Thursday evening business bulletin

Aug 21 2008 By Andrew Mernin

A stiff hike in oil prices cast a cloud over the London market today as they helped wipe out some solid gains enjoyed during earlier trading.

Light, sweet crude leapt more than six dollars to top 121 US dollars a barrel for the first time in around two weeks amid fears the ongoing tension between Russia and the West may affect global supplies.

It saw the FTSE 100 Index close 1.6 points down at 5370.2, obliterating a healthy 30 point gain see earlier in the session. The dip came as New York opened on the back foot thanks to the oil spike and continued fears for the financial sector.

London’s drop overshadowed a strong session for housebuilders after investors were cheered by Persimmon’s half-year results.

Food firm Heinz today reported a 11% rise in first-quarter earnings after it achieved a record share of the UK soup market in the three-month period.

The baked beans and tomato ketchup producer said its UK soup market share in value terms increased to 63.5%.

Group earnings in the quarter to July 30 rose to 229 million US dollars (£122.9m) on turnover of 2.58 billion US dollars (£1.38bn) as the firm said it benefited from double-digit sales growth in Europe and North America.

Heinz Europe sales increased 20%, with volumes up 6.4% after it launched new products and increased promotional activity in the UK and on the continent.

Volume increases were achieved on a variety of products, including Heinz ketchup in Europe and beans and salad cream in the UK. Net pricing increased 4.3%, but this was partially offset by increased promotional work in the UK.

Wholesale gas prices reached a new record today in the wake of the closure of a major North Sea pipeline.

Yesterday costs soared 14% after Norwegian firm Statoil Hydro announced it was shutting down the pipeline linking the Kvitebjoern field and an onshore processing site. It is a major contributor to European gas supplies.

Energy analyst Heren said the cost of wholesale gas for the coming winter reached a new record high of 109p per therm today, up from 104p yesterday. Prices later eased back to the 100p a therm level, still well above the 90p level seen before Statoil’s announcement.

In a sign of other gas market turmoil, the contract for the first quarter of the next year - typically the coldest and most expensive quarter of the gas year - increased 3p a therm to reach a new high of 112p before falling back a few pence.

The pound at 5pm was US$1.8753 compared to US$1.8589 at the previous close while the euro at 5pm was £0.7931  compared to £0.7904 at the previous close.