Tuesday morning business bulletin

Aug 19 2008 By Andrew Mernin

Fears of a full-scale bail out for American mortgage giants Fannie Mae and Freddie Mac rattled financial stocks worldwide today.

As well as reports of a Government rescue for the mortgage firms, speculation of more losses from Lehman Brothers added to concerns the worst of the credit squeeze for banking stocks may be far from over.

Wall Street’s Dow Jones Industrial Average slumped 1.5% last night and infected world markets, with the FTSE 100 Index down 75.2 points at 5375 in the first hour of trading today.

Banks accounted for around a third of the losses in London, with Halifax Bank of Scotland off 5% or 16p at 283.5p and Barclays 15.75p lower at 327p.

The weaker sentiment also impacted housebuilders in the FTSE 250 Index, with Persimmon down 27.5p at 204.5p and Bellway off 34.5p at 521.5p.

Trinity Mirror fell 10.25p to 100.25p and Johnston Press fell 4.25p to 55.75p as investors dived for cover amid the uncertainty.

A war of words broke out today after Australian energy firm Origin formalised its rejection of a £6.7bn takeover move by UK exploration firm BG.

Origin accused BG of trying to buy it on the cheap and told its shareholders to reject the proposal from the UK-based oil and gas explorer.

But BG said Origin’s response lacked ``any substance or clarity" and had failed to provide evidence to back its view that BG’s offer undervalued the company.

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 has highlighted the potentially soaring value of its coal seam gas reserves, the value of which it has tested by seeking joint venture proposals to accelerate the ``monetisation" of the reserves. It has short-listed a number of projects from major players in the energy industry, each of which has proposed a liquefied natural gas plant using the coal seam gas.

But BG said Origin had failed to tell shareholders whether the coal seam monetisation process will yield superior value.

Troubled lender Bradford & Bingley yesterday said investors had bought more than one in four of the new shares offered under its £400m fundraising plans.

The pound at 8am was US$1.8555 compared to US$1.8659 at the previous close while the euro at 8am was US$0.7892  compared to £0.7890 at the previous close.