Thursday morning business bulletin

Jul 3 2008 By Andrew Mernin

Shoppers are making shorter and less frequent journeys because of the high cost of fuel, according to the Marks & Spencer boss.

Chief Executive Sir Stuart Rose said the soaring prices were ``quite a big deal", not only because it was adding to the cost of running the business, but also because it was changing customer behaviour.

And he said the Government must take the ``right action" on inflation rather than concentrating too much on trying to kill it off.

``We are seeing less traffic going to our big out of town stores and we are seeing more traffic going to our local stores, and that’s something we have to react to because that’s different to the patterns of traffic and trading that we have had in the preceding decade," he told BBC2’s Newsnight.

The comments came after the retail giant yesterday announced its worst sales performance in three years and issued a shock profit warning.

Computer games retailer Game today said a strong market and a raft of hit games releases had helped it beat expectations in the first half of the year.

The firm said it was ``slightly ahead" of hopes thanks to new titles including Grand Theft Auto IV and Nintendo’s Wii Fit.

Demand for consoles also shows no sign of wavering, the group added, as UK like-for-like sales rose 28.1% in the 22 weeks to June 28.

The update was well-received by analysts, with Altium Securities’ David O’Brien saying: ``One word can describe the latest trading update - wow!"

Despite the positive figures, Game initially fell 4% as the gloom hitting the wider retail sector weighed on the firm.

Stock markets were expected to come under more pressure today after oil prices surged to a new record above 145 US dollars a barrel.

Brent crude for August delivery traded on the London-based ICE Futures Exchange reached 145.75 US dollars before easing back slightly.

The latest spike comes on a combination of concerns over a weak US dollar, surging oil demand and fears about supply disruptions in the Middle East and Africa.

This fed into a 1.5% drop for New York’s Dow Jones Industrial Average yesterday. Brokers in London were forecasting the FTSE 100 Index could open down around 40 points today.

CMC Markets chief dealer Paul Webb said: ``It’s certainly going to be a big day for equity markets with last night’s close on Wall Street and bumper oil prices both weighing."

Global oil prices have doubled over the past year and are up by 45% since the start of 2008.

Light, sweet crude being traded on the New York Mercantile Exchange was also at record highs overnight, peaking at 144.57 a barrel before settling back marginally.

The commodity’s latest surge also comes amid escalating tensions between the US and Iran.

The pound at 9am was US$1.9903 compared to US$1.9930 at the previous close while the euro at 9am was £0.7978  compared to £0.7964 at the previous close.