Tuesday lunchtime business bulletin

Aug 19 2008 By Andrew Mernin

Fresh fear over the health of the banking sector helped drag London’s leading companies into the red today.

The concerns followed new reports of a potential bail-out for US mortgage lenders Fannie Mae and Freddie Mac, which sent Wall Street’s Dow Jones Industrial Average tumbling nearly 200 points overnight.

Speculation that US investment bank Lehman Brothers could disappoint with weaker-than-expected third-quarter results added to the pressure on financial stocks.

In London, Halifax Bank of Scotland was the biggest victim with a a fall of almost 5%, while Royal Bank of Scotland, Lloyds TSB and Barclays all registered slides of 3% or more.

The losses for the heavyweight sector helped drag the FTSE 100 Index more than 1% lower. Japan’s Nikkei 225 blue-chip index fell 2.3%.

The housing market downturn is forcing increasing numbers of homeowners to rent out their property because they are unable to sell it, figures showed today.

The Royal Institution of Chartered Surveyors (RICS) said instructions to let properties increased at their fastest pace since its survey began during the three months to July.

Overall 43% more chartered surveyors reported seeing a rise in the number of new landlord instructions than those who saw a fall, up from 30% during the previous quarter.

The group attributed the jump to frustrated sellers opting to become landlords after being unable to sell their home in the current market.

It added that the credit crunch and housing market downturn had also boosted demanded for rented property as people either delayed buying somewhere or were unable to obtain the mortgage they needed to do so.

Social housing and care firm Mears was today bullish over prospects after overcoming wider economic turmoil with a 25% rise in first-half profits.

The group boasted a record £1.7bn order book after winning £430m of new work so far this year, and said it was "in good shape to achieve further growth".

Gloucester-based Mears said the local authorities and housing associations which account for 80% of its revenues were ``substantially immune" from bad debts.

Its pre-tax profits in the six months to June 30 rose 25% to £8.7m.

Chairman and chief executive Bob Holt said: "In very difficult world markets and times of serious economic pressure, these figures are further proof of our commitment to continued growth as well as underlining the defensive qualities of the business."

Mears has been a player in social housing maintenance for several years but moved into the domiciliary care market - providing home care for the elderly - in April 2007 with its acquisition of Careforce.

The pound at 10am was US$1.8579 compared to US$1.8659 at the previous close while the euro at 10am was £0.7894  compared to £0.7890 at the previous close.