Friday lunchtime business bulletin

Jul 4 2008 By Andrew Mernin

The London market was on the back foot today amid poor sentiment over banking and mining firms.

Bradford & Bingley fell nearly 10% after being forced into another overhaul of its cash-raising plans, while Goldman Sachs said European banks could have to raise billions more in funding.

The FTSE 100 Index was 35.4 points lower at 5441.2 by mid-morning, as caution from Citigroup over prospects for miners hit many in the heavily-weighted sector.

B&B’s private equity investor Texas Pacific pulled out of its fundraising plans overnight after the bank was downgraded by ratings agency Moody’s.

B&B - whose major shareholders have stepped in to support an enlarged rights issue - fell 5.5p to 55.5p in the FTSE 250.

The Footsie’s banks in retreat included Barclays off 10p to 282p and HSBC off 8p at 762p. Lloyds TSB - which has dodged the worst of the credit crunch woes - was the exception, adding 1.5p to 307.5p.

Miners including Anglo American and Antofagasta - off 100p to 3170p and 15p to 589.5p respectively - also felt the brunt of the Citigroup comments.

A Citi downgrade also did for retail giant Marks & Spencer as its week of woe continued. The firm was down more than 4%, or 9.5p to 226.5p, with poor sales figures from rival John Lewis adding to the gloom.

Australia’s Origin Energy today urged shareholders to reject BG Group’s £6.7bn hostile takeover.

Origin highlighted the potentially soaring value of its coal seam gas reserves, saying it wanted to "test" their worth on the open market.

Oil and gas producer BG is eyeing Sydney-based Origin as a route to expanding its presence in the region and bolstering its assets in coal-seam gas (CSG) - methane gas trapped underground in deep coal seams by water.

Origin said oil prices - which have driven up gas prices to record levels - had led to ``strong interest" in its CSG reserves, and it was looking at proposals from third parties ``to accelerate their monetisation". The deadline for expressions of interest closes tonight.

BG chief executive Frank Chapman reiterated his group’s offer, saying it was not solely based on CSG resources. ``We wish to retain and invest in all of Origin’s businesses in Australia," he said.

Mr Chapman also questioned whether Origin was able to maximise the potential of its CSG reserves.

The Icelandic investment group that owns a host of British retailers including House of Fraser and Hamleys today unveiled plans to relocate to the UK.

Baugur - which also owns supermarket chain Iceland and jeweller Goldsmiths - is seeking to switch its headquarters from Reykjavik to London.

The move is part of a group restructuring that involves focusing mainly on its UK assets, which make up 85% of the portfolio.

Baugur today completed the sale of its remaining Icelandic assets, which include the cut-price Bonus supermarket chain founded in 1989. That company’s success led to the formation of the investment group in 2002 and its subsequent international expansion.

A spokeswoman for Baugur said: ``We are investigating how best to move the headquarters to London. We no longer have any Icelandic assets and 85% of the portfolio is based in London, so it makes sense to be based here."

Any move has to be agreed by the group’s board.

The pound at noon was US$1.9819 compared to US$1.9812 at the previous close while the euro at noon was £0.7914  compared to £0.7923 at the previous close.