of a home in the UK slid by 0.9% during the month to stand at £172,415, while annual house price inflation slumped to minus 6.3%, the lowest level since December 1992.

The housing market downturn has now wiped 7.3%, or £13,500, off the value of homes compared with their peak in October last year, with prices falling by 6.4% since the beginning of 2008, according to Nationwide Building Society.

The pound at 10am was US$1.9962 compared to US$1.9910 at the previous close while the euro at 10am was "0.7891  compared to £0.7910 at the previous close.